There are a few more items that must be understood regarding financial recordkeeping. First is the method for recording the records. There are two basic methods for measuring transactions: the cash method and the accrual method.
The other main business report is the profit and loss statement. This report is a sum¬mary of the income and expenses of the business during a certain period. Profit and loss statements are sometimes referred to as income statements or operating statements. You may choose to prepare a profit and loss statement monthly, quarterly, or annually, depending on… Read More »
The purpose of the balance sheet is to look at what the business owns and owes on a specific date. By seeing what a business owns and owes, anyone looking at a balance sheet can tell the relative financial position of the business at that point in time. If the business owns more than it owes, it is… Read More »
The purpose of any business financial recordkeeping system is to provide a clear vi¬sion of the relative health of the business, both on a day-to-day basis and periodically. Business owners themselves need to know whether they are making a profit, why they are making a profit, which parts of the business are profitable, and which are not. This… Read More »
Each year, thousands of small businesses fail because their owners have lost control of their finances. Many of these failures are brought on by the inability of the business owners to understand the complex accounting processes and systems that have become relatively standard in modern business. Accounting and bookkeeping have, in most businesses, been removed from the direct… Read More »
The legal forms in this chapter cover a variety of situations that arise in the area of employment. From hiring an employee to subcontracting work on a job, written doc¬uments that outline each person’s responsibilities and duties are important for keeping an employment situation on an even keel. The employment contract contained in this chapter may be used… Read More »
Corporate stock represents the money or property that is invested in a corporation. It is a representation of the share of ownership in a corporate business. When a corporation files its Articles of Incorporation with the state, it states how many shares of stock it will be authorized to issue (for example, 500 shares).
Corporate resolutions are records of official acts of either the shareholders of the corporation or the board of directors. They are a permanent record of actions taken by either of these bodies as a group. In most situations and for most corporations, a majority vote of the directors or shareholders present at an official meeting (as long as… Read More »
The main responsibility of the shareholders of a corporation is to elect the directors of the business. This election is conducted at the annual meeting of the shareholders that is held on the date, time, and place as specified in the corporate bylaws. In addition, specific corporate business at other times of the year may occasionally need shareholder… Read More »
The board of directors of a corporation transacts business as a group. Each individual director has no authority to bind the corporation (unless the board of directors as a group has previously authorized him or her to exercise that power). Even in a corporation with a single director, there must be formal records of meetings and of the… Read More »