Debits and credits form the core of the double-entry accounting system, ensuring every transaction is recorded in two accounts: one debited and one credited. This method guarantees the accuracy of financial statements and the stability of financial management. Understanding debits and credits is essential for anyone looking to grasp the fundamentals of financial literacy and […] The post Understanding Debits and Credits appeared first on Rigits Bookkeeping & Accounting ..read more

Pro forma financial statements are financial reports that project a company’s future financial performance or simulate the impact of a potential event or decision. Used for planning and decision-making, they help small business owners gauge future financial health and make informed decisions. This article explains how pro forma financial statements assist in business planning, their […] The post Pro Forma Financial Statements for Business Planning appeared first on Rigits Bookkeeping & Accounting ..read more

When a business finds itself unable to recover money it is owed from its customers for goods or services already provided, that amount is known as bad debt. It’s not an ideal situation, but it has to be faced, and by accurately accounting for bad debts, you can mitigate their effects as much as possible.  […] The post How to Calculate Bad Debt Expenses for Businesses appeared first on Rigits Bookkeeping & Accounting ..read more

Profit First Accounting revolutionizes the way small businesses approach their finances by placing profit at the forefront, instead of an afterthought. This financial management system, conceived by Mike Michalowicz, could prove transformative for your business. Today we’ll go through the core principles of Profit First Accounting, as well as how to set it up for […] The post Profit First Accounting for Small Businesses appeared first on Rigits Bookkeeping & Accounting ..read more

Having a handle on expense reports is important for any business, but perhaps even more so for small business owners who need to track every dollar spent. We’re going to dig into what goes into an expense report, the benefits of accurate expense reporting, creating and reviewing the report, setting up policies and guidelines for reporting, auditing expense reports, and finally some practical strategies to make it all seamless. This guide is also related to our articles on understanding gross vs. net profit, how to read a cash flow statement, and operating income vs. EBITDA. This list includes ..read more

Adjusting entries in accounting are important because they make sure your financial records show the right earnings and expenses for your business. They’re made at the end of each accounting period to make sure all the money you made and spent during that time is properly accounted for. In this article, we’ll explore the various types of adjusting entries – accruals, deferrals, estimates, and corrections. Plus, you’ll learn how to record these entries, some common errors, and how to correct them. Also, this guide is related to our articles on understanding journal entries in accounting, unders ..read more

This article will explore the nuances of direct deposit, including how it works and can be used effectively, and the ways it can benefit your business. This guide is also related to our articles on 13 best payroll software, apps & tools in 2023, 15 best payroll books to read in 2022, and online bookkeeping services for small businesses. This list includes: Direct deposit advantages Setting up direct deposit Direct deposit for small businesses Benefits of electronic payments Managing payroll systems Let’s get into it! Understanding direct deposit Direct deposit is an electronic payment me ..read more

Understanding marginal cost–the increase or decrease in total cost when you produce one more unit of a product–is important for small business owners. This article will explore everything from the basic formulas to practical examples in small business contexts, so you can apply marginal cost analysis to your own business operations. This guide is also related to our articles on understanding and calculating EBITDA, how to calculate break-even point in sales, and how to calculate profit margin. This list includes: Marginal cost calculation Marginal cost formula Examples of marginal cost Margin ..read more

Depreciation is like spreading out the cost of something valuable, like a machine or a building, over the time you use it. The Double Declining Balance (DDB) method is a way to do this faster. It means you take a bigger chunk of the cost at the beginning, which can help show the true value of the asset over its lifetime. Today we’ll explain how the DDB method works, compare it to other common depreciation methods, and get into its implications for your business’s financial management. This guide is also related to our articles on understanding journal entries in accounting, double-entry accoun ..read more

Journal entries (JEs), the foundation of all accounting processes, are used for accurately recording every financial transaction in the account books. Knowing how they work is key in maintaining accurate and reliable financial records, which you need for both decision-making and regulatory compliance. This guide is also related to our articles on understanding journal entries in accounting, double-entry accounting: the basics, and how to read a balance sheet. This list includes: Basic journal entry examples Adjusting journal entries Complex journal entries Correcting journal entries Journal e ..read more