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Also called doubtful debts, bad debt expenses are recorded as a negative transaction on your business’s financial statements. In accrual-basis accounting, recording the allowance for doubtful accounts at the same time as the sale improves the accuracy of financial reports. The projected bad debt expense is properly matched against the related sale, thereby providing a

For example, if it takes five years to recover the cost of an investment, the payback period is five years. The term payback period refers to the amount of time it takes to recover the cost of an investment. Simply put, it is the length of time an investment reaches a breakeven point. The table

However, special circumstances can affect the meaningfulness of the current ratio. For example, a financially healthy company could have an expensive one-time project that requires outlays of cash, say for emergency building improvements. Because buildings aren’t considered current assets, and the project ate through https://www.simple-accounting.org/ cash reserves, the current ratio could fall below 1.00 until

However, special circumstances can affect the meaningfulness of the current ratio. For example, a financially healthy company could have an expensive one-time project that requires outlays of cash, say for emergency building improvements. Because buildings aren’t considered current assets, and the project ate through https://www.simple-accounting.org/ cash reserves, the current ratio could fall below 1.00 until

While the use of the company’s proprietary software can work well for newly established businesses, it can be difficult to switch from this system over to another accounting software such as QuickBooks or Xero. Furthermore, the lack of add-on services such as payroll and bill pay may be a dealbreaker for some users who require