The basic accounting equation is a simple formula where assets are equal to liabilities plus shareholder equity, but the equation can be made more granular to provide greater insight into equity transactions. The type of business impacts the format of the expanded accounting equation, but the concept is still the same – a detailed accounting …
Accountants use a standardized record keeping system to monitor business transactions and economic events relevant to an organization. The general ledger can be kept in a spreadsheet, but it’s often a part of an accounting software package. Below are details and an example of the mechanics of a general ledger and how it fits into …
What is a General Ledger? How is it Used & Examples Read More »
During the purchasing and accounts payable process, cash disbursements are often-times remitted using business checks. These instruments are among the oldest and most commonly used to pay for everything from raw materials and payroll to capital projects. Bank reconciliations and cash disbursement reports are the tools used to track outstanding checks, helping accountants and business …
Discounts are offered by sellers of goods and services to incentivize buyers and speed-up the cash collections process. Trade and cash discounts each have advantages related to generating revenue and enhancing cash flow. Below are the differences between these techniques and how they impact the bottom-line. Trade Discount Definition Sellers in business-to-business transactions will offer …
What is the difference between a trade discount and a cash discount? Read More »
Recording inventory transactions such as inventory purchases may be simple or complex, given the size of a business and the resources available to the accounting department. The needs of financial statement users, along with applicable accounting standards, also factor into the recordation process. The perpetual and periodic inventory systems are viable options for recordkeeping purposes, …
What is the difference between perpertual and periodic inventory systems? Read More »