The current portion of long‐term debt represents cash outflows that companies must pay within one year from the balance sheet date. If having no enough money, the company has a high risk of default.Definition of the current portion of long‐term
Investing Fundamentals
Accounts Payable: Meaning, Importance, How to Analyze
Analysts are often keen to examine the accounts payable relative to the purchase. It gives them an insight into the company's relationship with its suppliers. Leeway to delay payments is a source of liquidity for the company.Accounts payable
Notes Payable: Definition, Its Reporting
On the balance sheet, you can find the notes payable account in the liabilities section. It may exist in the current liabilities section or, in the non-current liabilities, depending on their maturity.Notes payable definition Notes
Expense: Meaning, How It Reported in The Financial Statements
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
Cash and Cash Equivalents: Meaning, Importance
Cash and cash equivalents are cash plus short-term investment instruments that you can immediately cash and have minimal risk of changes in value. You can find this account in the top row of assets on the balance sheet.What are the components of
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 Criteria
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