Student Loans

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What is a Student Loan? A student loan is exactly what it sounds like – a loan given to students to finance their studies. This is most common for college or university students, but also works for trade schools and other vocational studies. Most of the time when a person takes out a loan, they are using it to invest in an asset that they … Continue reading Student Loans »

Property Rights

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Property rights is the foundation of all free-enterprise economic systems. It is what allows people to profit from capital and ideas, without fear of seizure by the government or theft. Definition “Property Rights” usually refers to a set of fundamental rights giving citizens control over their own land, capital, and ideas. Land Property Rights The property right to Land gives a landowner exclusive use of … Continue reading Property Rights »

Cost Accounting

The field of accounting is typically divided into two areas, financial accounting and cost (or managerial) accounting. Whereas the purpose of financial accounting is to report the results and position of a business to external parties, cost accounting focuses on internal reporting for the purpose of improving managerial decision making. This means that cost accounting is forward looking, as opposed to the primarily backward-looking financial … Continue reading Cost Accounting »

Creating Financial Statements

A company’s financial statements give investors, managers, and other “users” a complete, honest look at its financial health. Finished financial statements follow a standardized format, letting investors compare different companies in the same industry apples-to-apples. For the company’s financial reporting team, this presents a challenge – every business’s internal operations are different, but all activities need to be summarized into a standardized format. Businesses assign … Continue reading Creating Financial Statements »

Comparative Advantage

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Comparative Advantage is the concept where one person, business, or economy is able to outproduce one particular product or service compared to another person, business, or economy. The concept of comparative advantage is essential to understanding both why people choose different careers, and why countries engage in international trade. Comparative Advantage At The Personal Level When it comes to people, comparative advantage will have a … Continue reading Comparative Advantage »

Gross Domestic Product

In Economics, “Gross Domestic Product” is the one statistic to rule them all – a measure of the total size of an economy. Definition The “Gross Domestic Product” of a country is the total value of all finished goods and services that were produced in a given year. In other words, this is the total economic output. GDP is used to measure the total size … Continue reading Gross Domestic Product »

The Accounting Cycle

The accounting cycle is a series of steps that businesses take to track transactions and consolidate financial information over a specific accounting period (month, quarter, year). The end result of the accounting cycle is the production of accurate financial statements for that period and preparedness for the next accounting period. We will examine the steps involved in the accounting cycle, which are: (1) identifying transactions, … Continue reading The Accounting Cycle »

Property Rights

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Property rights is the foundation of all free-enterprise economic systems. It is what allows people to profit from capital and ideas, without fear of seizure by the government or theft. Definition “Property Rights” usually refers to a set of fundamental rights giving citizens control over their own land, capital, and ideas. Land Property Rights The property right to Land gives a landowner exclusive use of … Continue reading Property Rights »

International Trade

International Trade is the system under which businesses, individuals, and governments trade goods and services. This exchange from many different National economies is what makes up the Global economy. Imports and Exports When we talk about international trade, we usually think in terms of imports (the goods and services a country buys from outside) and exports (the goods and services one country sells to the … Continue reading International Trade »

Inflation

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Inflation: how much less a dollar is worth next year compared to today. Most consumers hate inflation – it erodes your savings, and eats away at the real benefits you get from increasing income. However, inflation plays a necessary role in the economy, and without it much of the economy would quickly fall apart. Inflation Definition “Inflation” means that the general prices of goods and … Continue reading Inflation »

Government Impact on the Economy

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As a society with a market-based economy, the government has three broad mandates: Ensure the common defense Promote economic growth Strive to maintain a just society On the face, only one of these implies direct intervention in the economy, but all three are interconnected with the economy as a whole. This means every action taken by the government will have some impact on the economy, … Continue reading Government Impact on the Economy »

Fiscal Policy

Government spending makes up a whopping 20% of all spending in the American economy, including the salaries of all government employees, government contracts to private companies, and military spending. This is all paid for by taxes, meaning more than 1/3 of all economic activity filters through the public sector in some way. This means government taxing and spending will have a huge impact on the … Continue reading Fiscal Policy »

Time Value of Money

The “Time Value of Money” is one of the most important concepts in economics, investing, and business. For individuals, this determines how much you save and spend. For businesses, it determines how quickly they try to expand. For investors, it decides the mix of a portfolio. What is the Time Value of Money? “Time is money” – this can be more literal than you think. … Continue reading Time Value of Money »

