Accounting

Profits or net income generally imply total revenue minus total expenses in a given period. This is to be contrasted with the “bottom line” which denotes net income .

Revenue is the amount a company receives from selling goods and/or providing services to its customers and clients. A company’s revenue, which is reported on the first line of its income statement, is often described as sales or service revenues. Hence, revenue is the amount earned from customers and clients bef […]

Current liabilities are debts that a company must repay in less than a year, such as accounts payable and taxes payable. In turn, long-term liabilities are those debts for which the term is more than one year, such as bonds and leases. Its dollar value equals the portion of a company’s net earnings that has not been distributed as dividends to shareholders.

Treasury stock for the company is the amount stock bought back by the company and is no more part of the outstanding shares. The ret […]

This results in a reasonably constant expense related to the asset because depreciation expense declines as repair expense increases. To demonstrate how this fraction is worked out, suppose that an asset has a 5-year life. In the first year, the rate is a fraction that has a numerator of 5, the number of years remaining at the beginning of the year. Note that the asset’s residual value is subtracted from its acquisition cost to determine its depreciable base. For example, if an asset has […]

Specific types of budgeting, such as activity-based budgeting, can allow a company to record, track, and lower their expenses in order to reduce overall costs and improve efficiencies. Learning more about this type of budgeting may help you decide if it would be helpful in your accounting.

The irrelevant activities are eliminated and only the necessary activities form a part of the business. It is easy to perform, the most identifiable, and the cheapest approach to budgeting that most organiza […]

Companies can choose to reinvest net income after tax back into the company. It often signifies to investors of a company’s strong growth prospects. Specifically, investors believe that the company is holding positive net present value projects in its pipeline and can generate further returns on their investment. Net income after tax is either reinvested back into the company, paid out in dividends, or is used to acquire treasury stock. A financial advisor can help you understand how taxe […]

$5,000After this, Matty P’s books are ready for the next accounting period. Of course, this process assumes that closing journal entries are made manually. Before wrapping up, it’s important to note that accounting software has changed up the process slightly. As a reminder, the income statement shows how well a company did over the last period. In other words, it’s a measure of performance over a set period of time. As such, all the numbers on it are temporary, and the next p […]