Accounting

Hence, the credit balance in the account Accumulated Depreciation cannot exceed the debit balance in the related asset account. After the 5-year period, if the company were to sell the asset, the account would need to be zeroed out because the asset is not relevant to the company anymore. Therefore, there would be a credit to the asset account, a debit to the accumulated depreciation account, and a gain or loss depending on the fair value of the asset and the amount received. The units-of-produ […]

For example, an accountant in the U.S. always use printer toner, but might use more of it in the first quarter of the year when preparing and printing tax forms for clients. Overhead and operating expenses are two types of costs that businesses must incur to run their business.

Is overhead the same as burden?

Burden Rate vs.
Overhead refers to an ongoing expense associated with operating a business. This can include anything from administrative to marketing costs. The key difference is th […]

Profit margins allow investors to compare the success of large companies versus small ones. But a small company might have a higher margin, and be a better investment because it is more efficient. When expenses are higher than revenue, that’s called a loss. If a company suffers losses for too long, it goes bankrupt. Capitalism is an economic system whereby monetary goods are owned by individuals or companies. The purest form of capitalism is free market or laissez-faire capitalism. Here, […]

The extraordinary gain should be recorded as an increase to net income. A seller sometimes sells his business at lower than its original price due to many circumstances this leads to the creation of negative goodwill in the books of accounts of seller. Usually, goodwill is an asset and is a part of the asset section in the balance sheet but in case of negative goodwill, it gets treated as an liability which will be reduced from the value of assets transferred. Negative goodwill can also be show […]

It indicates that the company is able to generate similar returns more quickly. The figure also helps assess theliquidity risklinked to a company’s operations. This metric takes into account the time needed to sell its inventory, the time required to collect receivables, and the time the company is allowed to pay its bills without incurring any penalties. This metric takes into account how much time the company needs to sell its inventory, how much time it takes to collect receivables, an […]

By selling one more sweater, you would make $20 more than last year – your marginal revenue. �� Lowering your price would lead to you losing $5 on each of the other candles. If you sell another candle, you will make $20 more than you did in Q1. �� Would it be wise then to lower your price to $45 per candle? The theory is sound, but in practice, you need to calculate whether the amount earned by raising your profits offsets the losses incurred from selling fewer items […]