Wikiaccounting

Net Purchases in Accounting: Example, Formula, and Journal Entries

Net purchases, in accounting, mean the total amount of purchases made less any discounts received, goods returned, allowances, and tax. This is the formula: Net Purchases= Gross Purchases – Purchased Returns – Allowances – Discounts. In the above equation, the components of the equation have the following meanings: Gross Purchases: Gross purchase is the total […]

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How to Improve the Quick Ratio? 5 Points To Consider

Quick ratio

Quick Ratio: The quick ratio can best be the best determinant of liquidity measures within a company. As a matter of fact, it can be seen as a measure to validate the organization’s ability to meet its day-to-day expenses and other short-term liabilities like accounts payable and accrued interest expenses. In this article, we will

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Debt to Equity Ratio: 4 Importance and 3 limitations You Should Know

Debt ratio

Introduction: The debt to equity ratio is computed by dividing the total liabilities of the company by shareholders’ equity. This ratio is represented in percentage and reflects the liquidity of the company i.e. how much of the debt owed by the company is used to finance the assets as compared to the equity. The investors

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Importance and limitation of Profitability Ratios (All You Need to Know)

Profitability Ratios

Overview: Profitability ratios are a group of quantitative values that measure a company’s profitability against its revenue, cost of sales, equity, and balance sheet assets. It is a metric that measures a company’s ability to generate income from its operations over a specific period of time. A profitability ratio is a category falling under financial

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Importance and Limitations of Quick Ratio You Should Know

Quick ratio

Overview: The quick ratio is a financial ratio used to measure a company’s short-term liquidity, where liquidity is defined as the ability of a firm to convert its most liquid assets into cash so that it could settle its current liabilities. The quick ratio, also known as the acid test ratio, measures how quickly a

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What Is the Difference Between Fixed Asset Write-off and Disposal?

Fixed Assets

What Are the Fixed Assets? Fixed assets are generally referred to as the property, plant, and equipment that own and use by the company to support its daily business operations. They do not help for the purpose of trading. These assets could refer to the land that the company owns and use to build the

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What is Fixed Assets Addition? How to Account For It

Fixed Assets

Meaning: Fixed assets are long-term investments in the operation of an entity. Long-term investments in terms of accounting conventions mean the asset whose useful life is more than 12 months. These assets are illiquid in nature, unlike current assets that can be easily converted into cash in twelve months from the accounting period. Fixed assets

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What are Biological Assets? Recognition and Measurement

Fixed Assets

Overview: Biological assets are assets that are living in nature. It includes trees, animals, and nowadays cannabis too, as it has been made legal. The company’s management breaks down the assets side of the balance sheet and classifies them by type and attributing a value to them. Biological assets are dealt with in International Accounting

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Proper Classification of Fixed Assets in Financial Statements

Fixed Assets

How are assets classified in financial statements? Assets refer to the resources that own by an entity such as cash, inventories, chairs, tables, cars, buildings, machinery, land, etc. These assets could be used to generate future economic flow to the entity. Entity reports assets in their financial statements specified in the balance sheet by classified

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Procedure for Fixed Assets Disposal And How to Account For It

Fixed Assets

Overview: Fixed assets are those long-term assets that can benefit the enterprise for more than 12 months and are above the particular threshold as defined by the enterprise as guidelines made in compliance with laws and regulations and align with the applicable accounting standards and frameworks. There are certain procurement procedures when the fixed assets

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