Understanding the world of taxes can often seem like a daunting task. The term “Value Added Tax” or VAT may have been heard so many times. It’s a critical piece of tax in the financial puzzle, affecting both businesses and consumers. Understanding how it works can offer clarity on its …

Investors invest in a company or business to get returns. Usually, these returns come from the entity distributing its resources to those investors. In accounting, it falls under distribution to owners. What is Distribution to Owners? Distribution to owners, commonly known as dividends or drawings, refers to the allocation of …

Navigating the world of taxes can be a challenge. Among these, one term often stands out – Ad Valorem Tax. It’s a key player in many financial circles, influencing decisions in businesses and personal finances alike. Understanding this tax type can help in better financial planning. Most people get confused …

Companies obtain finance from various sources. Each source comes with its costs. For debt, companies must incur expenses, such as underwriting, legal and professional, and credit rating agency fees. These expenses fall under debt issuance costs. What are Debt Issuance Costs? Debt issuance costs, also known as debt issuance fees …

Money factor is a lesser-known term in the finance world. However, when it comes to financing and leases, it’s an important concept to understand. Money factor affects how much is paid in total on any loan or lease, so knowing about the money factor can help save money over time. …

When a sale transaction occurs, companies must document it in their records. Usually, the bill or receipt provided to a customer during a cash sale serves as that document. However, the same does not apply to credit purchases. In this case, companies issue a billing statement. What is a Billing …

Every head in the financial statements has underlying accounts that constitute the sum. These accounts come from the financial system where companies accumulate their business transactions. However, companies need a proper structure to organize these accounts. Therefore, they use various titles to establish the names of these accounts. What is …

When it comes to managing finances, finding ways to minimize tax liabilities is a key strategy for individuals and corporations alike. Taxation is a complex world, but there are tools to help navigate it effectively. One such tool is the tax shield – a powerful yet often overlooked financial instrument …

During an audit engagement, auditors require financial records to have specific characteristics to be considered auditable. This ability falls under the scope of auditability. What is Auditability? Auditability refers to the extent to which financial records, transactions, processes, and systems are organized, structured, and documented such that it allows auditors …

Liabilities and obligations are the most common aspects of any organization be it small or big. This is why it’s important to take into account certain provisions to protect the organization and its members from any unforeseen circumstances or potential risks. This is where the clawback provision comes in – …