Implicit costs are expenses that appear on a company’s balance sheet and represent the opportunity cost of using resources. Unlike explicit costs, which are actual out-of-pocket payments for goods or services, implicit costs do not involve any cash exchange. As such, they can be difficult to recognize and measure accurately. …

Lease agreements are prevalent for properties throughout the world. These agreements involve two parties. Firstly, they include the property owner, also known as the landlord. On the other hand, they also contain the party that leases the landlord’s property, also known as the tenant. Both parties receive benefits from these …

Setting the price for a product or service can be a complicated task. From satisfying customers to staying competitive in the market, there’s a lot to consider. Economy pricing is one strategy that businesses can utilize to achieve their desired pricing objectives. Economy pricing, also known as low-price or cost-based …

Common stock is a type of equity ownership in a company. It is the primary instrument to indicate the shareholders’ rights to a company’s assets. Sometimes, they are also known as ordinary shares. Common stocks have various features, including voting rights, dividends, limited liability, etc. Companies use these instruments to …

The use of physical cash has decreased due to banking and various online alternatives. However, some companies still use petty cash as a regular part of their activities. This practice may be more common in some industries than others, for example, banking. When handling cash, companies may experience discrepancies in …

Financing is an essential component of any business’s operations. It helps to fund new investments, provide capital for expansion and support day-to-day operations. Hybrid financing is an increasingly popular financial instrument that combines the characteristics of both debt and equity. By understanding how hybrid financing works, businesses can gain access …

Depreciation is technique companies use to depreciate assets over their useful life. Usually, it consists of the straight-line method that divides the asset’s cost over that life. However, other depreciation methods also allow companies to comply with the accounting standards’ requirements. They are not as common as the straight-line method …

Accounting principles are guidelines and concepts that form the foundation of accounting practices and financial reporting. Regardless of the accounting standards used, accounting principles play a crucial role in the underlying fundamentals of financial reports. Primarily, accounting principles ensure consistency, accuracy, and transparency in financial statements. One of the accounting …

Budgeted cost is an important metric used by businesses and organizations to set financial goals, manage expenses, and ensure that resources are allocated efficiently. It’s also a key element in project planning as it helps to identify potential risks or areas of overspending before committing funds. Businesses can use budgeted …

Accounting standards require companies to prepare and report financial statements. Usually, these are part of a company’s annual reports. For most companies, it includes the balance sheet, the income statement, and the statement of cash flows. In accounting, these are the mandatory financial statements that every company must prepare and …