Category: ACCOUNTING

Petty Cash: Definition, Meaning, Accounting, Journal Entry, Example

Most companies prefer conducting their cash transactions through banks. However, they also need small sums of money in cash form to pay for insignificant transactions. Companies manage this cash through the petty cash system. This system is prevalent in most companies and businesses. The accounting for the petty cash system …

Average Total Assets: What is, Formula, Calculation, Meaning

Assets are resources owned or controlled by companies and used in operations to generate revenues. They are a part of the balance sheet and appear as a separate section. Since assets are crucial in running a business, they also contribute to various financial metrics. However, they may not be a …

Shareholder’s Equity vs Retained Earnings

Shareholder’s equity is a part of the balance sheet. It represents the equity portion of the accounting equation presented in the financial statement. In most cases, it includes prevalent items such as ordinary stock, retained earnings, and other reserves. Some people may wonder how shareholder’s equity is different from retained …

Operating Income: Definition, Formula, Examples, vs Net Income

Understanding business fundamentals are not as simple as it may first seem. If we only consider income there are different types that we must take into account when trying to get a clear picture of a company’s finances. In this article, we will be discussing operating income, also known as …

Cost to Income Ratio: Definition, Formula, Calculation, Example

Financial ratios are a relative measure of a financial metric to another. These ratios fall under different categories and are essential to evaluating a company. However, some are more relevant in some cases than others. In those cases, users must calculate specific ratios based on the type of investment they …

Debt Service Coverage Ratio: Definition, Formula, Examples

Debt Service Coverage Ratio (DSCR) is a common term used in corporate, government, and personal finance. It’s mostly used to measure the cash flow of a business and gives investors an idea of how well a company can pay its debts. The higher the DSCR, the better. In this article, …

Net of Fixed Assets: Definition, Formula, Examples, on Balance Sheet

The balance sheet presents a company’s assets, liabilities, and equity. Usually, these elements appear after some adjustments to the costs or base amounts. With fixed assets, the presentation occurs net of various figures. This presentation is known as the net of fixed assets. Before discussing the net of fixed assets …

Retainer Fee: Meaning, Definition, Example, Accounting

When it comes to businesses, a retainer fee is one of the most common terms used. The retainer fee is mostly used by small businesses that don’t have enough money to afford a full-time employee. The retainer fee is also used by businesses who want to keep an employee on …