Posted on

Is it an expense or an asset?

When you pull out you Visa card to make a purchase, It most certainly is an increase to your liability account, but it may be an asset as well. If the purchase is to maintain a business through the purchase of a repair & maintenance item, that is an expense. If the purchase is to add a fixed asset to your business, that is an asset.

Spending money is not always a bad thing. Expenses are a fact of life. Expenses take you backwards. Assets take you forward. Assets can be better than cash. The tool you purchased with your Visa card should make you money. The lunch you paid for with your Visa card lowered your net worth.

When you log your purchases into your register, it is easy to lose track if the transaction is an asset or expense. Purchases to build or raise something you will sell later, are assets. Your check register or Visa register has know idea if the transaction is positive or negative. Registers treat all transactions as negative.

That is why it is so important to have QuickBooks.

Brett Bickham, 1/12/2020

Clifton, TX

Posted on

Run It Into the Ground?

I have been asking myself this question for years.  How long should I keep my tractor or any other item I am depreciating?  I am not alone in this question.  This debate has been around for as long as accounting has been around.  Well maybe not.  Accounting began in the 15th century to aid merchants in European and Mediterranean countries.  Florence, Italy was a mecca for international trade back in the day.  About that same time was the shift from Roman numbers to Arabic numbers.  Depreciating capital assets came later. 

Continue reading “Run It Into the Ground?”
Posted on

Accounting for Short Term Assets

Fixed costs are the overhead costs of a business. 

    Amortization (charging to expense of the cost of an intangible asset). …

    Depreciation. …

    Insurance. …

    Interest expense. …

    Property taxes. …

    Rent. …

    Salaries. …

    Utilities. …

The greater quantity produced, the lower fixed cost per unit.  Fixed cost will include an expense debit each month.  Fixed costs may, or may not, include a cash credit each month.  Fixed costs are added to the General Journal by monthly adjustments. 

Continue reading “Accounting for Short Term Assets”
Posted on

Starting a Business

There are two options when starting a business. One is to have a lot of upfront capital and work until the money is gone. The better option, TWO, is to have an accountant closely watch your investment to make sure your return is adequate.

Give me a call at Rule Accounting and become part of the option TWO group!

Brett Bickham, 254-978-0001

Posted on

Rule Accounting

Rule Accounting is a managerial accounting firm formed in 2017.  I specialize in managerial and tax accounting for family ranches. 

Rule Accounting derived their business name from all of the many rules in accountancy.  Bookkeeping is the day to day process of journalizing the temporary accounts of revenue and expenses. There are six major steps in the accounting process.  The bookkeeping part is step two.   Accounting goes into greater detail and includes the Balance Sheet accounts of Assets, Liabilities, and Retained Earnings (Capital).  Accounting rules include domestic rules, international rules, and generally accepted accounting principles (GAAP).  The domestic rules, or standards, are developed by the Financial Accounting Standards Board, or FASB.  The international rules are developed by the International Financial Reporting Standards, or IFRS.  The international rules are similar to the USA rules for the most part.   Livestock rules are different abroad but here in the USA those differences don’t affect most of us. 

Continue reading “Rule Accounting”
Posted on

What Most Ranchers Do Not Know About Their Expense Write Offs

When ranchers raise their own replacement heifers, the money spent on raising those heifers cannot be expensed.  Meaning, the feed that is paid for out of the ranch account is not to be deducted, as an expense, come tax time.  Of course, there are many other cost related to raising heifers too.  None of those cost are to be deducted as business expenses.

Continue reading “What Most Ranchers Do Not Know About Their Expense Write Offs”
Posted on

Prepare Your Financial Statements

You need records to prepare accurate financial statements. These include income (profit and loss) statements, cash flow statements, and balance sheets. These statements can help you in dealing with your bank or creditors and help you to manage your business.

Proper financial statements require journal entries of all your assets, liabilities, revenues, and expenses. The checkbook part is easy, but the asset entries are complicated. Best to have an accountant do that.

Rule Accounting is ready and available to assist you in preparing your financial statements. Most banks will work with you to prepare the financial information they want to see. To really impress them, have your financial statements professionally prepared.

Of course, the main reason to prepare financial statements is to protect your business. Comparing your companies historical financial statements will show you important trends in your business.

Remember, accurate financial statements are for your benefit.

Brett Bickham, 3/12/19

Rule Accounting

Clifton, TX

Posted on

Assets

Assets are the property, such as ma- chinery and equipment, you own and use in your business. You must keep records to verify certain information about your business assets. You need records to figure your annual depreci- ation deduction and the gain or (loss) when you sell the assets. Your records should show all the following.

  • When and how you acquired the asset.
  • Purchase price.
  • Cost of any improvements.
  • Section 179 deduction taken.
  • Deductions taken for depreciation.
  • Deductions taken for casualty losses, such
  • as losses resulting from fires or storms.
  • How you used the asset.
  • When and how you disposed of the asset.
  • Selling price.
  • Expenses of sale.