WHAT ARE DEFERRED SHARES?
Deferred shares are mostly issued to founders of a company as compensation. And these shares do not possess any rights to a company’s assets unless … Read more
Accounting
Accounting Entries for value added tax -VAT
What is value added tax-VAT? Value-added tax (VAT) is a tax that is charged at each level or point of sale where value addition is … Read more
Return on net assets (definition, explanation, example, formula, calculation, and more)
Definition Return on net assets helps to understand how the business uses its assets base to generate the return. A higher return on net assets … Read more
Importance of Financial Analysis
Financial analysis is a process of examining the financial data of an entity to assess its performance. The financial analysis of a company is used … Read more
List of account titles in accounting
Accounts titles are the building blocks for accounting, and it’s the place where accounting transactions are posted. In a double accounting system, the transactions impact … Read more
What is a trial balance?
Trial balance is the listing for all the balances obtained from general ledgers; it’s an ending balance obtained from the general ledger and used to … Read more
Manufacturing cycle efficiency – (MCE)
Manufacturing cycle efficiency- MCE aims to measure the efficiency of the production function. As we understand, higher production time leads to higher costs of manufacturing … Read more
What are the asset management ratios?
Asset management ratios help to understand how effectively the business uses its assets to generate revenue. It’s an essential ratio for the business stakeholders to … Read more
What is the gearing ratio?
Gearing ratio help to determine financial risk in the financing structure of the business. It helps study the relative volume of the debt and equity … Read more
Predetermined overhead rate (definition, explanation, example, and more)
Definition A predetermined overhead rate is an estimated rate that is used in the absorption of overheads in product costing. It’s calculated by dividing the … Read more
What is suspense account in accounting (definition, explanation, example, and uses)
Definition of suspense account: A suspense account is a temporary account where all the suspicious and unclear transactions of the accounting system are parked. However, … Read more
What is contra account (Definition, concept, nature, treatment, presentation, and more)
Definition A Contra account is the creation of an opposite account balance in the balance sheet. It helps to reduce the normal account balance without … Read more
Fictitious assets
Fictitious assets meaning/definition Fictitious assets are not an asset in reality. However, these assets are recorded in the balance sheet to reflect a true sense … Read more
What is accumulated depreciation in accounting (definition, explanation, journal entries)
Definition Accumulated depreciation is the contra account created in the accounting record to offset the use/depreciation of assets. We do not directly reduce the cost … Read more
Five elements of financial statement (all you need to know)
Five elements of financial statement include the balance sheet, income statement, statement of cash flow, statement of changes in equity, and the notes to the … Read more
What’s notes receivable?
Notes receivable is the written promise to receive principal and interest in the future. In simple words, note receivable is a written, unconditional promise by … Read more
What is ERP– Detailed aspect
ERP is an advanced system of business management that integrates different operating modules and business intelligence. It helps in effective business management with real-time reports … Read more
Materiality in accounting
The concept of materiality helps an accountant decide which account balances should be disclosed separately and which of the account balances should be merged. The … Read more
Introduction to financial accounting
Financial accounting is a branch of accounting that deals with the recording, summarizing, and reporting of financial information within an organization. In other words, financial … Read more
Accounting principles and concepts
Understanding accounting principles and concepts provide a strong base for you to prepare a set of financial statements. Following accounting principles is necessary to meet … Read more