Accounting Basics: Current Assets - Accounts Receivable

 Almost as common a term as cash nowadays, accounts receivable is an accounting term meaning amounts owed to a business by other business or customers (individuals or otherwise). An accounts receivable arises anytime when goods are sold but cash is not received immediately; thus when you purchase something for cash at Walmart you are not creating an accounts receivable. If you commit to purchase something (say a lawnmower) and you are offered the option to pay next month, now you have created an accounts receivable on the retailers books.

Unlike a note receivable (to be discussed next), there is generally no signed agreement beyond an invoice for an accounts receivable. They are generally short term in nature (less than a year, if not only a couple months). Because of their short term nature, they are generally listed as a current asset on the balance sheet next after cash.

Accounting Basics: Current Assets - Cash

 Cash is normally the first item listed under Current Assets on the Balance Sheet. What does cash include? Cash includes any deposits available in the bank as well as anything on-hand which might include bills and checks or money orders to be deposited.

Accounting Basics: The Balance Sheet

 One of the fundamental components (for want of a better word) of accounting is the Balance Sheet. The balance sheet is often referred to as a statement of financial position. It can be described as a snapshot that shows the company's financial position at any given moment. Listed in the balance sheet are the company's assets, liabilities and owners equity.

If you view the balance sheet as a two column worksheet, the assets would be in the left column while the liabilities and owners equity would be in the right column. The two columns must be equal.

You won't be able to determine the company's profitability from the balance sheet. What the balance sheet will show is the solvency of the company. Analysts will look at various ratios (i.e. current ratio: current assets / current liabilities) to determine the company's financial well being.

Future entries in my Accounting Basics series will describe each of the components of the balance sheet.

Product Pricing Issues and Strategies

Another good article on BNET (can you tell I like this website). A lot of it is common sense. The helpful thing about the BNET website is how they present the article. It has a very good layout which highlights the main points. This particular article talks about issues and strategies regarding product pricing.

Another Free Office Suite of Products

I haven't looked at this new free office suite called IBM Lotus Symphony; but it looks like it could be pretty good. It appears to be an open suite of products (very universal) and they claim:

"With Lotus Symphony, you can import, edit and save a variety of file formats including Microsoft Office files. You can even export your documents to Adobe® Portable Document Format (PDF). The tools work with computers running both Microsoft Windows and Linux- environments, with support for Apple Macintosh planned for the future."

The suite consists of three products:

1. Lotus Symphony Documents (replacement for Word)
2. Lotus Symphony Presentations (replacement for PowerPoint)
3. Lotus Symphony Spreadsheets (replacement for Excel)

As a former Lotus 1-2-3 user, I'm very interested in these and will have to check them out the first opportunity I get. If anyone has tried them, please comment!

Resume Writing Tip

 Just happened to come across this article on MSN. Some interesting tips on resume writing. Includes a list of 'buzz words' you should avoid on your resume as well as a few what they call 'empty phrases' which should be avoided.

Another Information Security Breach

 Anyone holding such information on the internet should be required to have their systems independently tested on an annual basis. Many company's have audits of their financial records and internal controls. Why not audit the security controls of their network?