Managing assets is a crucial part of any business, as assets are the resources that a company uses to generate revenue. Companies need to know what assets they have and how long they will be useful for. Without identifying and cataloging assets, companies cannot make plans for their future. In …

Accounting standards are a set of rules and practices that dictate the accounting process in a company. These standards guide companies in recording and presenting financial information. While these standards are crucial, some accounting principles also dictate the process. These principles apply to all companies and cover the accounting process …

Companies usually receive compensation for their products and services after delivery. In some cases, they may also charge the customer simultaneously as they deliver. However, some companies also receive advances for products and services that they will supply later. Accounting standards require companies to record these revenues as unearned revenue. …

Companies use assets to generate revenues. Usually, they include fixed assets, which are crucial to running operations. Most of these assets contribute to the production of goods or services. However, some assets may also be critical in running the administrative side of the business. One of those assets includes office …

When companies incur an expense, they record it in the income statement for that year. However, the same does not apply to costs borne on assets. More specifically, when companies acquire fixed assets, they cannot charge it as an expense. Instead, they must spread these costs until they use those …

Companies prepare four financial statements, which are crucial in describing their operations. These financial statements include records of the company’s activities from the past. Usually, they consist of the balance sheet, income statement, statement of cash flows, and statement of changes in equity. These statements consist of records, each represented …

Nowadays, there are multiple ways to account for your business’s finances. Each of them is used for different purposes and serves a specific set of needs. Some people use one type of accounting over another simply because that is the way their accountant told them to do it. The two …

Companies offer credit sales, allowing customers to pay for products and services later. Companies record sales made on credit as accounts receivable. Later, they account for any repayments from customers as a reduction in that account. Sometimes, however, customers may also fail to repay their suppliers. In those cases, companies …

Companies attract customers through their products and services. In addition to those, companies also provide other packages or incentives. These incentives come through the provision of credit terms and incentives. On top of these, companies also offer discounts that promote more sales. Usually, companies provide two forms of discounts, namely …

The income statement details a company’s financial performance. This statement includes revenues and expenditures. Based on those items, it calculates several types of profits. However, it must categorize expenses into several categories depending on their nature. One of these classifications includes the cost of goods sold. What is the Cost …