Managerial Accounting

Accounting is often defined as the backbone of any corporation or business. Without the numbers explaining the day-to-day operation, it’s tough to tell how well or how poorly said company is doing. In order to simplify accounting as a whole, it is easiest to split it into two separate definitions. On one side, there is financial accounting, which focuses heavily on the numbers and creating … Continue reading Managerial Accounting »

Working With Segments and Target Markets

Have you ever wondered how big and small companies gather their customer base? With all the people in the world, how do companies select who to market to? Larger companies use mass marketing to market their products, while smaller companies use market segmentation. What is Market Segmentation? Market segmentation is the process of dividing a market of potential customers into groups (segments) based on different … Continue reading Working With Segments and Target Markets »

What is a Brokerage?

Brokerages exist to allow individuals to make investments into the larger market. In other words, they connect individuals to the markets as a whole. Securities Brokers help individuals trade securities, the security type will change depending on the broker, but they usually fall into these categories: Cash (including Foreign Exchange markets) Individual Securities Bonds and Debts Stocks Structured Products Mutual Funds Exchange Traded Funds (ETF) … Continue reading What is a Brokerage? »

Building Case Studies

At some point in your business career you will likely be asked to build a case study. Whether it’s for school or for work, building a case study is a very methodical task. While case studies will differ across companies and sectors, your process should remain the same. When conducting a case study, you should try to include these core pieces: a summary of the … Continue reading Building Case Studies »

The Love of Money: Audits and Fraud

The love of money… A Case of Fraud at LocatePlus Holdings Corporation   In business, greed comes most frequently not in the pursuit of profit but in the form of financial fraud. Individuals who lack or loosen their ethical restraints often rationalize their behavior as unavoidable or good-intentioned. But, make no mistake, people who commit fraud normally do so in order to enrich themselves even … Continue reading The Love of Money: Audits and Fraud »

Marketing Fundamentals

Marketing is a word often thrown around as an umbrella term for a wide variety of functions within organizations, ranging from the running of social media accounts to inside sales, and anything in between. Marketing and Value Proposition The truth of the matter is that a successful marketing strategy is deeply rooted in a firm’s ability to build positive relationships with consumers by consistently providing … Continue reading Marketing Fundamentals »

Corporate Debt

Do you ever wonder how companies have the money to build new stores, develop new products, or perhaps even buy another company? Usually companies do not keep enough cash for these transactions sitting in their bank account – it needs to be raised from outside investors. There are two main ways a company can fund these endeavors: a bond issuance or a stock issuance. Corporate … Continue reading Corporate Debt »

Consumer Behavior

Consumers play an integral part in the marketplace. They are the ones who purchase the products, and largely inform the kinds of products that are produced (demanded).  This is where the concept of consumer behavior comes in: what drives customers’ purchasing decisions, and how do they use the products and services that they buy.  It is important to look at how a consumer behaves by … Continue reading Consumer Behavior »

Building Wealth

There are hundreds of small tips and rules you will hear about managing your personal finances, but putting everything together into one coherent plan can be a daunting task. You have probably already heard about budgeting, spending plans, savings strategies, credit cards, and all points in between – now we will put everything together to make a plan to build lifelong wealth. Manage Your Income … Continue reading Building Wealth »

Mortgages

Your home will probably be the biggest purchase you make in your lifetime. Buying a home not only saves money on rent, but is a serious asset that can appreciate over time. Since homes are so expensive, (almost) no-one buys them in cash. Instead, homes are typically purchased with a special type of loan, called a “Mortgage”. What is a Mortgage? A mortgage is a … Continue reading Mortgages »

Buying a Car

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Buying a car is usually the first big purchase a person will make. There is also no shortage of horror stories of people immediately regretting the decision, either by buying a new car and later struggling to meet payments, or a used car with hidden mechanical problems demanding costly repairs. When you need to buy your first (or next) car, make sure these factors weigh … Continue reading Buying a Car »

Issuance of Stocks and Paying Dividends

Big corporations are very powerful entities that can possess more capital than some countries in the world. However, every company begins as a small start-up business. These businesses grow with the injections of capital, both from the founders and from other investors. Going Public At one point, a company’s plans become so big that it needs public financing to support future development, and so they … Continue reading Issuance of Stocks and Paying Dividends »

