The calculation of COGS is distinct in that each expense is not just added together, but rather, the beginning balance is adjusted for the cost of inventory purchased and the ending inventory. It can be, especially for management decision-making concerning break-even analysis to derive the number of product units needed to be sold to reach […]
In other words, this measures their stake in the company and how much the shareholders or partners actually own. This section is displayed slightly different depending on the type of entity. For example a corporation would list the common stock, preferred stock, additional paid-in capital, treasury stock, and retained earnings. Meanwhile, a partnership would simply […]
The purpose is to assess if the company’s cash flows can adequately handle existing debt obligations. The 0.5 LTD ratio implies that 50% of the company’s resources were financed by long term debt. Long term debt (LTD) — as implied by the name — is characterized by a maturity date in excess of twelve months, […]
The term write-off may also be used loosely to explain something that reduces taxable income. As such, deductions, credits, and expenses overall may be referred to as write-offs. Financial institutions use write-off accounts when they have exhausted all methods of collection action. Write-offs may be tracked closely with an institution’s loan loss reserves, which is […]
The customer unwittingly gave me $96 for the purchase, an error we both failed to catch. The accounting system will show $95 in posted sales but $96 of collected cash. The journal entry for this sale would debit cash for $96, credit sales for $95, and credit cash over short for $1. Over and short—often […]
You’ll get a strong sense of how much value you get for each dollar you spend per vendor, empowering you to make smart spending decisions. You should also look for platforms through which you can add your branding to all these documents. This way, you achieve visual consistency across all your invoices, quotes and estimates […]