Business Accounting Blog

For instance, say you paid $10,000 for marketing during one particular month. Accordingly, the ‘marketing expenses’ will be listed as ‘-$10,000’ for that month’s balance. There are more financial transactions you’ll have to write up that may or may n…

Cash disbursement accounts for every expenditure payment done by the company. When one of these cash transfers occurs, it’s immediately added to the disbursement journal, including information such as:…

The debt-to-asset ratio estimates precisely that – a portion of the company’s value owned by creditors as opposed to stockholders. This ratio is usually represented by leverage, with debt on one side and asset value on the other. Divide total debt by…

It is easy to remember the meaning of the term debit memo because it has the word debit in it, which just means the amount on the left-hand side of a ledger (when there is no other meaning to the debit). When it comes to the whole phase debit memo, i…

Simply put, when you have interest on a loan, you are getting charged based on the principal. When it accrues and you are not paying on the loan, that means it is accumulating. Thus, the word accrue simply means accumulate and accrued interest can be…

You can see the formula for computing this ratio above. Let’s use it to find the interest coverage ratio for Leaf Company. The business owner wants to buy new equipment and for this, she needs to apply for a loan. Not surprisingly, the bank looks at …

Theoretically, budgeting is the process of planning various kinds of asset transactions. In its simplest form, this means planning cash receipts and payments. Depending on the degree of adaptability, there are three types of budgets: flexible, fixed,…

This method is based on the assumption that the actual income received from the usage of the relevant asset in each reporting period is associated with the release of units of products produced with its involvement in these accounting periods….

A Sales journal is one of these entry lists. It’s one of the most important of the bunch, seeing how it records sales transactions throughout the company’s life. Unlike many other journals that end up being sources of information for the Balance shee…

There are two types of credit memos that one can come across:…