FAQ

What is the difference between a trade discount and a cash discount?

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 …

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What is the difference between perpertual and periodic inventory systems?

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, …

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What is a Multi Step Income Statement?

When making managerial decisions by small businesses about overhead expenses, sales growth, profitability, and a myriad of operational objectives, income statement analysis is needed. A high level of detail is useful when reviewing operations, which is why the multi-step income statement is utilized. Expense line items, such as selling expenses and administrative expenses, are detailed, …

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What is the difference between freight in and freight out?

When goods are shipped between suppliers and customers, freight charges are incurred from the freight services 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 …

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