Accounting

If a customer does not pay within the discount period of 10 days, the net purchase amount is due 30 days after the invoice date. A high accounts receivable turnover ratio can indicate that the company is conservative about extending credit to customers and is efficient or aggressive with its collection practices. It can also mean the company’s customers are of high quality, and/or it runs on a cash basis. Working toward and attaining financial security requires businesses to understand th […]

Moreover, the chances of income manipulation are less under this method than under other inventory valuation methods. Under average costing method,the average cost of all similar items in the inventory is computed and used to assign cost to each unit sold. Like FIFO and LIFO methods, this method can also be used in both perpetual inventory system and periodic inventory system. However, the weighted average cost method won’t work equally well in every situation. For example, when the batch […]

Because of the mobile platforms and decentralized workforce–work anywhere and anytime–ERP systems can no longer be tied to yesterday’s on-premises back-office applications. The next-generation, cloud-based, and modern ERP solutions support the new industry dynamics while providing the ability to reduce support time to enable organizations to respond quickly to volatile markets and industry trends. An ERP solution is used to unify coordination of all processes, automate workflow management […]

For example, if your company generates $10,000 for the period, you must write a debit in the revenue account for $10,000. Write a corresponding credit in the income summary account to balance the entry. For example, credit income summary for $10,000, the amount of the revenue for that period. This transfers the revenue account balance into your company’s income summary account, another temporary account. At the end of a fiscal year, the balances in temporary accounts are shifted to the re […]

At the time of insolvency, Lehman held $700 billion in assets and only $25 billion in equity. The bank held assets that had a maturity of over a year while its liabilities were mostly short-term, maturing in less than one year. That imbalance forced Lehman to borrow billions of dollars through the Repo market to pay its short-term debt obligations. The sales proceeds are used to pay down debts, enabling the company to temporarily reduce liabilities for the purpose of financial reporting. After […]

The accounts receivable turnover ratio can help you analyze the effectiveness of extending credit and collecting funds from your customers. A high accounts receivable turnover ratio can indicate that the company is conservative about extending credit to customers and is efficient or aggressive with its collection practices. It can also mean the company’s customers are of high quality, and/or it runs on a cash basis. In comparison, the receivables turnover is all about collecting money. Th […]