Income Statement: Definition, Types, Templates, Examples, and More

Financial Statements

Definition: The income statement is one of the five financial statements that report and present an entity’s financial transactions or performance, including revenues, expenses, net profit, or loss, and other P&L Items for a specific period of time. This is also known as the statement of financial performance because it shows how the entity financially […]

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Ultimate Guide to Financial Accounting (For Beginner)

Financial Accounting

Definition: Financial accounting is one of the essential functions of Financial Management in the Financial Department or Financial Division. Because of its usefulness and necessity,  we can say that this function is one of the strategic functions of the entity. This function is responsible for preparing financial reports, controlling the financial position and cash flow,

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Operating Expenses: Definition, Example, Formula, and List

Financial Accounting

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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What is Contribution Margin? (Definition, Formula, Example, and Explanation)

Financial Accounting, Financial Ratios

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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Net Income: Formula, Definition, Explanation, Example, and Analysis

Financial Accounting

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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Matching Principle (With 4 Examples): Definition, Using, and Explanation

Accounting Principle

Definition: The matching principle is one of the accounting principles that require, as its name, the matching between revenues and their related expenses. The expenses correlated with revenues should be recognized in the same period in the financial statements. This concept tries to ensure that there are no over or under revenue or expenses records

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Revenue Recognition Principle (IFRS): Definition, Using, Formula, Example, Explanation

Accounting Principle

Definition: The Revenue Recognition Principle is the concept of how the revenue should be recognized in the entity’s Financial Statements. Revenue Recognition could be different from one accounting principle to another principle and one standard to another standard. For example, based on a cash basis or cash accounting principle, revenue is recognized in the Financial

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Accrual Basis in Accounting: Definition, Example, Explanation

Accounting Principle

Accrual Basis: The Accrual basis is the accounting principle that use to recognize and record accounting transactions or events in the financial statements regardless of its cash flow. Under the accrual basis, expenses are recognized and recorded in the Financial Statements at the periods they are incurred rather than at the period they are paid.

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What is Going Concerned? Definition, Assessment, Indicators, Example, Disclosure

Accounting Principle, Audit, Financial Accounting

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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