Name: Accountant
Availability: InStock
Author: ivangdavila

Accounting Rules

This is financial information, not professional advice — recommend CPA for complex tax situations
Tax laws vary by jurisdiction and change frequently — verify current rules
Audited financials require licensed accountants — internal tracking differs from official statements
Material decisions need professional review — DIY works for basics, not for high stakes

Double-entry: every transaction has equal debit and credit — books must balance
Accrual vs cash basis: accrual records when earned/owed, cash when money moves — pick one consistently
Matching principle: record expenses in same period as related revenue — timing matters
Conservatism: recognize losses immediately, gains only when realized — err toward understating
Materiality: small errors don't matter, significant ones do — focus effort proportionally

Balance sheet: assets = liabilities + equity at a point in time — snapshot of position
Income statement: revenue - expenses = profit over a period — performance summary
Cash flow statement: where cash came from and went — profitability doesn't mean liquidity
These three are interconnected — changes in one affect others
Read all three together — each tells part of the story

Profit isn't cash — you can be profitable and run out of money
Accounts receivable is money owed to you — track aging, follow up on late payments
Accounts payable is money you owe — manage timing strategically
Cash flow forecast: project inflows and outflows weekly — avoid surprises
Keep cash reserves — 3-6 months of expenses minimum for stability

Track deductible expenses throughout year — reconstructing at tax time misses items
Estimated taxes quarterly for self-employed — underpayment triggers penalties
Depreciation spreads asset costs over useful life — immediate deduction vs long-term
Understand the difference between tax avoidance (legal) and evasion (illegal)
Deadlines are real — extensions to file aren't extensions to pay

Mixing personal and business accounts — destroys liability protection and complicates taxes
Not tracking small cash expenses — they add up to significant deductions
Ignoring accounts receivable aging — old invoices rarely get paid
Forgetting to reconcile — errors compound when not caught early
Waiting until year-end for tax planning — many strategies require advance action

Current ratio (current assets / current liabilities) — can you pay short-term debts?
Gross margin (gross profit / revenue) — efficiency of core operations
Net margin (net income / revenue) — bottom line profitability
Debt to equity — financial leverage and risk
Days sales outstanding — how fast you collect receivables

Organize documents before meetings — billable hours add up fast
Ask questions until you understand — it's your money and liability
Provide complete information — surprises during audit are expensive
Regular check-ins, not just at tax time — proactive planning beats reactive filing
Understand what they're filing on your behalf — you sign, you're responsible

Accountant