Preparing for Spending Shocks

“Spending Shocks” are large, irregular expenses. According to CBS, more than 60% of Americans cannot absorb a $500 spending shock: spending shocks are the #1 reasons why budgets end up abandoned, and being prepared for large spending shocks is the best thing you can do to keep your personal finances healthy. Types of Spending Shocks There are two types of spending shocks: Budgetable and Unbudgetable. … Continue reading Preparing for Spending Shocks »

Unemployment and Other Assistance Programs

Everyone needs to start from somewhere. While you build your personal finances from the ground up, you may already have faced times when you had low (or no) income, trying to get any advantage to pull yourself up. There are several public programs specifically designed to help people get out of these situations. In the real world, many people suffer for months simply because they … Continue reading Unemployment and Other Assistance Programs »

Solvency

Understanding financial solvency is as important to an investor as it is to a financial manager. Whether it’s having the money to pay off a friendly wager or having the capital to pay off a commercial loan, being solvent is necessary to achieve long-term success. Solvency is the possession of assets in excess of liabilities, or more simply put, the ability for one to pay … Continue reading Solvency »

Risk Management Controls

Risk management is a very important part of any business because it allows for the matching and identification of risk and the associated losses (loss exposures). Practically, this means managers put in place Risk Management Controls. Most business operations are concentrating on maintaining a customer base and building growth. The Risk Management Controls are different – these are designed to protect assets and prevent problems … Continue reading Risk Management Controls »

Budgeting and Spending Strategies

Building a budget or spending plan is tough. Sticking to the plan is even tougher. Thankfully, there are a few ways you can game the system to make sure you stay under budget, and your savings continues to grow. Budgeting Strategies A “Budgeting Strategy” means different ways to approach your budgeting to build something that works for you. There is no silver bullet budget: every … Continue reading Budgeting and Spending Strategies »

Bankruptcy

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If you are severely behind on your bills and all other debt management plans have failed, the last option available is declaring Bankruptcy. What is Bankruptcy? Bankruptcy is a type of forced debt settlement, and is a legal procedure. When you declare bankruptcy, the courts will gather all your unsecured creditors together, and hear the debts you owe. They will then examine all your assets, … Continue reading Bankruptcy »

Cash Planning

A cash budget is used internally by management to estimate cash inflows (receipts) and outflows (disbursements) of cash during a period and the cash balance at the end of a period. In other words, a cash budget is a plan for an organization to obtain and use resources over a specific period of time. This means an organization must have an idea of where their … Continue reading Cash Planning »

Leading vs Directing

Leading and directing are important management functions, but usually do not appear in the main job description. A great manager needs to be able to both lead their team and direct their operations – failing either of these roles is a recipe for disaster. Leading vs Directing To understand how managers can excel (or fail) at these roles, we first need to define what they … Continue reading Leading vs Directing »

Debt Management Services

If you find yourself over your head in debt, there is always a light at the end of the tunnel. Credit counseling agencies, both for-profit and non-profit, exist in every state to help people build a clear, workable path back to healthy personal finances. If you do need the help of a credit councilor, this is what you can expect. What is Credit Counselling? Credit … Continue reading Debt Management Services »

Cash Flow Analysis

Cash flow is a concept in accounting that refers to the spending or receiving of cash by an organization. For a given period, cash flow is calculated by ending cash balance less starting cash balance. It is important not to confuse cash flow with earnings, as cash flow is related to solvency (or how well a business can pay its immediate debts) and not necessarily … Continue reading Cash Flow Analysis »

Consolidating Debt

If you start falling seriously behind on your bills with simple prioritization and negotiation not enough to catch up, you still have some options available to keep your finances under control. One of the most straight-forward options is Debt Consolidation. When to Consider Debt Consolidation Most adults have at least half a dozen creditors, such as credit card companies, banks for a mortgage, car loan … Continue reading Consolidating Debt »

Planning and Evaluating Business Advertising

Planning advertising for any business is nothing to be taken lightly. Advertising, after all, is the method by which a business gets its message out to the world. How, and how well, a business advertises its products or services can, and does, make the difference between business success and business failure. Thus, planning and evaluating advertising are critical business activities. Most successful business advertising results … Continue reading Planning and Evaluating Business Advertising »

