Accounts receivable for a company means the total money that is due from customers to which goods or services are sold on credit. If a company has sold goods or services to 100 customers in credit, then the total amount due to be received as on the balance sheet date is shown under the head accounts receivable on the balance sheet. Accounts receivable is also referred as … [Read more...] about What is Accounts receivable on the balance sheet
Archives for January 2019
Cash vs Accrual basis of accounting – which on is better
Financial accounting is a major source of information for success of business. Most important aspect of financial accounting system is referred to as recognition, it's the decision about when to record revenue and expense transactions. We have two type of accounting used to record transactions, cash and accrual. In this article, we will be discussing both cash and accrual … [Read more...] about Cash vs Accrual basis of accounting – which on is better
Inventory on the balance sheet
In simplified terms, inventory consists of items which the company owns but has not yet sold and/or consumed. Inventory is shown under the head current asset on the balance sheet because in the normal operating cycle, the company usually converts the goods into cash. Inventory for a manufacturing company consist of: Raw materialsWork-in-progressFinished goods Raw … [Read more...] about Inventory on the balance sheet
Understanding Current liabilities on the balance sheet
Balance sheet has three components, assets, liabilities and owner's equity. One of the section under the component liability is “current liability”. Current liabilities are obligations that is due and payable within 12 months from the date of balance sheet or within one operating cycle, whichever is longer. In balance sheet, under the current liability section company … [Read more...] about Understanding Current liabilities on the balance sheet
what is Retained Earnings and how its calculated
Company's profit can be distributed as dividend or retained for reinvestment within the organisation. Based on management's plan, companies in general distribute a portion of the profit as dividend and the balance left out reinvested for future growth. Retained earnings is the accumulated profit that the company earns and retain for reinvestment purpose after paying dividend … [Read more...] about what is Retained Earnings and how its calculated
Beginner’s guide to Bookkeeping and Accounting Process
In an organization, financial transactions are recorded timely and accurately in the books of accounts. With that recorded information, the accountant analyze, review and prepare various reports. The entire process is known as accounting of which bookkeeping is a very important part. Bookkeeping is generally defined as the process of accumulating, classifying, recording … [Read more...] about Beginner’s guide to Bookkeeping and Accounting Process
Current asset on the balance sheet
When you look at the asset side of company’s balance sheet, you will find a category at the end of the balance sheet called current asset. It will let you know the liquid capital the company has to pay its current liabilities. This means, it will tell you how much money is available with the company for business immediately. Under current assets, you will find those assets … [Read more...] about Current asset on the balance sheet
How to calculate Price earnings to growth ratio – PEG
PEG or price earnings to growth ratio is simply calculated by taking P/E ratio and dividing it by earnings growth rate. Price to earnings is the most important component of PEG calculation. Price to earnings ratio is calculated by taking current market price of the stock and dividing it by the earnings per share or EPS. Normal Price to earnings ratio is not considering … [Read more...] about How to calculate Price earnings to growth ratio – PEG
How crowdfunding works – A Beginner’s Guide
Crowdfunding is the pooling of money in small amount from a large number of people, using the internet and social media. Money can be raised to fund a project or for charity or to start a new business. There are three major players involved in crowdfunding: The campaignerCrowd or backers or investorsPlatform The campaigner is the person who is looking to raise money … [Read more...] about How crowdfunding works – A Beginner’s Guide
Single entry or double entry bookkeeping – What is best
Bookkeeping is the process of accumulating, classifying, recording and organizing a financial transaction to facilitate day-to-day transaction of an entity for preparing financial statement. We have two systems of bookkeeping to consider: single-entry and double-entry. Based on your business size and complexity, you can use either single-entry or double-entry bookkeeping … [Read more...] about Single entry or double entry bookkeeping – What is best