Expense is the cost of providing goods and services. In accounting, it represents an outflow of resources from a company during an accounting period. That includes purchasing raw materials, paying rent, wage labor, depreciation, and marketing and
Financial Statement Analysis
Revenue: Types, How To Calculate and Report It
Revenue is money earned by an organization. Businesses get it by selling products. The government receives it through tax collection. That's why I don't use the word "product sales" because, in the case of the government, they don't sell
Financial Reporting: Importance, Effective CriteriaÂ
What's it: Financial reporting refers to documenting and providing financial information to stakeholders. Companies prepare and present financial reports regularly, usually quarterly and annually. While the annual financial
How to report four types of accruals in the financial statements?
I mean, the four types of accruals in a financial statement are:Unearned revenueAccrued revenuePrepaid expensesAccrued expenses What are accruals? Why does it matter?Two methods in reporting revenue and expenses are accrual and
Accrual Accounting: Meaning, Examples, Pros, Cons
Accrual accounting is an accounting method by which companies recognize revenue when earned and record expenses when incurred, regardless of the time of cash. In other words, a company can recognize revenues and expenses even though it has not
Double-Entry Accounting: Meaning, Examples
Double-entry accounting is the transaction bookkeeping principle for which hold accounting equation remains balanced. For this reason, each transaction will affect at least two accounts.The accounting equation states that assets are the sum of
Investing Activities: Meaning, Components, Why It Matters
Investing activities are business activities related to growing a business and bringing profits to the company in the long term. It involves buying and selling long-term assets and other business investments. When adding a new machine, for example,
Financing Activities: Meaning, Components, Why It Matters
Financing activities covers business activities related to the company's capital structure. These activities include transactions involving changes in owner's equity, long-term liabilities, owner's equity, and short-term loans. The transaction
Accounts Receivable: Meaning, How to Report and Analyze It
Accounts receivable, or sometimes called trade receivables, is the amount owed by customers for the purchase of goods and services on credit. In other words, this account appears when the company has provided products or services but has not received
Operating Activities: Meaning, Importance, How It Is Reported
Operating activities refer to the main business activities directly related to the supply of goods or services. Examples are manufacturing, distribution, marketing, and selling activities for products or services.Why is cash flow from operating
Goodwill: Meaning, Examples, Types, How It Is Reported
Goodwill is the excess of the acquisition cost over the fair market value of the net assets. This intangible asset arises when a company acquires another company and pays a premium above the fair market value of the target company.For example,
Completed-Contract Method: Meaning, How to Calculate It, Impacts
Completed-contract method is a revenue recognition method in which the company does not recognize revenue and profits until the contract is complete. This method is common in long-term contracts such as construction, which often face uncertainties