The primary reason why shareholders invest in a company is the returns they get. While capital gains on share prices are crucial, dividends make a more stable type of earning. For most shareholders, these returns provide more certainty on their earnings. However, these distributions are usually at a company’s management or board of directors’ discretion. […]
What Is the Appropriated Retained Earning? (Explained) Read More »
The difference between income and revenues is self-explanatory. The revenues of a company are the net sales proceeds. However, the income represents the net of revenues and expenses. The revenue recording in the accounting books of an entity is necessary to calculate the net income. The process is simple in cash basis accounting because there
Revenues Vs. Unearned Revenue: What Is The Difference? Read More »
It is an understood fact that the business entities report their earnings, expenses, and financial side of their operations in the financial statements. In the cash-based accounting system, appropriation of cash gone and entered in the business is easy. However, the accrual-based account system requires a more rigorous approach to cater to all aspects. Therefore,
Cash Flow From Financing Activities: What Is Included and How To Calculate? Read More »
The financial statements of any business entity tell a lot about financial health and profitability. If we talk about the income statement alone, the firm’s profitability, revenues, and expenses are covered in it. The last item on the income statement is profit that tells how much the company has made during a financial period after
What Is Included In Cash Flow From Operating Activities? Read More »
Companies raise finance from various sources. One of the primary sources includes equity, which refers to any investment in a company from its shareholders. Usually, companies rely more on equity than any other finance. However, companies also have the option to raise finance from debt. Debt refers to finance acquired from third parties other than
How Are Bonds Payable Presented on the Cash Flow Statement? Read More »
Every business concern or organization needs resources to operate the business functions. The resources are sometimes owned by the company and sometimes borrowed by external parties. The resources owned by the company are called its assets. On the other hand, the borrowed money is the liability or obligation for the business entity. The assets include
What Is A Plant Asset? Example and More Read More »
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
What are Work-in-Progress (WIP) inventories? Definition, Calculation, Example, and More Read More »
A company’s financial statements include two primary statements. The first is the balance sheet, also known as the Statement of Financial Position. It contains a list of all the balances in a company’s financial records. Similarly, the second is the income statement, also known as the Statement of Profit or Loss. It includes a company’s
How is Investing Activity Calculated and Presented in the Statement of Cash Flow? Read More »
Businesses prepare financial statements; these are historical figures and do not guarantee profit or revenue in the future. If the business entity wants to predict future growth projections, there must be reliable measures and methodologies. Therefore, budgeting or forecasting is inevitable in all kinds of business entities. Besides forecasting and budgeting, companies use significant estimations
What Is the Purpose Of the Pro Forma Statement? Read More »
Depending on the size, nature, and industry of a business, there are varying financial reporting requirements for every business entity. Small and medium enterprises usually do not prepare formal financial statements and rely on bookkeeping. However, there are many circumstances when the presentation of formal financial statements is necessary. A company may decide to prepare
What Is A Compilation Financial Statement? Explained! Read More »