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 »
When goods are shipped between suppliers and customers, freight charges are incurred and must be expensed using the correct methodology, to remain consistent with U.S. Generally Accepted Accounting Principles. There are different classifications for freight out and freight in on the income statement. Below are details of each type of charge and how the expenses …
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Cost of goods sold is a major line item on the income statement, and it’s comprised of inventory expenses such as the cost of goods manufactured. Understanding cost of goods manufactured is important for accounting and business decision-making purposes. The better these costs are controlled, the more profit a company will realize over the long-term. …