Companies incur expenses that are a part of daily operations. These expenses are crucial in running the business and ensuring the generation of revenues over time. In some industries, companies may also incur pass-through expenses. These expenses are not the same as the ones that occur through the usual course …

Companies sell products or services that help generated revenues. For the former category, some companies purchase items to sell them after adding a margin. Some others also manufacture those products. Either way, these companies hold products that they can sell later. These products are known as inventory for the company …

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 …

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 …

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 …

Companies use assets to generate revenues. Sometimes, these assets can be long-term, which requires spreading the cost over various accounting periods. In contrast, some can also be short-term, spanning less than 12 months. In this case, the items may not require the same treatment. These assets can also fall into …

Financial statements are reports of a company’s financial position and performance. They provide an overview of a company’s operations over a specific period. Consequently, it allows stakeholders to analyze the company. However, these statements come as a part of a standard package stemming from accounting practices and principles. For some …

Financial statements are written reports of a company’s financial performance and position. These usually consist of the top three ones, the balance sheet, the income statement, and the cash flow statement. As implied by their name, each provides a different aspect of the company’s performance or position. These financial statements …