Inventory is the primary source of revenue for companies that sell physical goods and products. These companies manufacture or purchase items and sell them to customers. During this process, companies must track the goods available for sale. One of the systems that companies can use to do so is the …

A budget is a monetary plan for an upcoming period. It can also help forecast financial performance and position. Usually, companies prepare a budget for every financial period. Once created, companies can use it as a tool to control performance. Companies can use various types of budgets for different areas …

The SEC or Securities and Exchange Commission defines a prospectus as, “A formal document that is required by and filed with the SEC when securities are first offered for public sale. A prospectus includes information about the offering, such as the price of the security, the risks involved, and the …

What is an Endorsement? The term endorsement refers to signing a negotiable instrument to transfer the rights in the future. It includes writing a party’s name on the back of that instrument or other documents attached to it. Usually, there are two parties to an endorsement. The endorser is the …

An employment contract specifies the salaries or wages employees receive for their work. However, the actual amount they get may differ from that amount. Employees may wonder why the payment varies from the one mentioned in the employment contract. Therefore, it is crucial to understand how this difference generates and …

A company allows shareholders to buy its stock to give them partial control over its operations. Once shareholders own enough shares in that company, they hold a controlling interest. Usually, this interest comes with having enough voting stock shares. Sometimes, it may not be necessary, as in variable interest entities. …

The Federal Home Loan Banks (FHLBs) are a group of federally-chartered banks that provide liquidity and credit support to member institutions, which include commercial banks, thrifts, and credit unions. The FHLBs were created in 1932 in the aftermath of the Great Depression to ensure that there was a reliable source …

In business or investing, debt is a very common type of financing arrangement in which one party (the creditor, often a financial institution) loans another party (the debtor) a sum of money with the expectation that it will be repaid. Debt covenants are also a type of agreement between the …

To make a business budget, you need to understand your overhead costs. Every business has some kind of cost that is not related to making or selling a product or service. These costs are called overheads. Overheads are crucial for businesses because they must be recorded and paid regardless of …

When a bank makes a loan, it is not just giving away money. It is also taking on the risk because there is always the possibility that the borrower will default on the loan. To protect itself against this risk, a bank sets aside money to cover potential losses. This …