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

What is deferred tax? Deferred tax is defined as an accounting measurement of future tax consequences for a given enterprise. It is the tax that has not yet been levied by the government, but still needs to be calculated and subsequently disclosed in the financial statements in accordance with the accrual concept. As per the

What are Salaries Payable? Salaries payable refers to the amount a company owes to its employees due to their past work. This amount represents an obligation for the company to pay those employees in the future. Primarily, salaries payable come from the salaries calculated for employees at each calculation date. Companies record this amount in