In business, there’s a critical process called the Working Capital Cycle. It’s like the heartbeat of a company, keeping everything running smoothly. This cycle is a key part of how businesses manage their money and keep operations going. Understanding it can unlock insights into a company’s financial health. It is …

Reversing entries are crucial adjustments that companies make in every fiscal period. Therefore, it is critical to understand what they are and how they impact accounting. What are Reversing Entries? Reversing entries in accounting are adjustments made at the beginning of a new accounting period to counteract the impact of …

When it comes to running a profitable business, both internal and external analysis are crucial. However, external analysis plays a more significant role as it deals with understanding the market and identifying potential opportunities and threats for the business. By understanding the external factors that could affect the company, businesses …

The cash flow is one of the four primary financial statements in accounting. Typically, companies prepare it using the indirect method. However, there is an alternative presentation known as the cash flow statement direct method. What is the Cash Flow Statement Direct Method? The cash flow statement prepared using the …

In business, the cost and benefit is an important aspect that must be considered when making decisions. Marginal analysis is a tool that helps decision-makers evaluate the additional costs and benefits of a certain action or decision. The concept of marginal analysis can be a very useful tool in understanding …

Companies require assets to generate revenues and run operations. However, not all of those resources may be essential for a company’s activities. Operating assets help run operations and build a company. Therefore, it is crucial to understand what they are. What are Operating Assets? Operating assets are the essential tools …

Running a successful business requires a healthy cash flow and a positive balance sheet. However, it is common for businesses to experience periods of negative cash flow, where the company’s expenses exceed its revenue. This can be due to various reasons such as seasonal fluctuations, unforeseen expenses, or market changes. …

As companies grow, the size of their operations and segments increases. Accounting standards may entail reporting these segments separately. However, the requirements may differ between different accounting frameworks. Segment reporting is a crucial aspect of accounting, especially for larger companies. Therefore, it is critical to discuss it. What is Segment …

When it comes to economics, it’s impossible to ignore the impact of unemployment. One particular type of unemployment, often overlooked yet significant, is frictional unemployment. This idea sheds light on the job market, giving a new understanding of employment dynamics. It’s not about job absence or economic downturn – rather, …

A general ledger is an accounting record summarizing financial transactions for a specific account. However, companies need more information than that provided in this ledger. Therefore, they may use a supplementary record to back it up, known as the subsidiary ledger. What is a Subsidiary Ledger? A subsidiary ledger is …