Lets’ define cash in a scientific way. If we take the company as a human body then cash is the blood. Then why blood, because it’s the most needed thing same as oxygen. A human can’t survive without blood and oxygen and a company can’t run without money, which is cash and human resource, which is an employee.
High-low method commonly used to distinguish the variable & fixed price by analyzing some given data. This price or cost can be of a product, product line, geographical sales region, store etc. This method also used to ascertain a budget.
An adjunct account is a valuation account in which recorded assets termed as bonds payable because its credit amount added to bonds payable account.
Every year many startups have been joining the startup journey but few exist for a longer period. The only way to survive in this competitive world is to have a strong marketing or business growth strategy.
Variance analysis is simply a method to find out the difference between planned goals and actual or achieved goals. In terms of budgeting, it’s the difference between planned budget and actual budget spent or revenue achieved.
Accounting standards define the rules & regulations of which accounting need to be done. Accounting standards form GAAP (Generally Accepted Accounting Principles).
When the liabilities of a company or entity become higher than assets, this situation called insolvency and the company called as insolvent.
Financial planning is a key growth factor for small businesses. Financial planning includes budget planning, cash-flow management, Income & expense management, investment planning etc.
Accounting errors is a common mistake always likely to happen in businesses. But these small mistakes can hamper your business in a bigger way.
Budget variance is the difference between the budgeted or planned total amount of revenue or expense and the actual amount of revenue or expense. Budget variance helps a business owner to fix an achievable target amount in a year after evaluating last years budget difference.
Zeo based budgeting stands on the concept of zero-base. Every business plans out a budget plan for every year and never go for a recheck on all activities those included in the budget.
Average collection period is the total time a business undertakes to collect its payments for the goods or services sold in terms of credit. Collection period is different from companies to companies.
The margin of safety is the safety level before a company reaches its breakeven point. A margin of safety shows a company’s sales level after which the sales value will decrease. A margin of safety is the most needed factor for an investor to analyze the company’s current situation.
The payback period is the time needed to recover the total cash invested. Payback period is an important factor for taking up any investment or project or not. Projects with shorter time payback period are most preferable than ones with longer payback period.
Reorder point is the level where the stock needs to fill again. Usually, what happens a company always set a minimum amount level of a stock and the stock needs to record for reordering when it reaches that level.
Operating cycle can be defined as the total time starting from buying inventory and selling the inventory in order to generate cash to fulfill rest operational expenses. Defining the length of an operating cycle is very crucial for a business in order to be always ready to meet future expenses.
Income statement shows a company’s income during a particular period. It also involves profit & loss statement. Usually, Income statement used by business owners to find out how much profit they earn in a particular financial year or a period.
Joint cost is the cost incurred during a manufacturing process. When a manufacturer produces different products with same raw material inputs, then the cost consumed during this whole production process is called joint cost. For example, Dairy firms use milk as the raw material an produces curd, cream, ghee etc.
Retained earnings is the net amount retained by the entity or corporation over a period of time until the reporting time or fiscal year end. This total amount excludes any dividends that need to pay out to investors.
Appreciation is the increase in the value of assets over a period of time, unlike depreciation. Appreciation occurred due to certain factors like increase in demand, change in inflation rates etc. It’s totally opposite of depreciation. Appreciation is of two types, capital appreciation & currency appreciation.
Income tax rebate can be claimed by resident individuals whether male or female & senior citizens or you can say by all taxpayers.
As the name suggests it’s a tax levied on incomes or earnings by companies & individuals. The government imposes this tax to provide better infrastructure & facilities to citizens also for some Government’s own activities. Income tax needs to be filed every year by individuals & entities. The only sector exempted from income tax is agriculture.
Indirect cost as the name suggests costs those are not directly linked to any product, project, facility etc. are called indirect costs. Examples are administration costs, operations costs, product cost etc. Indirect cost is of two types: fixed cost and variable cost.
An invoice represents the sum due for a service or product provided by a seller. It also called a bill.