Author: John

Income Statement: Definition, Meaning, Format, Template in Excel, Example, Sample, Formula, Importance

Each financial statement focuses on specific financial information. Often, stakeholders prioritize profitability when analyzing a company’s performance. The primary source of information related to that comes from the income statement. What is the Income Statement? The income statement, or the profit and loss statement (P&L), is a fundamental financial document …

Unearned Rent: Definition, Meaning, Accounting, Journal Entry, Example

Landlords often demand tenants pay them rent in advance. For the tenant, it is a prepayment or asset. However, the landlord must recognize it as unearned rent. Before understanding the accounting treatment, it is crucial to know what unearned rent is. What is Unearned Rent? Unearned rent, or deferred rent …

Capital Addition: What It Is, Meaning, Example, Accounting, Journal Entry

Companies follow a strategy that ensures profitability and future growth. As a part of this strategy, they decide how to run their operations. Usually, it also entails assessing the assets required to run those operations. If needed, companies can go through capital addition to support activities. What is Capital Addition? …

Ad Valorem Tax: Definition, Meaning, Exemption, Formula

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 …

Accounting for Debt Issuance Costs

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: Definition, Calculation, Formula, Example, Meaning

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. …

Billing Statement: Definition, Template, Example, Invoice, Components

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 …

Account Title in Accounting: Definition, Meaning, Example, Importance

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 …