Current Assets Archives - Wikiaccounting

What is the Difference Between Current Assets and Current Liabilities?

The balance sheet is a financial statement that reports various account balances. Companies may combine several items under a single name or report them separately. Nonetheless, they accumulate those accounts to offer a financial picture of operations. The balance sheet is the only financial statement that presents those balances. Similarly, it does not report the …

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What is the LIFO Conformity Rule? Definition, Explanation, and More

Inventories

Companies need revenues to stay in business. Usually, these revenues come from the sales of products and services. While services are perishable, companies can store products and sell them to various customers. These products form a company’s inventory or stocks. For product-based companies, inventories are crucial in generating sales and satisfying customer demand. There are …

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What are Work-in-Progress (WIP) inventories? Definition, Calculation, Example, and More

Inventories

Many companies sell physical products, which constitute their primary income source. Some companies may manufacture these products while others acquire them from an external source. Usually, companies also keep their stock in hand so they can meet customer demand when it arises. These may include raw materials, finished goods, or work-in-progress inventory. Every type of …

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Inventories Costing: Method, Example And More

Financial Accounting, Inventories

Overview Inventory costing is an integral part of inventory control and inventory management. It helps a business determine its cost of goods sold and eventually in gross profits. Different inventory costing methods can bring the different cost of goods sold results. Although a business can use any inventory costing method. Certain methods have discrete benefits …

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Perpetual Vs. Periodic Inventory System – Key Differences

Inventories

The perpetual inventory system is the process of keeping inventory records in real-time. The company updates its inventory account as and when it makes new inventory purchases. On the other hand, the periodic system first adds the inventory to the purchases accounts, and after the inventory count, it adds the figures to the inventory account. …

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What Is Periodic Inventory System? (Explained)

Current Assets, Inventories

The periodic inventory system is the physical counting method for inventory management. It is performed periodically to calculate inventory figures that lead to the cost of goods sold. A periodic inventory system takes time and effort as it is a laborious activity. Mostly, the periodic inventory system is followed by small businesses with low inventory …

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Inventory Level Control – Definition, Formula, and Example

Inventories

Inventory level control is referred to as controlling the threshold of inventory to avoid delay in production. It’s the level of inventory that should be available within the warehouse all the time. An important concept of inventory level controls is to create a balance between capital tied up in the inventory and the availability of …

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Fictitious Assets: Definition, Example, and List

Current Assets, Financial Statements, Fixed Assets

Definition Fictitious assets can be defined as fake assets, which are normally used to record assets that do not have physical substance. They do not have a physical presence, and hence, these assets are not really assets in the true sense. Still, they are defined as assets mainly categorized as huge expenses or losses that …

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Permanent Current Assets – Definition, Example and How Is It Different from Temporary Current Assets

Current Assets

Definition: Permanent Current Assets can be described as assets that are supposed to be maintained by the business over the course of time in order to ensure that the company is able to run its operations. These assets are considered to be current assets that tend to stay persistent on the balance sheet of the …

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What is a prepayment? (Definition, Explanation, Journal Entry, and Example)

Current Assets

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 shown on the face of the balance …

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