Accounting standards require companies to prepare and report financial statements. Usually, these are part of a company’s annual reports. For most companies, it includes the balance sheet, the income statement, and the statement of cash flows. In accounting, these are the mandatory financial statements that every company must prepare and …

Companies use assets to generate revenues. Sometimes, these assets can be long-term, which requires spreading the cost over various accounting periods. In contrast, some can also be short-term, spanning less than 12 months. In this case, the items may not require the same treatment. These assets can also fall into …

Financial statements are reports of a company’s financial position and performance. They provide an overview of a company’s operations over a specific period. Consequently, it allows stakeholders to analyze the company. However, these statements come as a part of a standard package stemming from accounting practices and principles. For some …

Financial statements are written reports of a company’s financial performance and position. These usually consist of the top three ones, the balance sheet, the income statement, and the cash flow statement. As implied by their name, each provides a different aspect of the company’s performance or position. These financial statements …

Return is the income an investor receives on their investment. It can be in the form of fixed income generated from the underlying asset. For example, dividends and interest receipts are a form of fixed income on instruments. However, a return can also come as capital gains or losses. Companies …

Accounting standards require a company to record inventory when the risks and rewards associated with the goods get transferred to it. Sometimes, the company may not be in physical possession of those goods. However, they may still need to record the inventory they have not yet received. In most cases, …

Some companies take up construction projects for internal use. These may include building a fixed asset for future use. Sometimes, this work may not be complete when a company prepares its accounts. Therefore, the company must perform specific accounting treatments to present this work. The process is not complex but …

Assets are the essence of a company’s operations. Every company has fixed assets that help them generate revenues. Unlike other resources, companies cannot charge the cost of these assets to one fiscal period. Instead, accounting standards require them to spread over several periods. This process occurs through depreciation. This expense …

If a company has a cash surplus, it can invest the money in various projects or activities. In most cases, the goal is to increase the returns shareholders get from these projects. Sometimes, though, companies may also invest that money in their own shares. Treasury stock is a common concept …

Most assets depreciate as they near the end of their useful life. While companies account for it using depreciation, they have other costs associated with them as well. Specifically, the more a company uses an asset, the more it becomes prone to wear and tear. However, that does not imply …