The Young Entrepreneur's Guide to Starting and Running a Business by Steve Mariotti

Author:Steve Mariotti [Mariotti, Steve]
Language: eng
Format: epub
ISBN: 978-0-307-81551-4
Publisher: Random House Inc.
Published: 2014-04-29T04:00:00+00:00

LONG-TERM ASSETS

• Building: The Building account has not changed.

• Equipment: Matt purchased more equipment for customizing baseball caps and shirts during the year, so Equipment has risen from $20,000 to $25,000.

Total assets for Matt’s Merch have risen from $300,000 to $330,000. The company has increased its assets, but does that mean that Matt’s Merch has had a successful year? Let’s look at liabilities.

CURRENT LIABILITIES

• Bank Loans: The amount owed to the banks for the loans taken out by Matt’s Merch was reduced from $25,000 to $20,000. Decreasing debt is typically a good business strategy.

• Accounts Payable: The amount owed to the various wholesalers and manufacturers Matt’s Merch buys its hats from decreased from $40,000 to $30,000. Despite adding inventory during the year, the amount owed to suppliers decreased. This shows that Matt made a deliberate business decision to find suppliers who could offer him better prices.

• Sales Tax Payable: Matt’s Merch collects sales tax for the state from its customers on every sale. It then makes payments to the state. Matt’s Merch paid some of its taxes, which decreased the amount it owes the state from $5,000 to $2,000.

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