SolveYourProblem
Article Series: Accounting
Home & Small Business Accounting
Business
Accounting: Your Assets
Current assets are the key
assets that your business uses up during a 12-month period
and will likely not
be there the next year. The accounts that reflect current & long-term
assets are:
Cash
in Checking: Any company's primary account is the checking
account used for operating activities. This is the account
used to deposit revenues and pay expenses. Some companies have
more than one operating account in this category; for example,
a company with many divisions may have an operating account
for each division.
Cash
in Savings: This account is used for surplus cash. Any
cash for which there is no immediate plan is deposited in an
interest-earning savings account so that it can at least earn
interest while the company decides what to do with it.
Cash
on Hand: This account is used to track any cash kept
at retail stores or in the office. In retail stores, cash must
be kept in registers in order to provide change to customers.
In the office, petty cash is often kept around for immediate
cash needs that pop up from time to time. This account helps
you keep track of the cash held outside a financial institution.
Accounts
Receivable: If you offer your products or services
to customers on store credit (meaning your store credit system),
then you need this account to track the customers who buy on
your dime. Accounts Receivable isn't used to track purchases
made on other types of credit cards because your business gets
paid directly by banks, not customers, when other credit cards
are used.
Inventory: This account tracks the products you have on hand
to sell to your customers. The value of the assets in this
account varies depending upon the way you decide to track the
flow of inventory into and out of the business.
Vehicles: This account tracks any cars, trucks, or other vehicles
owned by the business. The initial value of any vehicle is
listed in this account based on the total cost paid to put
the vehicle in service. Sometimes this value is more than the
purchase price if additions were needed to make the vehicle
usable for the particular type of business. For example, if
a business provides transportation for the handicapped and
must add additional equipment to a vehicle in order to serve
the needs of its customers, that additional equipment is added
to the value of the vehicle. Vehicles also depreciate through
their useful lifespan.
Accumulated
Depreciation Vehicles: This account tracks the
depreciation of all vehicles owned by the company.
Furniture
and Fixtures: This account tracks any furniture
or fixtures purchased for use in the business. The account
includes the value of all chairs, desks, store fixtures, and
shelving needed to operate the business. The value of the furniture
and fixtures in this account is based on the cost of purchasing
these items. These items are depreciated during their useful
lifespan.
Accumulated
Depreciation Furniture and Fixtures: This account
tracks the accumulated depreciation of all furniture and fixtures.
Equipment: This account tracks equipment that was purchased
for use for more than one year, such as computers, copiers,
tools, and cash registers. The value of the equipment is based
on the cost to purchase these items. Equipment is also depreciated
to show that over time it gets used up and must be replaced.
Accumulated
Depreciation Equipment: This account tracks the
accumulated depreciation of all the equipment. # # # # # SolveYourProblem.com : 2007
> Home > Business
Accounting Articles:
Main Page
|