Debt Negotiation

Everyone has had financial emergencies, when a huge spending shock breaks your budget or spending plan into pieces. If you have more than one emergency in a short time, such as if you lost your job, your outstanding debt balances might start to spiral out of control. Even in extreme circumstances, it is still possible to keep your personal finances under control. With some ingenuity, … Continue reading Debt Negotiation »

Asset Valuation – How to value an asset through their financials

Every asset has a value that is always changing. So, what factors affect this change? Things such as earnings announcements, financial ratios, and recent news all go into the movement of an asset’s valuation. The key with all asset valuation is that ratios and prices are always relative. This means most methods for asset valuation can only compare one company to another company (usually in … Continue reading Asset Valuation – How to value an asset through their financials »

Operating Ratios

Operating ratios are a class of ratios that are meant to analyze how well a company is using their assets. Specifically, these ratios show how well a company utilizes its assets to create revenue. Like many of the ratios that are used in financial analysis, operating ratios are complex ratios. Some use simple measures in their numerators and denominators, such as COGS (Cost of Goods … Continue reading Operating Ratios »

Margin Trading and Market Timing – High Risk Investing

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Most people trading on their own will use a basic cash account – you deposit your cash into your brokerage account, which you then use to buy securities like stocks and bonds. For professional investors, like day traders and financial professionals, there are ways to multiply the investment amounts and returns by using more complex types of brokerage accounts and trading strategies. This includes margin … Continue reading Margin Trading and Market Timing – High Risk Investing »

Social Responsibility in Management

Social responsibility is having a sense of duty to society and everything that is a part of it. In other words, “social responsibility” means managers are accountable to society at large, not just their shareholders. Social responsibility is an important aspect of capitalism at large. Individuals and consumers place trust in businesses to “do the right thing”, and take a leadership role in making the … Continue reading Social Responsibility in Management »

Internal Risk Management

Risk Management is when a manager tries to organize his company (or business unit) to prepare in case of, and try to prevent, something going wrong. Risk management is one of the most complicated branches of management, as it requires managers to be able to assess unknown situations and try to be prepared for anything. It is the technique of distinguishing, investigating, and acknowledging uncertainty … Continue reading Internal Risk Management »

Researching Purchases

Every person makes hundreds of purchases every week. Think about how many individual items you have when buying groceries, how often you eat out or use a vending machine, or how often you buy new clothes. Each purchase has a reason, but each purchase costs money. One of the cornerstones of strong personal finances is knowing why you buy what you do, and knowing how … Continue reading Researching Purchases »

Work Versus Study

Every high school student makes a choice when they are about to graduate – enter the job market right away, enter a trade school, or enroll in a university? Everyone will make the same kind of choice many times throughout their lives. If you first choose to work, the option is usually still available later to go back to school. University graduates sometimes feel like … Continue reading Work Versus Study »

Certifications in the Finance Industry

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Have you ever thought about a career in the finance industry?  Have you wondered what is required to be considered a professional in the stock trading world?  Well I have good news:  you’ve come to the right place!  We’ll cover educational requirements and the basics of Series 6, Series 7, and several professional designations in the industry.  So buckle in and let’s get started! Buying … Continue reading Certifications in the Finance Industry »

Importance of Planning and Vision

Planning is an important management function because it helps managers prepare for the short term and long term challenges and opportunities that a business faces every day. Planning plays a crucial part in creating a business plan and strategic plan in that it reinforces a company’s mission, visions, and goals that are used to develop and implement strategy, competitive advantage, and achieve effectiveness and efficiency … Continue reading Importance of Planning and Vision »

Personal Selling

Collectively, as a society, we are invited everyday to buy something for various reasons. For instance, we see an ad on TV for a car; so later we go to the dealership and pick-up some information about the car, with the objective being to purchase one. The advertisement on TV is the business marketing the product to us. Once we enter the dealership, we are … Continue reading Personal Selling »

Business Ethics

“Business Ethics” defines what is right and wrong in a business – not necessarily what is or is not illegal. It is the responsibility of everyone in any organization to maintain high levels of business ethics, as businesses who fail to do so lose the public trust, and the ability to continue to do business, very quickly. Maintaining strong business ethics generally requires all actions … Continue reading Business Ethics »

