When a company sells goods, it must record them as sales. For the companies that offer credit to customers, these also become a part of the accounts receivable balances. Sometimes, however, they may also appear as accrued revenues, which can create confusion. Fundamentally, both are the same due to their …

Costing is an essential part of any business. Whether it is products or services, companies must calculate the cost of their items. Once they can do so reliably, companies can use the information in various decisions. However, determining the actual product or service cost can be complex. Usually, assigning direct …

Every cost-effective business operation must have a healthy operating margin. It not only allows the company to remain financially solvent, but it also permits owners to reinvest in the business. Operating margins are an important financial metric used to measure the profitability of a company relative to its total revenue. …

Warranty is a term often associated with electronics. It represents a promise from the manufacturer about the condition of the underlying product. Usually, it includes compensation to the buyer if that product is defective or doesn’t work as expected. This compensation may come in many ways, for example, repairs and …

Most businesses run on a cycle of purchasing, inventorying, and then selling their products or services. When it comes to purchasing and selling, it is done through a process of credit. This simply means that the seller gets paid after some time, and the buyer pays after some time. To …

Money is undoubtedly the building block of any business. It is essential to every transaction that a company undertakes. Sometimes, companies may also partake in activities that may not have a monetary worth. Although these transactions may be materialistic, they do not hold significance in accounting. If a company cannot …

In a corporate structure, a shareholder or stockholder owns a company’s shares. The shareholder owns rights in the company’s assets for their investment. For the company, finance received from a shareholder constitutes equity, which it must ultimately repay. This finance gets reported on the financial statements as stockholders’ equity. What …

Liquidity is a key thing of concern for every business or individual, especially when it comes to money in a bank account. Cleared balance is the amount of money available to you that has been verified and confirmed by your bank. This means that any deposits and withdrawals have been …

Retailers are intermediaries in a supply chain responsible for delivering a product to a customer. In a given supply chain, retailers are usually the last parties that keep inventory and dispose of it to a customer. Sometimes, they must obtain and hold a significant amount of stock to meet demands. …

Companies often operate from a physical location, which includes land and a building. In some cases, companies may also have manufacturing plants or factories. Mostly, companies own these locations. However, some may also rent or lease property from other parties, known as landlords. The company becomes a tenant in this …