Accounting and Finance

What is the liquidity ratio?

The liquidity ratio helps to assess the cash flow position of the business. It’s a valuable tool in assessing if the business has sufficient liquid … Read more

What are the profitability ratios?

Profitability ratios help understand the profitability of a business at different stages of the income statement. For instance, the gross profit ratio helps to understand … 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

Bull and bearish market

Bull and bearish are the terms used in the stock market to reflect market conditions. The market is called Bull when the price index of … 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

Service level agreement – (SLA)

Service level agreement is the level of service agreed between the vendor and the buyer. The agreement includes matrices for the performance measurement and the … Read more

What is a performance guarantee in a contract? (Definition, explanation, example, and other aspects)

Definition Performance guarantee means the commitment to supply a certain level of service/supplies to satisfy the obligation agreed between the parties. Usually, banks offer performance … Read more

What is a demand loan?

Definition A demand loan is an informal type of loan that is to be repaid on the lenders’ call. There are no formal agreements and … 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 service rendered?

Businesses generate revenue from rendering services and the sale of tangible products. Income generated from service rendered is referred to as service revenue. The transaction … Read more

What’s a budgeted balance sheet, and how to prepare it?

A Budgeted Balance Sheet is a report that tells the financial position of an entity for a future period. It is just like a normal … Read more

5 Types Of Due Diligence Services

Definition: Due diligence is the systematic and structured analysis of investment decisions to mitigate the risk. It’s performed with strategic, operational, and financial perspectives to … Read more

What is accumulated depreciation (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 statements (Balance sheet, income statement, cash flow statement, equity statement, and notes)

Five elements of the financial statement include the balance sheet, income statement, statement of cash flow, statement of changes in equity, and the notes to … Read more