When using P&L to determine rent, there are three different ways to achieve this. Cash flow is one option, which uses the actual rent paid to create the rent costs. GAAP rent can be used to determine P&L, as well, if the property experiences decreases or increases. However, when using GAAP rent it is important to only do so if the changes are a fixed. The third way is referred to as Effective rent. It is calculated by taking the the base rent and averaging it with any free rent units or properties. The useful thing about using Effective rent is it is reflected on the P&L with increased add, so the bottom line can appear higher.
Short-term debt includes your car and student loans, as well as your credit cards and other forms of debt. Essentially everything except for your mortgage. You need to list all your outstanding liabilities and their respective minimum/monthly payments. Now add up the minimum/monthly payment amounts and you come up with a figure.
That means, if the husband has better understanding then he should shoulder the responsibility and vice versa. But the catch is; how do we determine which one understand financial better?
But you’ll earn something on your investments, right? Of course you will. Burns goes on to show that the higher the return on investment, the less you have to save.
First of all, you need three basic account reports for your business. They are the cash flow examples, profit and loss report and balance sheet. The use of the balance sheet is to show you the worth of your business, your liabilities and your assets in the company for the whole year. You need profit and loss account to keep updated with how much you earn and how much you have spent. Basically, a report that has high profit and low loss is a sign of a growing business. However, if vice versa, you might be having troubles with your business.
DIRECT COSTS: Also called cost of goods sold, cost of sales or job site expenses. These are expenses that include labor costs and materials. These expenses can be directly tracked to a specific job. If the job didn’t happen, the direct costs wouldn’t have been incurred. (Compare direct cost with indirect costs to get a better understanding of the term.) Direct costs are found on the income Statement, right below the income accounts.
When you take out debt, or use the credit line, that influx of cash does not show up in the profit and loss statement. Neither does the repayment of said debt. This is true for bank loans, owner loans, and credit cards. As business picks up, and cash is used to repay this debt, you may show a solid profit on your P&L, but not have anything in the bank. Not to worry, your overall asset picture is better (but that’s on your balance sheet).