The 5 Biggest Mistakes Of Job Seekers

Job Application On A Crumpled Ball Of Paper

Experienced workers have a job search lasting about 43 days, and fresh graduates can expect a longer wait. Your search will be much harder if you make one of the following very common mistakes. Avoiding all 5 will not promise an interview, but hitting any might mean you are missing out. Errors In Your Application When you are applying for a job, you should be triple-checking everything you want … Continue reading The 5 Biggest Mistakes Of Job Seekers »

Using Keywords In Your Job Search – Make Or Break Your Application

Keywords – the Achilles Heel of every student’s resume. Knowing how to craft a killer resume and cover letter that grabs employers attention (and keeps it) will only help once you get your resume in the hands of a recruiter. Unfortunately, today anyone can apply to just about any job anywhere, so that great new opening you have your eye on may already have dozens, … Continue reading Using Keywords In Your Job Search – Make Or Break Your Application »

Homeowner’s Insurance

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Homeowner’s Insurance is a broad type of insurance coverage designed to cover a home and the property it sits on. This insurance is very broad, wrapping many different types of coverage into one package. If you want to take out a mortgage on a home, the institution you borrow from will probably require you to have some level of Homeowner’s Insurance, if only to make … Continue reading Homeowner’s Insurance »

Renter’s Insurance

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“Rental Insurance” is taken out on property you rent to insure against damage. Rental insurance works like a lighter version of Homeowner’s Insurance. Why Would I Need Rental Insurance? As a renter, this insurance does not do you much good. For example, if there is a fire at your apartment caused by one of your neighbors, your landlord’s insurance would cover the repairs to the … Continue reading Renter’s Insurance »

Car Insurance

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If you drive a car, you need to be covered by some sort of car insurance. You have probably seen dozens of advertisements from insurance companies claiming to help lower your rates, improve your coverage, or just help you compare, but before you buy your first insurance (or change providers), the first step is knowing how exactly car insurance works. Types of Car Insurance There … Continue reading Car Insurance »

Human Resource Planning

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The Human Resources department at a business is in charge of everything from hiring and firing employees, organizing and implementing training programs, resolving internal conflicts, determining the pay scales, and everything in between. Human Resources Role The Human Resources department is concerned with the specific employees of the company, rather than sales, marketing, or product development. In a nutshell, the Human Resources department of any … Continue reading Human Resource Planning »

IRS Audits

Once you file your income taxes, the IRS will review all the forms you submit, and either issue your return or refund, usually with very little turnaround time. However, occasionally the IRS will ask you to provide some supporting documentation before your return is accepted. The Basics of an Audit An “Audit” is what happens when the IRS picks your return out from the pile … Continue reading IRS Audits »

Classification of Products and Services

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Clearly no two products are exactly alike and therefore each merits a unique marketing strategy. However, certain products carry similar characteristics in terms of price level, similarity between competing brands, and the way consumers approach them in the buying process. It is often useful to group these similar products into categories in order to help set up marketing strategies for each segment. This process is … Continue reading Classification of Products and Services »

Pricing Strategies

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One of the most crucial aspects of developing a marketing strategy is determining an approach to pricing. A company could have a great product and a fantastic promotion campaign, but could still fail if the price isn’t right for customers. On one hand, high prices could repel value-seeking consumers and could result in poor sales and low profits. However, prices that are too low could … Continue reading Pricing Strategies »

GAAP – Gains and Losses

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Revenue vs Gains Revenue and Gains are related fields related to the income a company receives. The main difference between them is the source of the income. Revenue Revenue represents income earned by the firm through the primary goods and/or services provided. It is the income earned from the firm’s operating activities. For example, Mike’s Computers specializes in selling computers to small businesses. During the … Continue reading GAAP – Gains and Losses »

Accounting Regulation and Ethics

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Professional accountants are vital to our economy and society. Accountants ensure the effective use of resources by recommending ways to reduce cost, increase revenue, and mitigate risk. The accountancy profession is only as good as the quality of service provided by its members. The regulatory environment of the accounting industry seeks to ensure the quality and consistency of these services. This means accountants must comply … Continue reading Accounting Regulation and Ethics »

All About Sales Tax

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What Is Sales Tax? “Sales Tax” is a tax that is charged on goods sold to end customers. The Sales Tax is a set percentage of the price of the goods sold. In the United States, all states except Alaska, Delaware, Montana, New Hampshire, and Oregon charge a sales tax, but the sales tax will vary widely by state. In Canada, there is also a … Continue reading All About Sales Tax »

