Accounting

Tax filing tends to be a challenging task for all organizations to ensure complete compliance and avoid any penalties or IRS Audits. In case of dividend payments, too, organizations are supposed to ensure that they keep a proper track record of the taxes paid in terms of acting as an agent between the government (the […]

Income Statement was previously referred to as the Trading and Profit and Loss Account. The Trading Account outlays the revenues, and the relevant expenses incurred in selling those goods. This implies that the trading account simply outlines the gross profit of the company. It has two broader components, the revenue part, and the Cost of

Financial statements of the company hold tantamount value in terms of stakeholders, as well as internal decision-makers of the company. Factually, it can be seen that financial statements are resourceful because they hint regarding the profitability and the performance of the company. Therefore, preparation of the financial statements tends to be one of the most

What are purchases? Purchases are categorized as expenses that are incurred by organizations when they procure goods and services, for purpose of reselling, or value-addition followed by reselling. Purchases are categorized as costs incurred by the company to bring goods and services to a sellable condition. Technically, purchases are defined as the act of a

Companies cannot expense assets in one accounting period. This requirement comes from accounting standards. However, it does not imply companies must not include those costs as a part of their profit calculation. At the same time, companies must abide by the matching principle in accounting. This principle requires companies to match expenses to the revenues

Companies report sales information for investors to understand their operations better. This report comes through the income statement where companies can state how much revenues they made. Similarly, companies also provide information about the costs incurred to generate those sales. These costs also come under different headings. For example, these include the cost of sales,

Accounting is a primary function for companies and all organizations. This function relates to handling financial transactions. Usually, it involves recording, analyzing, summarizing, and reporting those transactions. In the past, accounting only covered the financial aspects of a company’s operations. Over time, however, its scope has increased to cover more activities. Today, accounting has many

The accruals concept in accounting requires companies to record income and expenses when they occur. In the past, companies only recognized these items if they involved a cash flow. However, the accruals concept changed that treatment. While this made accounting straightforward and more transparent, it also created issues with understandability. Furthermore, it resulted in various

In general accounting, the difference between accruals and cash is not crucial. In most cases, accounting principles prefer companies to record transactions based on the accruals concept. Consequently, they must account for transactions when they occur. The cash settlement involved in those transactions does not contribute to the matter. However, this treatment only covers the

Companies prepare financial statements regularly that report various aspects of their operations. These statements are crucial in providing valuable information to their users and stakeholders. Based on that information, they can analyze the company and make various decisions. However, companies must use a specific format when preparing these reports. This format also includes guidance on