Companies use various costing techniques to determine the cost of a specific product. This process is crucial in establishing the expenses borne by a company to produce that product. Consequently, companies can use the information to set the price for that product. It is crucial in determining the profits the company expects to make and […]
What is a Variable Costing Income Statement? Definition and Example Read More »
The financial statements of a company tell about different aspects of the business. Financial health, future growth prospects, underlying problems, expenses, revenues, liabilities, and assets are shown in income statements and balance sheets. Income taxes and sales taxes are critical elements of a company’s financial calculations, valuation, and operations. Income taxes are payments a business
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
What is the Difference Between Current Assets and Current Liabilities? Read More »
Companies obtain finance from various sources. Usually, this finance comes from equity holders, which constitutes equity finance. This finance is perpetual and can be crucial in helping companies start their operations as startups. However, as companies progress, they have more options available in meeting their financing needs. The other finance source that companies can choose
How Does the Current Portion of Long-term Debt Affect Cash Flow Statement? Read More »
Using and understanding financial statements are crucial for investors. These statements provide insights into a company’s operations and activities. Usually, companies report these operations through four financial statements. These include the balance sheet, income statement, cash flow statement and statement of changes in equity. Each of these plays a significant role in helping investors analyze
How to Treat Capital Reserve in Cash Flow Statement? Read More »
Companies incur expenses to help in generating revenues. These revenues can allow companies to make profits. If companies don’t spend, they cannot make sales. Therefore, expenses are crucial in helping companies operate and continue their activities. Some may view these spendings as unnecessary. However, they support the revenues that companies generate through their operations. Companies
Does Prepaid Rent Go On Cash Flow Statement? Read More »
Managing cash and cash equivalent resources is crucial for companies to stay liquid. This liquidity also brings many benefits, such as quicker transactions, more flexibility, better opportunities, etc. Similarly, most investors prefer investments that can illustrate better cash management. These investors obtain information about how companies manage their operations through financial statements. For most companies,
What is the Treatment of Provision in Cash Flow Statement? Read More »
Companies prepare financial statements to report their activities to the stakeholders. These include four reports. Out of these, three use the accrual concept in accounting to present activities. While it is a mandatory accounting concept, it can also be confusing. Furthermore, they do not show how a company uses its cash resources or report cash
How Will You Treat Payment of Interest on Debentures in Cash Flow Statement? Read More »
The cash flow statement is one of the primary financial statements prepared by companies for financial reporting. This statement covers the cash movements in cash and cash equivalent balances during a period. In accounting, the cash flow statement allows companies to report cash activity. The other financial statements use the accrual concept, which can be
Where Do Security Deposits Go on a Cash Flow Statement? Read More »
Cash inflows and outflows are a crucial part of any company. These flows may relate to financial or business transactions. When these transactions occur, companies can record the cash flows in their accounts. These cash transactions then become a part of the cash flow statement. In accounting, cash flows are not necessary to record a
How Do Proceeds on Sale of Fixed Assets Affect Cash Flow Statement Read More »