Quick Answer The definitive answer is no: equipment is NOT a current asset. It’s classified as a non-current asset, specifically a fixed asset, on your balance sheet. But here’s the real question: why? Let me be blunt. If you’re running an HVAC, plumbing, or electrical business and you don’t understand the why, you’re flying blind. […]
Quick Answer: What is Accumulated Depreciation? Accumulated depreciation is the total amount of an asset’s value that has been used up over time. It shows how much wear and tear an asset has gone through since you bought it. This amount builds up year after year and helps reduce the asset’s value on your balance […]
So, What’s with Those Negative Numbers? If you’ve ever looked at a balance sheet and wondered why there’s a negative number under “Assets”, or why some accounts seem to contradict themselves, you’re probably staring at what’s known as a contra account. As an owner or manager of a field service business, knowing how contra accounts […]
Quick Answer Simply put, to calculate cost per hire, you’ll need to divide your internal and external recruiting costs by your total number of hires within a given timeframe. The formula is simple: Now, Let’s Break It Down Now that we’ve uncovered the mystery of how to calculate your cost per hire, let’s delve into […]
Quick Answer Yes, depreciation is an operating expense. While not directly reducing your bank account, it does impact your profits. Classifying depreciation as an operating expense allows you to match revenue generated by an asset with its related expense, providing a clear picture of your business’s true profitability. Depreciation is one of those accounting concepts […]
Quick Answer To calculate accumulated depreciation, you simply total up all the depreciation expense recorded on an asset from the day you put it into service. Essentially, it’s a running tally of how much value the asset has lost over time. The simplest and most common formula to calculate accumulated depreciation will look something like […]
Quick Answer To calculate retained earnings, you simply subtract dividends paid from your total net income over a given period – this is your profit retained in the business after paying out to owners or shareholders. Now, how do you actually use this information to run a smarter, more profitable operation? Let’s examine. Numbers Don’t […]
Key Takeaways The Importance of Good Accounting Construction accounting is the basis of a contractor’s business decisions. While you may not be an accountant, or even like accounting, you are likely a decision-maker. You are asked to make numerous business decisions every week, and your decisions need to be correct the vast majority of the […]
If you are in the HVAC, plumbing, electrical industry, or another contracting business, you have likely heard terms like “FSM software”, “ERP software” and “CRM software” used to describe software programs you might have heard about. Have you ever wondered what these terms are used for and what they mean? In this article from James R. Leichter, we will unravel the mystery of these terms and tell you what they all mean.
Deferred revenue, also known as unearned revenue, is a crucial concept for HVAC and plumbing companies that often receive payments in advance for services. It represents money received for goods or services yet to be delivered, making it a liability on your balance sheet. Understanding and managing deferred revenue ensures accurate financial reporting. This guide will walk you through the definition, accounting treatment, and importance of deferred revenue, complete with an example journal entry. By the end, you’ll be equipped to confidently handle deferred revenue, ensuring your business remains financially sound and trustworthy.
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