Accounting

Return On Net Operating Assets (Definition, Formula, Examples, Calculations, and More)

What is an operating asset? Operating assets are the assets required by the business to execute business operations and generate revenue. Examples of operating assets include prepaid expenses, fixed assets, inventories, cash, and accounts receivables, etc. Further, intangible assets like patents, technology, and licenses are also considered operating assets if used to manufacture and generate […]

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Accounting for Warranty Provision: Journal Entries and Example

Official Definition “Warranty is an implied or expressed promise of a manufacturer/vendor to a buyer, assuring that the product’s specifications, facts, and conditions are true and valid.” A business’ warranty expense is the cost of repairing or replacing items it has sold or is expecting to incur in the future. A business’s warranty period determines

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Accounting for Inventory (Purchase, Journal Entries, Example, and More)

Inventory management is one of the important areas to run and manage your business effectively. Knowing how much inventory you have at your business premises and what level should be maintained mitigates the risk of an out-of-stock situation. So, there is a need to account for inventories properly via recording journal entries of purchasing, processing,

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What Is Goods Received Note (Definition, Example, Process, Importance, and More)

Definition: Goods receive notes/delivery note is prepared by business to document details of the goods received from suppliers. It’s used as a supporting document while recording liability and paying to the suppliers. It serves as evidence for the delivery of specific goods quantity. So, it can be used by both seller and buyer to compare

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Accounting for Repair and Maintenance (Journal Entry and More)

Repair and maintenance expense is incurred to keep business assets operational, it’s a routine expenditure, and this amount is expected to be significant for the companies with intensive machinery and equipment. On the other hand, repair and maintenance are limited for the companies operating in the trading and service sectors. This expense must not be

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Accounting for Subsidiary: Using Consolidate and Equity Method

Companies are complex structures that represent a separate legal entity. Primarily, they issue shares that allow shareholders to become part-owners. Being a separate legal entity, companies have all the rights that other legal entities have. Therefore, companies can also buy shares from other companies as a part of their investment policies. The accounting for investments

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Accounting for Bank Service Charge: Definition, Journal Entries, Example, and More

In most jurisdictions, transacting in cash may be acceptable. While paying and receiving cash is the primary source of compensation for most transactions, some may prefer other options. The most prominent of these are bank accounts and transfers. For most individuals and companies, banks have taken over cash transactions. Some jurisdictions even require entities to

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