Say Robert runs a jewelry shop and uses the LIFO costing method to manage his inventory. Later, he chooses to buy another 50 silver necklaces, but this time, the price has gone up to $30 per item. Inventory accounting is a useful and profitable tool for keeping a track of your inventory and maximising its […]

Inventory turnover measures how often a company replaces inventory relative to its cost of sales. In this case, we would estimate that The Home Depot turns its inventory about once every 73 days. Inventory for a retailer or distributor is the merchandise that was purchased and has not yet been sold to customers. A manufacturer’s […]

For businesses in manufacturing, establishing and monitoring an overhead rate can help keep expenses proportional to production volumes and sales. It can help manufacturers know when to review their spending more closely, in order to protect their business’s profit margins. The overhead rate is a cost allocated to the production of a product or service. […]

First, a department that needs to order materials creates a purchase requisition form. This form notifies the purchasing department that supplies are needed. The purchasing department can approve, alter, or deny the request from the other department. If the order is approved, the https://simple-accounting.org/ purchasing department will create an order. Further, the inventory cycle of the business […]

However, because it only analyzes the extreme high and low numbers and removes the influence of any outliers, the formula does not take inflation into account and produces a very imprecise estimate. Because of the ease with which the high-low method can be used to get insight into the cost-activity relationship, it does not take […]

You should only ever charge your clients fees directly related to their account. We don’t recommend building your business off the back of your credit card. The interest rates are high, limits are often lower than other forms of credit, and they’re easily mismanaged. Your checking account is self-explanatory — its primary purpose is managing […]

If you’re depositing a check or cash at an ATM, check that the ATM accepts deposits and whether you’ll need an envelope to keep your deposit slip and money together. If you’re making a remote deposit with your mobile device, you typically don’t need to use a deposit slip. At most banks, you’re already logged into […]

Also known as a debit memo or a debit note, debit memorandums are commonly used in financial transactions. A debit memo is common in the banking industry in several situations. For example, a bank may issue a debit memo when it assesses fees. When a seller issues a debit memo, the seller is required to […]