The Product Life Cycle

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Humans and animals have standard life cycles—a series of stages of living that each passes through before death. For people, these phases could include infancy, childhood, adolescence, adulthood, and retirement. Products also move through a series of phases throughout the duration of their lives called the “product life cycle”. The four stages included in the product life cycle are introduction, growth, maturity, and decline. This … Continue reading The Product Life Cycle »

Management Theory

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When holding a job, there are usually certain people that have specific “titles” that describe the work that they do.  With those titles, comes the chain of command, which can be looked at as a flow chart: The CEO –> who oversees Management –> who oversees Associates. These managers organize and coordinate the activities of the business to achieve specific goals. While the chain of … Continue reading Management Theory »

Accounting for Liabilities

Every firm needs capital to purchase assets like inventory, land, and equipment. They also need cash to help manage expenses such as paying employees. How do companies raise the money they need to run their businesses? The answer is through a mix of liabilities (borrowing money) and equity (selling shares of ownership of the company). Liabilities and equity make up the right-hand side of the … Continue reading Accounting for Liabilities »

Marketing Plan – Purpose, Elements, and Design

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Marketing is a cornerstone in the success of any organization. However, successful marketing is not as wide spread in large part due to the lack of a marketing strategy and marketing plan. To ensure marketing is successful for an organization, companies need to compose long-term marketing strategies promoting their goals with specific actions. A short term marketing plan is also necessary to ensure actions taken … Continue reading Marketing Plan – Purpose, Elements, and Design »

Short Term Financing

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Short Term Financing “Short Term” financing means taking out a loan to make a purchase, usually with the loan term at less than a year. There are many different types of short-term financing, the most common of which are “Buy Now, Pay Later”, “Unsecured Personal Loans”, and “Payday Loans”. Short Term Financing VS Credit Cards Short-term financing has many similarities with credit cards – there … Continue reading Short Term Financing »

Basics of Payroll Accounting

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Most the taxes paid are through paychecks, so a large part of payroll accounting is properly accounting for all taxes. Most people are familiar with their annual personal tax return, but payroll tax filing works a bit differently. Payroll is run weekly, bi-weekly, monthly, or even semi-monthly, so for each pay cycle, taxes need to be calculated and reported. All tax payments need to be … Continue reading Basics of Payroll Accounting »

Revenue and Expense Recognition

One of the first challenges auditors and regulators faced when developing the Generally Accepted Accounting Principles (GAAP) was trying to standardize how companies account for their revenues and expenses. Before GAAP, companies had (more or less) free reign on how and when revenue and expenses were reported, leading to general confusion when trying to compare balance sheets and income statements between companies. Today, all companies … Continue reading Revenue and Expense Recognition »

Competitive Advantage in Business

SWOT

“Slow and Steady” does not always win the race. The business world is very fast paced, competitive, and often a ruthless world where the one who stays ahead of the game is more likely to emerge victorious. “Competitive Advantage” is what businesses have that puts them ahead of the competition. What is competitive advantage? Competitive advantage is what makes a business better than everybody else … Continue reading Competitive Advantage in Business »

GAAP – Purpose, Framework, and Terms

What are the objectives of financial statements? How can accountants best meet these objectives? These are the very questions that the Federal Accounting Standards Board (FASB) set out to address in 1976 when they began developing the conceptual framework. FASB’s goal was to identify the objectives and concepts that govern the preparation and presentation of financial reporting. In other words, to provide a backbone for … Continue reading GAAP – Purpose, Framework, and Terms »

Centralized and Decentralized Management Explained

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When a company starts to grow, one of the biggest questions they face is how to organize their management. The two main branches of management roles are centralized and decentralized authority. Companies usually fall somewhere between these extremes. Centralized Management Centralized management is the organizational structure where a small handful of individuals make most of the decisions in a company. For example, a small family … Continue reading Centralized and Decentralized Management Explained »

GAAP – Accounting for Equity

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An Introduction to Equity The Basic Accounting Equation says that Assets – Liabilities = Equity Equity (stockholders’ equity, owners’ equity, etc.) is the claim shareholders of a company have on assets once the liabilities have been satisfied. Equity on the Balance Sheet There are five critical entries on a balance sheet related to equity: retained earnings, common stock, preferred stock, treasury stock, and other comprehensive … Continue reading GAAP – Accounting for Equity »

