Eric Gerard Ruiz, CPA

Fixed and variable costs are categories of costs based on activity level. Fixed costs are expenses that don’t change regardless of changes in activity level, whereas variable costs respond directly to activity level changes. Distinguishing between fixed vs variable costs help in determining your business’s contribution margin (CM). Fixed vs Variable Cost Examples The list…

Brex Empower is a platform that lets Brex users request cards and spending limits, pay vendors, and issue reimbursements to employees. This platform comes with every Brex Business Account, free of charge. Our Brex Empower review will focus only on its features as a spend and expense management tool. For information about the provider’s accounts,…

The accounts receivable (A/R) turnover ratio is helpful in managing your A/R and measures how effectively a business collects payment from customers they have extended credit to within a given period―generally one year. Analyzing the A/R turnover should include industry benchmarks to give you a full understanding of whether the company is doing fine at…

Fixed asset accounting is the process of capitalizing the purchase cost, allocating the cost over the asset’s useful life via depreciation, testing the fixed asset for impairment, and removing the fixed asset from the books following a disposal. We go over each in detail and provide examples. 1. Accounting for the Fixed Asset Cost The…

Product and period costs are the two major classifications of costs that have different accounting treatments. Product costs are related to the cost of purchasing inventory for sale or performing a service. Meanwhile, period costs are costs that are not related to production but are essential to the business as a whole. It’s important to…

Direct costs are traceable to a specific product or business component, while indirect costs benefit multiple products or the business in general. Knowing the difference between direct vs indirect costs helps in understanding the business’s cost structure and developing a competitive pricing strategy. Moreover, understanding the nature of costs enables you to determine if all…

Creating a business budget is an important step in planning. A small business budget starts with creating the budgeting process, the operating budgets, such as sales, inventory and purchases, cost of goods sold (COGS), and sales and administrative, and ends with the financial budgets, such as cash, capital, and proforma financial statements. To help you…

When it comes to financial accounting vs managerial accounting, the main differences are the manners of collecting, processing, and reporting information. Users of financial and managerial accounting information also have different goals in analyzing and interpreting this information. In this article, we’ll discuss how these two major branches of accounting differ along seven criteria. Our…

Managerial accounting is an accounting system that aims to provide information to managers and internal users for decision-making. Information obtained from managerial accounting can help management fulfill its planning, organizing, and monitoring functions. While not typically considered a bookkeeping task, small businesses can benefit greatly from a bookkeeper who can perform some basic managerial accounting….

Small business owners can avoid frequent inventory counts and save time by using the gross profit method to estimate inventory. The gross profit method is the easiest inventory estimation technique wherein the company uses historical gross profit rates to determine cost of goods sold (COGS) and estimate ending inventory. By assuming a constant gross profit…

The double declining balance (DDB) method (also called 200% declining balance method or 200DB) computes higher depreciation expense in the earlier years and then declines as it goes nearer the end of the useful life. It is called “double declining” because the depreciation rate is twice the straight-line rate. The double declining balance method formula…

Days payable outstanding (DPO) measures the average number of days from when a company purchases inventory and materials from the supplier until it’s paid. The DPO calculation is: DPO = Number of Days x = Average Accounts Payable  Cost of Goods Sold The formula can easily be changed for periods other than one year or…