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 …

Companies must allocate indirect costs to products or services to determine their costs accurately. It involves considering expenses not directly tied to specific products or services, such as rent, utilities, and overhead labour. Consequently, this allocation process helps companies include these indirect costs to use in several areas. This process …

It’s no secret that managing a business’s finances is key to its success and well-being. But creating order from the chaos of financial data can be an intimidating task for any entrepreneur or a small business owner. One way to simplify this process is by using fiscal quarters, which are …

Merchandise refers to goods a company purchases or produces for selling to customers. It includes tangible products bought, stored, and sold in the operations. Examples of merchandise include finished goods, raw materials, or inventory items a company acquires to resell for a profit. The above process starts when a company …

Understanding the factors contributing to a company’s financial performance is crucial for assessing its profitability and efficiency. Financial managers, investors, and analysts often analyze various components that impact a company’s financial health. Usually, these components are a part of the DuPont formula. What is the DuPont Formula? The DuPont formula …

A Portfolio at Risk (PAR) is a way to measure how much credit risk there is with loans. It looks at how many loans are not getting paid back on time – this tells us if those loans will be repaid or not. By understanding the PAR, lenders can get …

Accurate cost allocation and determination of the cost per unit are crucial in industries where continuous processes occur. Costing techniques enable companies to accumulate and allocate costs, determine the cost per unit, and report cost information for each production process. Companies in these industries can use process costing to achieve …

NSF checks can disrupt any business, no matter how big or small. Also known as non-sufficient funds checks, these occur when a customer writes a check for an amount greater than what they have in their account. This can cause significant headaches for business owners, leading to lost revenue, extra …

Solvency ratios are financial metrics that measure a company’s ability to meet its long-term debt obligations. They provide insights into a company’s financial strength and ability to repay debts over an extended period. Typically, solvency ratios assess the relationship between a company’s total debt and its equity or assets and …

A budget is a financial plan that outlines the expected income and expenses for a specific period, typically a year. It is a crucial tool that helps individuals and organizations manage their finances effectively and achieve their monetary goals. Similarly, budgets can help these parties monitor their spending, identify areas …