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 …
What is the difference between freight in and freight out? Read More »
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. …
When gauging the performance of an organization, the income statement helps illustrate profitability, major expenses and business trends. The level of detail needed on an income statement varies depending on the circumstances and report users. The single step statement is the simplest format and has advantages relative to the multi step statement, especially for a …
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 »