When rent is paid in advance under accrual accounting, it is considered prepaid rent and is recorded on a company’s balance sheet. Whether the prepaid is recorded as an asset or liability is dependent on the nature of the transaction. Below are important features of prepaid rent and how it’s accounted for. Prepaid Rent & Accounting …
Revenue is among the most important financial metrics on the income statement and in comparative financial statements, but it’s not always straightforward to analyze. There is a difference between gross sales and net sales, and these differences give leaders insight into the efficiency and effectiveness of the sales and marketing process. Credit policies and other …
What is the Difference Between Gross Sales and Net Sales? Read More »
Although there are many different benefits of proper accounting, companies frequently rely on it for evaluative purposes. Meaning, they take advantage of their data to quantify their financial position. For instance, think about the way that the income statement depicts some entity’s operational efficiency. In order to facilitate these outcomes, however, accounting experts must rely on …
The Purpose and Benefits of Closing Entries in Accounting Read More »
When companies begin the planning process of manufacturing a product, cost projections are a large and important focus. Calculating a predetermined overhead rate is one of the first tasks management will take on because it provides a formula to estimate the production costs of a product in advance. Specifically, the predetermined overhead rate is an …
What is the Predetermined Overhead Rate and Why is it Important? Read More »
As with nearly every aspect of financial tracking, accounting allows businesses to choose different ways to record transactions. Consider, for instance, the number of companies that employ the cash-basis approach versus the accrual method of accounting. Well, one of the most obvious differences when it comes to the accounting methods boils down to the way …
What is the weighted average method in accounting? Read More »