See Also: Accounting Income vs Economic Income Realized and Unrealized Gains and Losses Operating Income Overhead Definition Retained Earnings Retained earnings (RE) refers to the portion of a company’s net income that is reinvested in the company. It is also the amount of profit left over after the company pays dividends to its stockholders. Record
See Also: Common Stock Definition Preferred Stocks (Preferred Share) Treasury Stock (Repurchased Shares) Owner’s Equity Balance Sheet Paid in Capital Definition The paid in capital definition is the total amount paid on equity or stock over the par value of the stock. In addition, it is a balance sheet account in the stockholder’s equity section. This
An operating lease is a short-term off-balance-sheet lease agreement. This type of lease is not recorded on the lessee’s balance sheet. This type of lease typically spans a small portion of the asset’s useful life, and the lessor retains the risks and benefits of ownership. For example, in an operational lease, the lessor is responsible
See Also: Notes Payable Treasury Notes (t notes) Accounts Receivable How to collect accounts receivable Balance Sheet Notes Receivable Definition The notes receivable is an account on the balance sheet usually under the current assets section if its life is less than a year. Specifically, a note receivable is a written promise to receive money
See Also: Current Liabilities Net 30 Credit Terms Accounts Payable Notes Receivable Long Term Debt Financial Ratios Notes Payable Definition Notes payable is a written promise to pay a certain amount at some future date. The account appears on the balance sheet when the company borrows money and signs a note or contract stating they
See Also: Inventory Turnover Ratio Analysis Inventory to Working Capital Perpetual Inventory System Just in Time Inventory System Work in Progress LIFO vs FIFO – Last In, First Out vs First In, First Out In the field of accounting, LIFO vs FIFO are two methods of valuing inventory. LIFO assumes the last items acquired are
See Also: General Ledger Reconciliation and Analysis Disclosure of Accounting Changes Accounting Principles Accounting Concepts Subsidiary Ledger Ledger Account Definition A ledger account, defined as the report which includes changes in balance sheet line-items, is an extremely valuable tool in accounting. These account numbers are separate from the balance sheet despite the fact that it
See Also: How to Prepare a Breakeven Analysis Contribution Margin Cost Volume Profit Model ProForma Financial Statements Net Profit Margin Analysis Prepare an Investor Package The Investor Package serves as a medium to visually communicate to the Owner/Management financial information which they might otherwise have difficulty digesting in financial statements. This is not unusual since
See also: Just in Time Inventory System Perpetual Inventory System Inventory Turnover Ratio Analysis Days Inventory Outstanding LIFO vs FIFO Inventoriable Costs In accounting, inventoriable costs refer to all costs incurred to obtain or produce the end-products. Apply these costs to the products the company produces and sells. The cost of raw materials, direct labor,
See Also: Financial Instruments Finance Beta Definition Generally Accepted Accounting Principles (GAAP) Financial Accounting Standards Board (FASB) Financial Ratios International Financial Reporting Standards (IFRS) The International Financial Reporting Standards (IFRS) are a set of rules and standards for preparing financial statements. An organization called the International Accounting Standards Board (IASB) issued the IFRS. The goal
Interest Expense Formula Interest expense calculations involve 4 parts: Principal, Rate, Time, and Compounding. Use the following formula to calculate simple interest expense (which excludes compounding): Interest Expense = Principal X Rate X Time To calculate the compound interest rate, use the following formula: Principal X (1+ (R / N))(N X T) Where: R =
See Also: Interest Expense Formula What is Compound Interest Effective Rate of Interest Calculation Nominal Interest Rate When is Interest Rate Not as Important in Selecting a Loan? Capitalized Interest Interest Expense Definition Interest expense, defined as a non-operating expense on the income statement, occurs anywhere money is borrowed. Consider this part of a company’s
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