Most companies incur interest expenses for the debt finance they acquire. Sometimes, however, they may also provide funds to other entities. It usually occurs when a company invests in financial assets or securities. In that case, they may also get interest income from the underlying security. What is Interest Income? …

The accrual concept in accounting requires companies to account for expenses when they occur. This requirement allows companies to record those expenses in the same period as they help generate revenues. However, companies may pay for them at a later date. The accruals concept does not consider the settlement relevant …

The accounting for government funds differs from the process for other entities. Usually, this process falls under the accounting standards for government bodies. Government funds may include various types as well. Before discussing the types and accounting of government funds, it is crucial to discuss them. What are Government Funds? …

Debt and asset are two of the most important financial terms an individual or company will use. Both of the terms are used in the calculation of the Debt to Asset Ratio. The ratio is a way to compare what an entity owes to what it owns and can be …

Every company prepares an income statement that shows how it derives revenues from its operations. On top of that, it also reports on expenses related to those activities. Usually, this area includes the operating profits or losses from activities only. After that, the income statement also presents non-operating income and …

To run a successful business, every company should be aware of its Days Sales Outstanding (DSO). This metric measures the average number of days that a company takes to collect its receivables. In other words, it’s a key indicator of how quickly a company is being paid by its customers. …

When companies acquire financial assets, they must report them on their balance sheet. The value for these items initially comes from the costs associated with obtaining them. Later, however, companies must include them at a different amount. Accounting standards dictate what these amounts should be. Usually, this process falls under …

Expenses are a necessary evil, we all have them. You may not think about them every day but they’re always there lurking in the background of your life. They can be overwhelming and stressful if you don’t keep up with them or know what to do when unexpected expenses come …

What is Depreciation? In accounting, depreciation refers to the process of deducting an asset’s cost over its useful life. This method allows companies to spread that cost over several periods. Furthermore, it is also in line with the matching concept in accounting. This concept requires companies to match expenses to …

Keeping the finances in order is a crucial aspect of any business. To do so, it is necessary to have a record of the financial transactions that took place within the business. The trial balance is an important part of this process and focuses on keeping all of the books …