Accounts receivable: Accounts receivable of a company represent the amount that customers owe to the company in respect of the purchase of goods or services on credit. Sales on credit means that the revenue has been earned and recognized in the financial statements in the accounting period, but the payment for it will be received […]
Accounting for Direct Write-off Method (Explanation With Examples) Read More »
Overview: Financial statements present the financial activities and health of the business clearly and concisely. Financial Statements include income statements, balance sheets, cash flow statements, and statements of retained earnings. However, further disclosures are made as per relevant laws, regulations, and as required by the accounting standard that is used. Financial statements record all the
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Overview: Provision for bad debt is the current assets account in the balance sheet that uses to records the provision for bad debt that the entity provides to account receivables that collection likelihood is high. This account is similar to accumulate depreciation that use to records the accumulation of depreciation to show the carrying value
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Accrued revenues and accounts receivable are the current assets that are reported in the balance sheet of the company. Accrued revenues, sometimes called contract assets are the revenues that a company accrued on the basis that they expected to receive from the goods or services that they already provided, but not yet billed. Account receivable
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Overview: Account receivables are the amount owes by other entities or people as the result of purchasing goods or rendering services without making payments at the time goods or services are delivered. This happens when the entity sells its goods or services to the customer. In daily business activities, the customers would love to purchase
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Definition: Operating expenses are the expenses incurred in the entity for its normal operational purposes and activities that generally include both the cost of products or services and sales & administrative expenses. Operating expenses are generally defined when identifying and assessing the theentity’ss operating profits. Like other income statement items, these expenses are recorded in
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Definition: The contribution margin is basically the sales price less variable cost. The contribution margin in percentages is calculated by sales price less variable cost and then divided by sales price. Mostly we use net sales to calculate the contribution. Variable costs are direct costs, including direct materials, direct labor, and other direct costs. The total
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Definition: Net income is sometimes called Net Profit, Bottom Line, or Net Earning. It is the net earnings from the operating activities and other income for a specific period of time. Net Income results from gross profits for the specific period less than their corresponding expenses of the same period. Those expenses are Cost of
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Definition: In accounting, going concerned is the concept that the entity’s Financial Statements are prepared based on the assumption that the entity operation is still operating normally in the next foreseeable period. This foreseeable period normally has twelve months from the ending period of Financial Statements. In order to assume that the entity has no
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Double-entry accounting means at least two entries for every accounting transaction. The practice leads to the balancing act of debits and credits. The double-entry system follows the principle of the basic accounting equation. It leads to the accuracy accounting function where all debits and credits must equal at any given time. There are several types
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