Accounting

If you want to analyse the financial statements of your business efficiently, you need to have an in-depth understanding of the relationship between different financial statements. However, it may be challenging for you to discover those relationships. In the annual financial report of your company, you will see every financial statement on a different page, … Read moreWhat is the Relationship between the Profit and Loss Statement and the Balance Sheet?

Deferred assets (Also see Accounting – Accrual and Deferral) are the expenditures that the company has made ahead of time, but it has not consumed the expenses. Two situations that cause this to happen are: Long consumption period The company has paid for the expenditure ahead of time, and it expects that it will consume … Read moreWhat You Need to Know About Deferred Asset

Trade receivables are the amounts that a company will bill to its clients when it provides goods or services to them as part of their normal business activities (Also see Understanding Asset Conversion Cycle). Typically, companies will document these billings on formal invoices, and it will summarise those invoices in the accounts receivable ageing report. … Read moreWhat are Trade Receivables and Non-trade Receivables?

The balance sheet is one of the three financial statements, other than the income statement and statement of cash flows (Also see What is the Relationship between the Profit and Loss Statement and the Balance Sheet?). Some of the business owners may choose to do the accounting tasks by themselves, and when preparing the balance … Read moreAccounting – Preparation of Balance Sheet

Typically, the businesses which are in the form of sole proprietorship or partnership will use the drawing account. It is an accounting record that documents all the distributions made to the business owners. In fact, they are the funds that the business owners have drawn from the business, and this is where the name “drawing … Read moreUnderstanding Drawing Accounts

As a business owner, you have various types of assets in your company. One of the vital assets is current assets. The cash, cash equivalents (investments with high liquidity), or anything that you can turn into cash in a year are all your current assets. On the other hand, “other current assets” is a usual … Read moreWhat are Other Current Assets?