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5 Accounting Frequently Asked Questions Answered

Do you have questions about accounting? You’re not alone. Many people find accounting to be complex, especially when it comes to the tax code. In this post, we will answer five of the most commonly asked questions about accounting. We’ll help you understand bookkeeping, financial statements, and more!

Do you need an accountant?

accounting blogGenerally, businesses will need an accountant when they reach a certain level of complexity. This is because accounting can be time-consuming and requires knowledge of the tax code. However, there are many software programs that can help with bookkeeping and financial statements. If you’re just starting out, you may be able to handle your own accounting. But as your business grows, you’ll likely need to hire an accountant or bookkeeper.

What is double-entry bookkeeping?

Double-entry bookkeeping is a system in which every transaction is recorded in two accounts. This helps to prevent errors and provides a better record of transactions. In double-entry bookkeeping, there are five main accounts: assets, liabilities, equity, income, and expenses.

How do I find my break-even point?

Your break-even point is the level of sales at which your business covers all of its costs. To calculate your break-even point, you need to know your fixed costs and your average variable costs. Fixed costs are expenses that remain the same regardless of how much you sell, such as rent or insurance. Variable costs are expenses that change based on how much you sell, such as materials or labor. Once you have these figures, you can use the following formula to calculate your break-even point:

Break-even point = Fixed costs / (Price – Variable costs)

For example, let’s say your fixed costs are $50,000 and your variable costs are $20 per unit. If you’re selling your product for $100 per unit, your break-even point would be 500 units.

What are my financing options as a business owner?

accounting blogThere are many financing options available to business owners. These include loans, lines of credit, and credit cards. You can also raise money through equity financing, which is when you sell a portion of your business in exchange for investment capital.

What accounting records should I keep?

You should keep detailed records of all your income and spending. Receipts, invoices, bank statements, and canceled checks are all examples of this. These records will assist you in preparing financial statements and filing your taxes.

We hope this post has answered some of your questions about accounting! If you have any further questions, be sure to consult with an accountant and contact us today!

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