Explain for your new business associates how you would do the accounting
Explain for your new business associates how you would do the accounting for this type of business. Using proper terminology and accounting concepts, give a general
Explain for your new business associates how you would do the accounting
You are forming a business with a couple of construction friends who want to build custom homes.
They are good at construction, but do not know anything about accounting.
Using the example of the construction in the PBS tv show “This Old House”:
Explain for your new business associates how you would do the accounting for this type of business.
Using proper terminology and accounting concepts, give a general explanation of the different types of costs involved and make up some sample transactions to record what you see on the tv show.
You can assume the costs amounts and identify anything else you are assuming in order to record the transaction.
What other transactions and costs need to be recorded that you do not directly see on the tv show.
More Details:
You didn’t get into business to be an accountant, so why do you need to know these accounting concepts?
Well, understanding basic accounting concepts can help you make better predictions about your company’s future based on past trends in sales and costs.
This will help you make smarter financial decisions in the long run.
Understanding basic accounting principals will also help you make quick but informed operational decisions on a day-to-day basis.
This will save you time and money — two of your most valuable resources as an entrepreneur.
Even if you’re using business accounting software, it’s important to have a foundational understanding of these concepts.
Finally, having a basic understanding of accounting concepts will ensure you have productive conversations with your financial advisors when planning strategically for your company’s future.