Posted by Sack Elmaleh Michael on July 17th, 2007 in Accounting ·
Financial accounting strives to answer two basic questions: how did the business do last year, and what did the business own and owe at the end of the year? The answers to these questions are summarized in two basic statements, the income statement and the balance sheet…
Posted by Sack Elmaleh Michael on June 27th, 2007 in Accounting ·
Businesses spend billions of dollars trying to develop new and better products, These outlays are referred to as research and development (R & D) costs. Accounting rule makers have struggled with how best to classify such expenditures. Should they be treated as expenses or assets?..
Posted by Sack Elmaleh Michael on June 18th, 2007 in Accounting ·
Small non-profit organizations are very vulnerable to fraud.When I say small, I mean small: organizations that raise less than $100,000 per year and have only one paid staff person or no paid staff persons. I’m talking about neighborhood associations, sports and recreation leagues and all manner of civic, political and religious groups…
Posted by Sack Elmaleh Michael on May 28th, 2007 in Accounting ·
Sunk costs are usually defined as previously incurred costs that are not recoverable and should not be taken into account in decision making. Here is a slightly modified example of a sunk cost from Jerold Zimmerman’s “Accounting for Decision Making and Control” (Irwin McGraw-Hill):
Example…
Posted by Sack Elmaleh Michael on May 21st, 2007 in Accounting ·
Accounting provides some measure of a firm’s economic efficiency on its income statement. A large net income usually tells us that something has gone right, while a large loss indicates that something is amiss. The same cannot be said about a non profit’s income statements (usually called the Statements of Revenue and Expense)…