Beginners guide to financial statements

Cost of goods sold is shown in the income statement of a company which is into manufacturing, wholesaling, retailing or into similar kind of business. Cost of goods sold or COGS is calculated by taking all direct expenses that a company has incurred to manufacture its product. After calculating COGS, you need to offset it against revenue to find out gross profit. In this … [Read more...] about How cost of goods sold or COGS is calculated

A company’s balance sheet has three major sections, assets, liabilities and stockholders’ equity. Liability represents the total debt of the company and owner's capital represents shareholders’ ownership. Liabilities and owner's capital are the two major sources of financing the assets of a company. Total assets must equal the total liabilities and stockholders equity in … [Read more...] about What is Shareholders’ equity on the balance sheet

Accounts payable is the amount that the company owes to its creditors or outsiders from whom it has brought goods or services. Total amount of accounts payable as on the date of balance sheet is classified under the head current liabilities. It arises because of the time lag between receipt of goods, supplies or services and the payment of them. This time lag is generally … [Read more...] about Accounts payable on the balance sheet

On the balance sheet you have three major components: assets, liabilities and owner's equity. In this article, we will understand the term asset on the balance sheet and its components. An asset is a resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the company. In simplified terms, Assets are simply … [Read more...] about Beginner’s Guide to Understanding Assets on the Balance Sheet

Asset held with the intention of being used for the purpose of producing goods or providing services and is not held for sale in the normal course of business is known as fixed assets. Fixed assets are shown on the balance sheet at its historical cost less accumulated depreciation. Cost of fixed assets Cost of fixed asset is the purchase price and any thing that is … [Read more...] about Fixed assets on the company’s balance sheet

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

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