Accounts receivables are balances owed to a company by its customers. For the company, it represents an asset that can result in future cash inflows. Usually, companies track how soon they can expect customers to pay as a part of their cash budgets. The duration typically depends on the credit …

Direct expenses are costs specifically and directly attributable to a particular product, project, or department. Companies incur these expenses when producing or delivering goods or services. Therefore, they relate directly to the revenue generated by those goods or services. Companies can understand their cost structure and profitability by tracking and …

Assets under management, commonly referred to as AUM, is a critical metric used in the financial industry to measure the total market value of assets that a particular investment firm manages on behalf of its clients. The AUM encompasses a diversified range of assets, including bonds, stocks, options, and other …

Companies operating in the manufacturing, construction, and consulting industries may use a contract structure for their clients. It allows them to treat each job separately and work on it according to the client’s needs. In accounting, these companies may use a contract account to track these jobs. Therefore, it is …

Direct materials refer to the tangible components or raw materials used directly in manufacturing a finished product. They are physically identifiable and traceable materials in the final product. Similarly, direct materials are a critical part of the production process, as they get transformed with other materials to create the end …

In the world of manufacturing, overhead costs represent a significant challenge for companies. These costs, often referred to as factory overheads, can be defined as indirect expenses incurred during the production process that is not directly attributable to a particular product. While these costs are essential for the functioning of …

Fixed costs are expenses that remain constant regardless of changes in business activity levels or production volume. They do not vary with changes in sales, output, or other business operations and get incurred by a company at a fixed amount or periodic payment. Similarly, they are a crucial component of …

As the business world continues to evolve, entrepreneurs and marketers alike need to be up-to-date on all of the latest tools and tactics. One popular model that is often used in today’s marketplaces is the Business-to-Consumer (B2C) approach. B2C refers to the relationship between companies and end consumers, making it …

Cost behaviour refers to how costs change in response to changes in activity levels or production volumes. It describes the relationship between costs and the company’s activity levels or production output. Understanding cost behaviour is crucial for companies to forecast, budget, manage costs and make informed decisions about pricing, production …

Companies acquire goods or services from others to run their businesses. These items represent the input to their processes which can help produce finished goods. Usually, companies obtain these items through a credit transaction, meaning the settlement occurs sometime after the purchase. Companies must record these transactions in a purchase …