A posting, pertaining to accounting, is the transferring of entry or multiple entries from a subsidiary accounting book or journal to a suitable ledger account.
An account post is usually done through a strict procedure that follows the creation of a journal entry from details of a particular transaction. Note that this is considered as the third step in the accounting cycle.
An account post will have to be completed before the finalization of the business’s annual financial statement. However, within that timeframe, an account post can be carried out at any time of day, depending on the nature and conditions of the business.
Continue reading “What is a Posting in Accounting?”
Royalties refer to the payment paid in exchange for a license to issue a particular patented or copyrighted asset. Royalties involve two parties: the owner of the asset, also known as the licensor, and the other party that pays royalties in return for acquiring a license to it, also known as the licensee.
In royalties, the owner is not selling full legal ownership of the asset, but simply the right to manufacture it. If the rights to ownership of a property are sold, that would be called capital expenditure. This is how the two differ. There are actually three types of royalties in accounting, namely: Copyright, Patent, and Mining. For this article, we will focus on the first one.
Continue reading “What is Royalties in Accounting”
In accounting, accrual and deferral are two significant terms that define the systematic recording of expenses and revenue in their respective accounting periods. Accurate entry of accruals and deferrals is the key to a sound financial statement and adheres to the complex principles of accounting. This way, the truest financial health of the business is reflected as accruals, and deferrals fall perfectly into their places.
Continue reading “Accruals and Deferrals — What is the difference”
QuickBooks Pro is a business software that will help you organize your finances in one place, which will significantly increase your work efficiency. Even though the program is not available in the Russian language, it is very easy to set up and use. With QuickBooks help, you will always be aware of all accounts, will be able to manage expenses effectively, will receive reliable financial reports, and much more. And if you have problems, you will use step-by-step instructions for creating accounts, accounting costs, etc. QuickBooks pricing is available and reasonable.
Continue reading “What is QuickBooks”
Retention Rate (Plowback Ratio, retained ratio) in the field of finance refers to a percentage of the income received or a fixed amount of money that the business leaves at its disposal after all dividend payments to investors have been made. Sometimes this term can be referred to as a retention ratio or a plowback ratio. However, most often, this coefficient is set as a percentage.
Continue reading “Retained ratio definition, formula and examples”
The concept of the balance sheet can be considered on the basis of two aspects: from a theoretical point of view – the balance sheet is interpreted as a relationship of characteristic features and ratios of indicators that are reflected in it as of a certain point in time.
From the point of view of use in the practical activities of business entities – the balance sheet is understood as a reporting form that contains information about the financial position of the business entity.
You can use the balance sheet to determine the company’s “health status.” It’s like a blood test. Only it records not the level of sugar or cholesterol, but financial indicators. For example, the amount of money that the company has or the amount of debt owed to creditors.
If you compare the balance sheet for different dates, you can see how things are going. Maybe your business got into debt, or, on the contrary, the company’s accounts have excess money that can be profitable to invest?
Continue reading “Balance sheet formula and definition”
The balance sheet is, first of all, a summary of the financial solvency of the organization. With it, you can understand the actual state of affairs in the company, how profitable or unprofitable it is. It is formed using grouping and generalized reflection of data about the company’s property and sources of its formation. Thus, a balance sheet definition is simple and easy to remember.
This information will be useful to both the company’s management and potential creditors and investors. The balance sheet shows the status of assets, liabilities to third parties, and equity at a certain date. As a rule, the balance is formed on an accrual basis for one year, broken down into quarters. The balance is also subject to submission to the tax inspectorate and statistical agencies. Now, you know what to say when asked, “What is a balance sheet?”.
Continue reading “What is the balance sheet? Simple definition”
You can analyze the potential effectiveness of investment projects and the financial and economic activities of a firm or enterprise by examining information about the movement of money in them. It is important to understand the structure of cash flows, their size and direction, and their distribution over time. In order to perform this analysis, you need to know how to calculate it using the cash flow formula.
Free cash flow formula
Continue reading “How to Calculate Cash Flow: Formula”
A cash flow statement is an internal document that reflects the company’s ability to earn (generate) money and its equivalent and allows it to assess the organization’s ability to manage financial cash flows.
What is the cash flow statement?
A cash flow statement is an element of an accounting report that is compiled in tabular form and contains information about cash flow from the position of receipt and payment of funds. As a rule, this is one of the four main accounting reports.
Continue reading “Cash flow statement and how to use it”
At the end of the cycle, the accountant should prepare four financial statements. All of them are equally important for the successful development of small and medium-sized businesses.
Why are financial statements so important for small businesses?
Continue reading “Financial statements that you should prepare”