Jacksonville CPA | Working With a Variety Of Assets
Good morning and welcome to the podcast. This is brandon and I’m the president of Mineva. And if your Jacksonville CPA is not meeting your needs, then please give them a call. So today we’re going to some to a lecture on basic accounting concepts, uh, to get you familiar with anything to get you familiar with, um, things that will help you grow your business. Says the lecture by Rob’s Smolan, um, accounting bites, you know, so let’s, let’s take a listen and see if we can learn something today.
Okay, good morning. My name is Robert Swollen. This is financial accounting 101. Today we’re going to be looking at the basics of financial statements. Now this is going to be covered in the first couple of chapters in our textbook and my goal here is not to lecture on the tire chapter, but simply to go over what I believe in the B to b, the most important elements that I want you to focus on so you can get a better understanding of accounting. Okay. One of the first things we learn about accounting is the various components of what is accounting. Okay. And so on the screen on your computer, you start to see a variety of different accounts. And we have assets, we have liabilities, and we have stockholders equity. The first thing that you need to do is you need to be able to sort this information into categories so you can then access the information because you’re going to be flooded with information in the early going. And to the extent you can sort out the information and start to put the pieces together at that point in time, you will start to get a better understanding of what we’re trying to accomplish. So the first thing I want to focus on is what we call the basic accounting equation k, and the basic accounting equation says, assets equals liabilities plus, and I’m going to abbreviate stockholders equity.
I hope you can see that. And that remains the same.
So taking a look at that, assets plus assets equals liabilities plus stockholders’ equity. So that’s basic accounting functions. So if your Jacksonville CPA is not helping you, uh, learn more about what you need to know to grow business, then please give Mineva a call.
No, let’s take a look at the list of the various assets, cash accounts receivable, that’s when our customers owe us money, supplies and think of office supplies when we talked about supplies, supplies get used up or consumed in the ordinary course of business inventory, which we’re going to see a little bit later on is basically a retail store or a manufacturing company and inventory is something that as a retailer we buy. We mark it up, we raised the price and we sell it prepaid expenses now notice that they’re under the category of assets. It is a confusing term, but it’s a commonly used term, a prepaid expense such as prepaid insurance and prepaid rent. These are things that sometimes are paid for in advance and then they expire over time. Okay. And so those are considered assets initially when we paid for them. And then as time progresses they will convert into expenses.
We will of course talk more about that later. Property, plant and equipment as a category within property, plant and equipment. We have land, we have buildings, machines, equipment, vehicles, furniture, computers, uh, all sorts of stuff. Okay. So that’s a sufficient definition of property, plant and equipment for now, and then there’s intangible assets such as trademarks, patents, copyrights, franchise licensing agreements, et Cetera, assets or resources that help us to run our business. Okay. Now the next category of liabilities and a liability is a debt or simply an obligation. The way we fulfill an obligation is either we paid for it with money in the future or we provide a service. Okay. And so there are a wide variety of liabilities. This is a partial list. These are the accounts that we will most likely see in our class, but there are several others. Accounts payable. Accounts payable is when we owe money to accompany and we refer to those companies that we do business with on a regular basis as vendors or suppliers with vendors of the more common term. Okay. So we owe money to our vendors for buying stuff. We may buy inventory from them several times a month, office supplies, they may come in and clean our building, then they bill us. Okay. So accounts payable is for your operational type expenses that you buy on account.
So just getting you familiar with some of these basic accounting terms. So if you’re Jacksonville CPA is not fulfilling your needs, then give them an eva call
at the term we’ll come back to, but on account the credit was involved, notes payable, this is the for my loan. When we borrowed money from a bank, we find a promissory note and we call that note payable. Wages payable is what we owe to our employees for their, for their everyday work. On earned revenue is when a customer pays us in advance and we’re going to provide service to them in the future. That’s a liability. Even though we see the word revenue because of the word on earned, it tells us it’s a liability. And again we’ll talk more about these world, these accounts in future lectures, utilities payable for gas, electricity, water, mortgage for your building. There are, if we issue bonds, their bonds payable, there’s pension liabilities is taxes payable and interest payable. So there’s a wide variety of liabilities. Okay? And again, Liabilities are obligations that we have to fulfill by either paying for, providing service in the future. And we have stockholders equity
and in a girl we stages for the first couple of months or so, Jacksonville CPA we simply have to primary accounts the first account we call common stock, it’s also called capital stock. Alright. And this is when the person who would, the owner, who starts a business and they choose to incorporate, they put money in a separate bank account and we call this the economic entity concept where they take money out of their personal funds and they put it into a new business checking account. Okay. And they issue shares of stock to themselves and that stock indicates ownership. Now they may attract money from other investors, in which case other people would invest in the company and they would be given shares of common or capital stock as well. Okay? So the word equity means ownership. The other account and stockholders’ equity is called retained earnings, Jacksonville CPA which I abbreviate rv quite a bit.
And retained earnings are all the profits that accompany makes for the life of the business that had been reinvested back into the business. Okay. Their earnings that have been retained, retained earnings, the earnings had been retained in the business. Now notice on the slide it says retained earnings includes the following accounts, revenues which increase retained earnings expenses, which decrease retained earnings and dividends, which also decreased retained earnings. Now in your book, I’m assuming you’ve read the information and you have to become familiar with the various definitions. Okay? Revenue is when we provide a service to a customer.
So if you don’t have a Jacksonville CPA and you need someone to help you grow your business and meet your tax and accounting needs then give from a name.
Call were a client and they pay us for that service. So for example, if I’m a tax practitioner, I’m a lawyer, I’m a doctor, I’m on the suse. Any number of services can be provided and customers are willing to pay for this. So when they pay us, they give us cash. For example, cash is an asset, but we keep track of all the work we perform and the dollar value of that service we provided and we call that revenue revenue must be earned. That’s a keyword in accounting earned. Okay, so revenue has to be earned. How do we earn it? We provide the service. Okay. Now sometimes a customer will owe us money and in that case we call it an account receivable. We still keep track of, but we record the transaction and we say, now we have an account receivable. The customer owes us money, but we still count that as revenue. Okay, so think of a scorecard or we’re scoring points. The more service we provide, the more points we are scoring.