What is a Nominal Ledger?
The Nominal ledger is also referred as a general ledger. All transactions of the company are recorded in the chart of accounts. These chart of … Read more
Accounting
Contribution margin vs. gross margin
Contribution and gross margin help to understand the gap between revenue and expenses of the business. These measures are used to assess the profit that … Read more
What is the ex-factory price?
The selling cost of goods or merchandise from the seller’s factory is called ex-factory price. Here the term “ex” depicts exports, which means that the … Read more
Interim Dividend (All you need to know)
Definition The interim dividend is a dividend payment made by a corporation to the shareholders during accounting year. The payment for the interim dividend is … Read more
What is NRV – net realizable value in accounting?
Definition NRV – net realizable value in accounting is a widely used inventory valuation method. It aims to calculate the value realized by selling some … Read more
Accounts Receivables Factoring
Definition Accounts receivables factoring is designed to finance ventures without increasing leverage in the business. It involves selling of invoices to third parties at discount … Read more
Accounting for property plant and equipment (PPE)
Accounting for property, plant, and equipment is one of the technical areas where accountants often face a challenge. In this article, we have discussed different … Read more
What is plowback ratio?
The plowback ratio is used to identify the earnings that are retained for business after paying the dividends. It is used to calculate the profit … Read more
What is the Retention ratio?
Definition The retention ratio reflects proportion of earnings retained by the business. These are the earnings that have not been distributed among shareholders. Instead, these … Read more
What is common stock in balance sheet (all you need to know)
Definition Common stock represents your ownership in the company. These rights/power include an appointment for the board of Directors, formation of the board policies, and … Read more
Interest in Drawings (detailed explanation)
What is Interest on Drawings? We need to calculate interest on drawings when partner withdraws certain goods/assets from the business for a temporary period and … Read more
What is a cut off concept in accounting/audit?
The cut off concept in accounting aims to ensure events and transactions are posted in the correct accounting period. It helps to calculate profit/loss without … Read more
What is the Realization Concept in Accounting?
Definition The realization concept or the revenue recognition principle in accounting is a method used by accountants for recording revenue earned by the business. This … Read more
Conversion Cost in Accounting
Definition Conversion cost is the cost required to convert raw material into finished goods. It includes direct labor and manufacturing overheads. Explanation Whatever product you … Read more
What are net purchases in accounting/business?
Definition Net purchases refer to total purchase after deducting discount obtained from supplier, goods returned to the supplier, and allowances made on the purchase. This … Read more
Trading Account in Accounting
The name trading account is given to a ledger account used by trading business firms to aid in the formation of income statement and balance … Read more
Provision For Income Tax
At the end of the accounting period, the businesses need to record a provision for income tax. The provision is recorded to fulfill the accrual … Read more
List of current assets (Definition, Formula, and Examples)
Current assets are those asset of the business that can be liquidated easily. In simpler terms, the assets that can be easily converted into cash … Read more
What are accumulated losses?
Definition Accumulated losses are losses incurred by the business in the past. These losses are adjusted against shareholders’ equity. These losses lead to a decrease … Read more
What is retained earning?
Retained earning is referred to profit retained by the business. It’s the profit that has not been distributed among shareholders; instead, it has been reinvested … Read more