Bookkeeping

External factors significantly impact the average collection period of an organization. Understanding these factors can help businesses optimize their collections processes and minimize Days Sales Outstanding (DSO). This section will cover three primary external factors—economic conditions, competition, and customer behavior—and how they influence a company’s average collection period. You can calculate the average accounts receivable …

What is the Average Collection Period? How Is It Calculated?Leer más »

However, in cases where a company receives money for sales that it expects to make after a year, it can also classify unearned revenues as non-current liabilities. Unearned revenue is a crucial accounting concept that businesses must understand to maintain accurate financial records and make informed decisions. Unearned revenue, also known as deferred revenue or …

Unearned Revenue: What It Is, How It Is Recorded and ReportedLeer más »

Goodwill is a unique intangible asset that is hard to quantify and does not arise from any identifiable source. In contrast, other intangible assets are often identified as part of a business’s everyday operations and are easier to quantify. A strong brand name and reputation can provide a competitive advantage over rivals in the market. …

Goodwill Entire Firm and Components Approach ValuationLeer más »

Unlike traditional income statements that combine fixed and variable expenses, the contribution margin income statement differentiates between the two. This unique attribute enables a clearer view of how changes in production or sales levels directly affect profitability. The contribution margin income statement is a superior form of presentation, because the contribution margin clearly shows the …

What Is Contribution Margin Income Statement: Format & ExamplesLeer más »

True-up means to match, reconcile, tie-out two or more balances with the help of an adjustment. Discover how accounting flowcharts transform complex financial workflows into clear, actionable visual guides. The accrual will be reversed, an extra £200 will be trued up for the utility cost and £3,200 will credited from the bank account. At the …

Why Is True Up An Important Accounting Concept?Leer más »

They’ve entered a phase where they aren’t growing quickly, so investors aren’t willing to pay up. I recommend using the additional ratios mentioned to determine why P/E is low or high. «P/E ratio N/A means a stock doesn’t have a P/E ratio. This happens when a company’s earnings are negative or nonexistent. In an era …

Price Earnings P E Ratio Analysis Formula ExampleLeer más »

For example, when money comes from a sale, it will credit the sales revenue account. Making sure transactions are properly assigned to accounts gives you the best view of your business and helps you extract the most helpful reports from your bookkeeping software. Bookkeepers record and organize financial transactions, while accountants analyze this data and …

What is Bookkeeping? Business Owner’s GuideLeer más »

This allows for a clear understanding of the impact of these interests on the financial statements. Basic EPS is calculated by dividing the net income attributable to the parent company by the weighted average number of common shares outstanding during the period. The existence of NCI, however, means that the net income is not entirely …

Noncontrolling Interests: The Full Consolidation Accounting TutorialLeer más »

If an amended return is allowed, you must file it by the later of the following. For fees and charges you cannot include in the basis of property, see Real Property in Pub. You make a $20,000 down payment on property and assume the seller’s mortgage of $120,000. Electing a Different Method Therefore, you must …

Understanding the Mid-Month Convention: How It Affects Your Depreciation DeductionsLeer más »

There are several ways a company can try to indirectly manage and control its gearing ratio, usually by profit, debt and expense management​. Please note that the use of debt for financing a firm’s operations is not necessarily a bad thing. The extra income from a loan can help a business to expand its operations, …

Gearing Ratio Definition, formula, analysis and exampleLeer más »