ATV Florida Forum

I was wondering if there was any CPA on ATV Florida, I was hoping to ask an accounting question.  Probably an easy one but I am not sure. 

I am not a CPA yet but I work for an accounting firm.  I could probably help you as long as its not a tax question.

ok here it goes (these numbers are just easy numbers not real ones)

I started my business with $40,000 in my account. 5 months later my net says I have a negative $5000. My account has gone down from $40,000 to $10,000. I would have thought it would say negative $30,000 net, to explain my 30,000 lost in my account. My quick books was set up by a CPA (for about $2000) and I have a very experienced employee handling data input. My question is, why is my net negative 5,000 instead of negative 30,000? I am sure there are 100's of explanations why I guess I am trying to figure out what IS NOT reflected on the P&L. I use to use the P&L to set my mind at ease but I am not sure anymore. Oh the reason I am not asking my CPA it just simply cost to much to talk to him. Thank your time and any info on the subject!

[quote aut link=topic=27772.msg337910#msg337910 date=1190241664]
I was wondering if there was any CPA on ATV Florida, I was hoping to ask an accounting question.  Probably an easy one but I am not sure. 
[/quote]'

   I think JACKL is one :D  lol   jk.

Ok, I am just going to see if I understand this correctly.  You started with $40,000 cash in a bank account and five months later your bank account says $10,000.  Your bottom line on the P&L says you have a net loss of $5,000.  You are wondering why your cash account has gone down by $30,000 and the P&L says you only have a loss of $5,000.  If this is correct, then one possible reason why is that some of the items that you may have purchased with the $30,000 do not necessarily represent expenses in the P&L.  For example, if you were to purchase a computer for $1,000, it would not be considered an expense but would be "capitalized" and recorded as an asset.  So you would see $1,000 come out of your cash account and the other side of the accounting entry would be to increase an asset account.  Thus it would not be an expense and you would not see it in your P&L.  Let me know if this answers your question. 

yes it does, thank you, now i have to look at more than my P&L to get an idea if i am floating or sinking LOL the balance sheet confuses the crap out of me LOL

No problem.  I know this stuff can be really confusing.  If you have any other questions feel free to ask.

thanks if i think of anything i will let you know, its past my bed time for me LOL talk to yall later

Taken seperately, they (the balance sheet and the income statement) are meaningless.  To understand the full picture, they must be considered at the same point in time.  Another issue not addressed in most financials (since most small businesses use simple cash basis accounting) is WIP, or Work In Progress.  Do you have projects you are in the middle of or projects that are completed that you haven't billed yet or, more appropriately, been paid for?  I don't know what your line of business is but WIP can be quite substantial.  I would recommend enrolling in a basic accounting class at your local community college or adult education programs at the high school.  It will be 6 to 12 weeks well spent and you just might be in a position where you aren't scratching your head when you run your end of period reports on QuickBooks.

Check your long term and short term assets and liabilities, moving one from long term to short term can make a huge diff in you P&L statement.

I'm not a CPA but I did stay at a Holiday Inn express last night. :D

LOL yea I need to do something, things are not looking good, in the past few months I feel like I have aged 20years

You have to be careful with a move like that.  The IRS dictates certain depreciation schedules for various classes of assets.  You cannot arbitrarily move one to the other.  Before making any adjustment that would affect the amount of taxes you pay, it would be exceedingly wise to consult your accountant.