When a sale transaction occurs, companies must document it in their records. Usually, the bill or receipt provided to a customer during a cash sale serves as that document. However, the same does not apply to credit purchases. In this case, companies issue a billing statement. What is a Billing …

Every head in the financial statements has underlying accounts that constitute the sum. These accounts come from the financial system where companies accumulate their business transactions. However, companies need a proper structure to organize these accounts. Therefore, they use various titles to establish the names of these accounts. What is …

When it comes to managing finances, finding ways to minimize tax liabilities is a key strategy for individuals and corporations alike. Taxation is a complex world, but there are tools to help navigate it effectively. One such tool is the tax shield – a powerful yet often overlooked financial instrument …

The trial balance is an accounting document with a list of all general ledger debit and credit balances. It comes in many forms. Typically, the term itself refers to the unadjusted version of the trial balance. What is the Unadjusted Trial Balance? The unadjusted trial balance is a critical accounting …

When companies make things, they use different materials like ingredients in a recipe. Sometimes, they use more or less of these materials than they thought. This can happen for various reasons, like mistakes, changes in how things get produced, or even the quality of the materials. Companies must determine why …

A mortgage is a loan to buy real estate, like a home, where the property is collateral. Borrowers make regular payments over many years, including the loan amount and interest. If these payments don’t occur, the lender can take ownership of the property. The borrower must record the mortgage obligation …

Companies prepare budgets that plan how long it should take employees to produce a specific number of products. However, the actual result may not always be close to that forecast. Therefore, companies must calculate variance to understand why differences exist. One variance they might calculate is for direct labour efficiency. …

A search for unrecorded liabilities is a critical process to assess the reliability and accuracy of a company’s financial statements. This procedure examines various financial records to identify potential liabilities that might have been overlooked or not accounted for. What is Search for Unrecorded Liabilities? Search for Unrecorded Liabilities (SURL) …

Companies must prepare financial statements at the end of each accounting period. The information that goes into these comes from the trial balance. Before that, however, companies adjust the trial balance to reach a post-closing version of this report. What is a Trial Balance? The trial balance is a fundamental …

In financial reporting, certain assets undergo a classification when a company decides to divest them. This special treatment involves changes in presentation and valuation, providing stakeholders with valuable insights into the company’s strategic plans. These resources fall under the definition of assets held for sale. What are Assets Held for …