Top-Ranked Personal Finance Software

As we approach a new year, it’s a great time to find good personal finance software to get control over your finances as part of your New Year's resolutions. No matter how well you manage your funds, finding easy-to-use software can help you:

• track and categorize spending
• manage multiple bank accounts
• create and maintain a budget
• manage your debt
• pay bills by sending reminders of when they're due (some even manage your bill payments).

·        1. Keeping It Simple: You Need A Budget

You Need A Budget can be operated from an app on your desktop or using apps on your iPhone, iPad or Android device. The YNAB system is based on four rules.

Rule 1: Give every dollar a job.

Your money shouldn’t tell you what to do. You’re the boss. The drill
sergeant. The maestro. When you earn money, you plan how
you’ll use it, then you follow your plan.

Without Rule One:

You see the $500 account balance, get the false idea that you’re flush with cash, and go out for sushi at your city’s finest for $100.  A few days later some bills come due and you’re in a pinch.

With Rule One:

You have $500 in your checking account.  You give each of those dollars a job by dividing the $500 into various categories:

$150	$10	$40	$100	$200
Food	Eating Out	Gas	Utilities	Car Payment
Total Budgeted: $500

Your friend invites you to go out and get some sushi.
You don’t look at your $500 account balance and say, “Wow, that’s a ton of money! Sure!” You look at your ‘Eating Out’ budget balance of $10, wince, then smile, and invite your friend over to split a $5 pizza.  A few days later some bills come due and you pay them with ease.

What is the difference between the current ratio and the quick ratio?

The current ratio is the proportion (or quotient or fraction) of the amount of current assets divided by the amount of current liabilities.

The quick ratio (or the acid test ratio) is the proportion of 1) only the most liquid current assets to 2) the amount of current liabilities. In other words, the quick ratio assumes that only the following current assets will turn to cash quickly: cash, cash equivalents, short-term marketable securities, and accounts receivable. Hence, the quick ratio does not include inventories, supplies, and prepaid expenses.

To illustrate the difference between the current ratio and the quick ratio, let's assume that a company's balance sheet reports current assets of $60,000 and current liabilities of $40,000. Its current assets include $35,000 of inventory and $1,000 of supplies and prepaid expenses. The company's current ratio is 1.5 to 1 [$60,000 divided by $40,000]. Its quick ratio is 0.6 to 1 [($60,000 minus $36,000) divided by $40,000].



What is the difference between the current ratio and working capital?

The current ratio is the proportion (or quotient or fraction) of the amount of current assets divided by the amount of current liabilities.

Working capital is not a ratio, proportion or quotient, but rather it is an amount. Working capital is the amount remaining after current liabilities are subtracted from current assets.

To illustrate the difference between the current ratio and working capital, let's assume that a company's balance sheet reports current assets of $60,000 and current liabilities of $40,000. The company's current ratio is 1.5 to 1 (or 1.5:1, or simply 1.5) resulting from dividing $60,000 by $40,000. The company's working capital is $20,000 which is the remainder after subtracting $40,000 from $60,000.

What is the difference between adjusting entries and correcting entries?

Generally, adjusting entries are required every accounting period so that a company's financial statements reflect the accrual method of accounting. It is typical for the adjusting entries to be dated as of the last day of the accounting period and to include an income statement account and a balance sheet account.

What is the difference between inventory and the cost of goods sold?

Inventory for a retailer or distributor is the merchandise that was purchased and has not yet been sold to customers. For a manufacturer, inventory consists of raw materials, packaging materials, work-in-process, and the finished goods that are owned and on hand. Inventory is generally valued at its cost. If a business has inventory it is often a major component of its current assets.

What is the difference between FIFO and LIFO?

The difference between FIFO and LIFO results from the order in which changing unit costs are removed from inventory and become the cost of goods sold. When the unit costs have increased, LIFO will result in a larger cost of goods sold and a smaller ending inventory compared with FIFO. If the unit costs are stable, there will be little or no difference between FIFO and LIFO. Also note that the order in which the costs are removed from inventory is independent of the order in which the physical units are removed from inventory.