ACCOUNTING

Net Sales Net sales is a measure of a company’s total revenue generated from the sale of products and services to customers. It is calculated by subtracting any returns, allowances, and discounts from gross sales. Formula: Net Sales = Gross Sales – Returns – Allowances – Discounts Components of Net Sales: Gross Sales: Total revenue […]

Ledger Balance Definition: The ledger balance is the sum of all accounts in a ledger account. It is a summary of the accounts and provides a complete picture of the financial position of a company at a particular point in time. Formula: Ledger Balance = Sum of Account Balances Components of a Ledger Balance: Assets: […]

Definition: Variable cost is an expense that changes in direct proportion to the changes in the level of production or sales. In other words, as the company produces or sells more units, its variable costs increase. Examples: Direct materials Direct labor Factory overhead Selling expenses Formula: Variable cost per unit = Variable cost / Number […]

Accrued income is income that has been earned but not yet received. It is usually income earned in the current period but for which payment will be received in the future period. Examples of accrued income include rent, dividends, and interest on loans. The accrual income is recorded on the books of accounts as a […]

Factors of Production Factors of production are the tangible and intangible resources used in the production of goods and services. They are the inputs that are combined in various ways to create output. Types of Factors of Production: 1. Land:– Natural resources such as land, water, minerals, and forests.- Can be either renewable or non-renewable. […]

Inflation Accounting Inflation accounting refers to the adjustments made to financial statements to account for the effects of inflation. These adjustments are necessary to ensure that financial statements accurately reflect the economic value of assets and liabilities in a particular period. Main Objectives of Inflation Accounting: To ensure that financial statements are not misleading: Inflation […]

Cost of Equity Formula: Cost of Equity = Risk-Free Rate of Return + Beta * Market Risk Premium Components of the Cost of Equity: Risk-Free Rate of Return: The return on a risk-free investment, such as Treasury bonds or government securities. Beta: A measure of a company’s sensitivity to changes in the overall stock market. […]

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Inventory Management Inventory management is the process of planning, controlling, and monitoring the flow of goods and services into, within, and out of an organization. The goal is to ensure that the organization has the right products in the right quantities at the right time to meet customer demand. Key Elements of Inventory Management: 1. […]

Definition: An invoice is a document issued by a seller to a buyer requesting payment for goods or services provided. It typically includes the following information: Essential Elements: Seller’s name: The name of the company or individual who issued the invoice. Buyer’s name: The name of the company or individual who is billed. Invoice number: […]