What is Deferred Rent? Deferred rent usually arises when a rent agreement grants a tenant free rent for one or several periods. In most cases, this period falls at the start of the lease agreement between the tenant and landlord. Accounting standards require companies to record this transaction as deferred …

Companies use various costing techniques to derive the cost of their products. Once they do so, they can apply a markup or margin to that cost to determine the sale price for a specific item. However, companies may also work with fixed prices in the market to stay competitive. It …

When it comes to financing, the Rule of 72 is a quick way to estimate how long an investment will take to double, given a fixed annual rate of return. The rule is useful for comparing the doubling time of different investments. It is also a good way to see …

Accounting principles define an expense as an outflow of economic resources during a period. Although it may sound adverse, expenditure is crucial to running any business. Most companies incur expenses in various areas, which they charge for a specific period. These items become a part of the income statement and …

Most industries follow a continuous production cycle. Consequently, companies follow a process throughout the year without much modification to their work. Process costing is the primary technique to determine product or service costs in these companies. However, some industries do not follow the same continuous system to serve clients. Companies …

When it comes to goods and business operations in a country, certain organizations dominate the scene. These are known as multinational corporations (MNCs). MNCs are large companies that have their origins in one country but operate in many other countries as well. They usually have a network of subsidiaries and …

Accounting is a field that involves collecting, analyzing, summarizing, recording, and reporting financial transactions. It includes branches that apply to various areas. One of these branches includes public accounting, which is a prevalent field. It is one of the most prominent forms of business based on accounting services. Therefore, it …

Companies prepare financial statements to report on their finances to their stakeholders. Usually, the balance sheet and income statement get preference because they include crucial information. However, companies also prepare two other reports, including the statement of cash flows and the statement of changes in equity. Although often overlooked, the …

In business or investing, debt is a very common type of financing arrangement in which one party (the creditor, often a financial institution) loans another party (the debtor) a sum of money with the expectation that it will be repaid. Debt covenants are also a type of agreement between the …

What is a Trial Balance? The trial balance is a part of a company’s internal records used to prepare the financial statements. It gets its information from the balances reported in the general ledger accounts. Usually, the trial balance includes both income statement and balance sheet items. However, some versions …