Credit Cards

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What are Credit Cards? Credit cards is a form of unsecured credit (meaning a loan without collateral) that you can use to make everyday purchases. All credit card purchases are made using a loan – you borrow money from your credit card issuer, and later pay it back with interest. Credit Cards Vs Debit Cards Credit cards can be used at all the same places … Continue reading Credit Cards »

Financial Analysis – A “Check-up” for a Business

Every year or two, most of us go to the doctor’s office to receive a check-up on the state of our physical health. The doctor typically checks several measurements (height, weight, blood pressure, etc.) in order to gauge how our health has progressed over the past year. They can then use their results to determine if there is any immediate threat to our well-being or … Continue reading Financial Analysis – A “Check-up” for a Business »

Good Debt, Bad Debt

Beginners trying to tackle their personal finances for the first time see debt as sort of a “boogeyman”, a specter that looms overhead, trying to trap people into inescapable cycles of minimum payments and late fees. Or at the very least, something to be avoided whenever possible. Deep down, we all know this is not really the case. Having a healthy amount of debt is … Continue reading Good Debt, Bad Debt »

Budgeting

When learning about managing your finances, many experts will recommend you begin with a budget. A budget is a tool that tracks income and expenses, and it allow you to set goals and make plans for the future. Developing a budget for a specific project, for a special event, or to help you with your monthly spending are all examples of using a budget to … Continue reading Budgeting »

Reconciling Accounts

Your parents probably have experience reconciling their checkbook by comparing your own written records with their bank statements. In today’s world, reconciling your checkbook isn’t a common activity for two reasons: Paper checks probably only account for a small amount of your total expenses per month You probably have an automatic record with your bank’s online services showing how much you paid for anything purchased … Continue reading Reconciling Accounts »

Managing Debt

To be “In Debt” means to owe money to someone else, usually making fixed payments to pay back the amount over time, plus interest. Debt means different things to different people – having some debt is perfectly healthy for your personal finances, but too much can leave you buried. There is also a major difference between debt held by people and businesses. Personal Debt Your … Continue reading Managing Debt »

Building An Investing Strategy

An “Investing Strategy” is a plan for how to save money to help it grow. Sometimes an “investing strategy” can just mean “plan for trading stocks”, but it really means a lot more. Liquidity, Risk, and Potential Returns All investments balance liquidity (how easily it can be converted into cash for other use), risk (the chance of the investment to lose value), and potential returns … Continue reading Building An Investing Strategy »

Planning for Retirement

Retirees

When should someone start planning for retirement? Fidelity Investments recommends most young people try to save up 2x their annual salary by the time they turn 35, which is a pretty good benchmark to shoot for. Unfortunately, retirement is so far off the mind of most young people that they find their retirement account is completely empty after turning 30. What can a person do … Continue reading Planning for Retirement »

Labor and Wages

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What is “Labor”? “Labor” is how much a person works. It is the use of time and exertion of effort to produce something of value. Generally speaking, the more valuable a person’s labor is, the higher their wage. Skilled And Unskilled Labor Each person starts off as an Unskilled Worker, meaning they do not have any specific training or professional skill sets that set them … Continue reading Labor and Wages »

Unemployment

“Unemployment” is a major economic indicator measuring how much of the working population is currently looking for a job. The unemployment rate is the most “tangible” economic indicator – if GDP is going up or down, it is harder for people to notice in their day-to-day lives. When the unemployment rate goes up, it usually means you or someone you know lost their job recently, … Continue reading Unemployment »

Price Controls

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Definition “Price Controls” are artificial limits that are put on prices. If the limit is put in place to prevent prices from getting too high, they are called Ceilings. If they are in place to prevent the price from getting too low, they are called “Floors”. Price Ceilings Price Ceilings are controls put in place to prevent the price of some good or service from … Continue reading Price Controls »

Interest Rates

Percentage and Time

What Are Interest Rates? Interest rates are growth rates – it is a percentage that is used to calculate how much a loan or investment grows over time. Interest rates are most commonly associated with borrowing money, like a homeowner taking out a mortgage or a government selling a bond. The interest rate is how much extra needs to be paid back in exchange for … Continue reading Interest Rates »