A balance sheet is a financial statement that includes account balances from accounting systems. It classifies those balances under three categories, assets, liabilities, and equity. Primarily, it follows the accounting equation. This equation states the total of assets should equal the total of liabilities and equity. Therefore, the balance sheet …

Fiat is a Latin word that translates to “it shall be” or “let it be done.” Fiat money or Fiat currency is a common term used to describe a government-issued currency that is not backed by a physical commodity. It lacks intrinsic value, and its value is based only on …

The accounting process involves various stages. The starting point within this process is a transaction. Once a company participates in this transaction, it must record it in the books of prime entry. Consequently, it reaches the general ledger, which helps prepare the trial balance and financial statements. The general ledger …

Most companies offer credit sales allowing customers to purchase goods and pay later. This process also involves a credit term that defines the time limit for the customer to repay their debt. Usually, customers settle these debts before that term. However, some customers may delay their payments. Companies may use …

To make a business budget, you need to understand your overhead costs. Every business has some kind of cost that is not related to making or selling a product or service. These costs are called overheads. Overheads are crucial for businesses because they must be recorded and paid regardless of …

Audit procedures allow auditors to check various assertions. These assertions may relate to account balances or a class of transactions and events. Similarly, it entails collecting audit evidence that auditors can use to form a conclusion regarding the subject matter. One of the most common audit procedures auditors utilize within …

The term audit expenses may refer to two areas. The first includes the examination of expenditures within a company performed by auditors during the auditing process. On the other hand, it may also represent the costs associated with the auditing process. The former area relates to auditing, while the latter …

Every industry has a different level of competition that it faces. The level of competition that an industry experiences is determined by the number and size of firms in the market, the similarity of products, and the ease with which new firms can enter the market. Monopolistic competition is a …

Most people associate the word auditing with external audits. This process involves examining an entity’s financial statements. Based on that assessment, auditors reach a professional conclusion about the subject matter. These auditors are not the employees of the entity under consideration. However, audits may also occur internally, known as internal …

Auditing requires auditors to collect audit evidence which they can use to reach an audit conclusion about the subject matter. Usually, this process entails checking an entity’s records and ensuring they match the figures reported in the subject matter. However, auditors cannot examine every piece of evidence due to constraints. …