Mike Piper > Quotes

“Accumulated Depreciation is what’s known as a “contra account,” or more specifically, a “contra-asset account.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“For every transaction, a journal entry must be recorded that includes both a debit and a credit. Debits increase asset accounts and decrease equity and liability accounts. Credits decrease asset accounts and increase equity and liability accounts. Debits increase expense accounts, while credits increase revenue accounts.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Intangible assets are real, identifiable assets that are not physical objects.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Prepaid Rent is an asset account. Over the course of the three months, the $4,500 will be eliminated as the expense is recorded. Assets caused by the prepayment of an expense are known, understandably, as “prepaid expense accounts.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“LLCs are allowed to elect S-corp taxation by filing Form 2553.”
― Mike Piper, LLC vs. S-Corp vs. C-Corp Explained in 100 Pages or Less

“time. The trial balance is typically prepared at the end of a period, prior to preparing the primary financial statements. The purpose of the trial balance is to check that debits—in total—are equal to the total amount of credits. If debits do not equal credits, you know that an erroneous journal entry must have been posted. While a trial balance is a helpful check, it’s far from perfect, as there are numerous types of errors that a trial balance doesn’t catch. (For example, a trial balance wouldn’t alert you if the wrong asset account had been debited for a given transaction, as the error wouldn’t throw off the total amount of debits.) Chapter 8 Simple Summary For every transaction, a journal entry must be recorded that includes both a debit and a credit. Debits”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“inventory-valuation method is used. The three most-used methods are known as FIFO, LIFO, and Average Cost. Under GAAP, a business can use any of the three.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Liquidity ratios are used to determine how easily a company will be able to meet its short-term financial obligations.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Whenever an expense is recorded prior to its being paid for—such as in the above entry—the”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Assets Under Management” Advisors Many people claim that the best advisor is one who is paid as a function of your account size (i.e., your “assets under management” or “AUM”). AUM fees tie the advisor’s interests to yours—or so goes the claim. What they really do is tie the advisor’s interests to your account size, not to your overall financial well-being. For the most part, this is not a problem, but it does present a conflict of interests whenever the most appropriate thing for you to do is liquidate a part of your portfolio (for example, to pay down your mortgage, delay claiming Social Security, or buy a piece of real estate).”
― Mike Piper, Can I Retire?: How Much Money You Need to Retire and How to Manage Your Retirement Savings, Explained in 100 Pages or Less

“These financial statements are compiled using information found in the general ledger, which is, essentially, the collection of all of a business’s journal entries.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The business must file Form 2553 along with Form 1120S (the form for an S-corporation’s annual tax return) no later than six months from the date Form 1120S would have been due for that year, No shareholder of the corporation can have reported his or her income for the year inconsistently with the S-corp election, and”
― Mike Piper, LLC vs. S-Corp vs. C-Corp Explained in 100 Pages or Less

“A trial balance is simply a list indicating the balances of every single general ledger account at a given point in time.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“That’s why, with each transaction, entries will be recorded to two accounts.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Debits and credits are simply the terms used for the two halves of each transaction.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“debit (or credit) to an account may increase it or decrease it, depending upon what type of account it is: A debit entry will increase an asset account, and it will decrease a liability or owners’ equity account.          A credit entry will decrease an asset account, and it will increase a liability or owners’ equity account.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Assets = Liabilities + Owners’ Equity”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“With double-entry accounting, each transaction results in two entries being made. (These two entries collectively make up what is known as a “journal entry.”)”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“the goal of GAAP is to ensure that companies’ financial statements are prepared using a consistent set of rules and assumptions so that they can be compared to those of another company in a meaningful way.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Dividends: Not an Expense!”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“XYZ Consulting takes out a loan with its bank. The loan will not appear on the income statement, as the transaction is neither a revenue item nor an expense item. It is simply an increase of an asset (Cash) and a liability (Notes Payable). However, because it’s a cash inflow, the loan will appear on the cash flow statement.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Reduce the likelihood of investment mistakes, such as panicking and selling an investment at the wrong time,”
― Mike Piper, Can I Retire?: How Much Money You Need to Retire and How to Manage Your Retirement Savings, Explained in 100 Pages or Less

“key is”
― Mike Piper, Investing Made Simple: Index Fund Investing and ETF Investing Explained in 100 Pages or Less

“Interest or dividends received from investments, and”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The statement of retained earnings acts as a bridge between the income statement and the balance sheet. It takes information from the income statement, and it provides information to the balance sheet.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“First, there are often differences in timing between when an income or expense item is recorded and when the cash actually comes in or goes out the door. We’ll”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“The difference between quick ratio and current ratio is that the calculation of quick ratio excludes inventory balances.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“This transaction could be recorded as a journal entry as follows: DR. Equipment   40,000          CR. Cash            40,000 As you can see, when recording a journal entry, the account that is debited is listed first, and the account that is credited is listed second, with an indentation to the right.”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less

“Getting a tax ID is absolutely free, and the entire process only takes a few minutes. Simply visit irs.gov, search for “EIN,” and fill out the online application.”
― Mike Piper, LLC vs. S-Corp vs. C-Corp Explained in 100 Pages or Less

“Interest Expense   150          Interest Payable                150”
― Mike Piper, Accounting Made Simple: Accounting Explained in 100 Pages or Less