This is part two of three in my series of posts talking about the importance of financial structure. Chart of Accounts Financial transactions are recorded with a set of codes called the chart of accounts. These codes are classified by assets, liabilities, equity, income, cost of goods, overhead, and more. The chart of accounts is …
Financial Reporting Structure for a Contracting Business. Part 2 Read More »
Accounting is the basis of 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 time. Will we need to borrow money soon? How much …
Financial Reporting Structure for a Contracting Business. Part 1 Read More »
I sometimes receive questions on why Total Office Manager does not allow for cash basis financial reports (like we do for sales tax reports). Cash basis accounting is not GAAP compliant and has NO PLACE in business management. A cash basis is how a person manages their personal checking account, not a business enterprise. In …
Cash versus Accrual Accounting. The Difference Could Kill Your Business. Read More »
Introducing the Z-Score Bankruptcy Model This famous and widely used model (or ratio) represents the important work of New York University’s Professor Edward I. Altman. Originally, Altman studied 33 public corporations that filed for bankruptcy and 33 control firms selected at random. Using a very sophisticated statistical technique referred to as multiple discriminate analyses (MDA), …
How to Accurately Predict Bankruptcy | Understanding the Z-Score Model Read More »
The bank reconciliation process provides assurance that a company’s accounting records and balance sheet reflect the proper amount of cash. Bank recs are also a vital step in reducing your risks against theft, fraud, and embezzlement. Terms associated with the “bank rec” include: 1. Outstanding checks. Checks that were written (and have been recorded on …
This article deals with the topic of how to name computer files and folders. When you manage a contracting company, setting up an electronic file system is a necessary and important part of your management system. Naming Files and Folders with Special Characters It is important to use standard universal “regular” characters when naming folders …
There are many Key Performance Indicators (KPIs) and Key Financial Ratios (KPIs) available to managers. The key to profitability in the contracting industry is controlling labor. One of the most important labor rations, if not the most important, is the Labor Efficiency Ratio. Labor Efficiency Ratio This productivity measurement compares the labor hours paid versus …
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