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What is a prepayment? (Definition, Explanation, Journal Entry, and Example)
Definition Prepayment is an accounting term referred to the types of expenses not incurred yet but for which payment is made in advance. As the economic benefits from such resources are not taken yet this is why it is classified as an asset rather than an expense and...
Accrued expense journal entry
Introduction The term “accrued” means “accumulate” or “increase”. As such accrued liabilities mean that the unpaid bills issued to the company are increasing. When the expenses are made by customers, they don’t make cash payments every time. Despite payments being not...
Deferred revenue journal entry
Do customers pay for the goods or services purchased before delivering them? The answer is big YES. If so, the need for knowing about deferred revenue arises. In common parlance, it is called unearned revenue. The revenue becomes unearned when the company receives...
Prepaid expenses journal entry
Introduction Sometimes the companies pay for the expenses in advance before the expenses become due. This may be due to some discount being offered or longer subscription or validity being offered. They haven’t been recorded by the company as an expense, but have...
Notes Payable Journal Entry
Meaning of Notes Payable Notes payable form the largest portion of the current liability section on the company’s financial statements. It represents the purchases that are unpaid by the enterprise. In the cash conversion cycle, companies match the payment dates with...
What is the selling expenses budget? (Definition, Meaning, Example)
Meaning of Selling expense The expenses that are initiated to achieve the objective of making sales such as sales commission, advertising and promotion, and distribution of merchandise to the customer are selling expenses. It has to be noted that distribution costs do...
What is an Accounting Worksheet?
Introduction During the normal course of business, record keeping and bookkeeping tends to be increasingly important in order to ensure that businesses have proper clarity and understanding regarding their financials. It is also considered pivotal because of the fact...
Non-Operating income
Companies conduct various operations while running their business. Some operations are directly aimed at revenue generation while other operations are not related to the company’s main line of operations. Such operations are called non-operating activities and revenue...
Operating income Vs EBIT
Operating Income Operating income is the residual amount of revenue left after deduction of the cost of goods sold (COGS) and operating expenses. It is one of the measures of the profitability of the operations of an organization. It infers investors and owners about...
