Companies use various accounting principles when preparing their financial statements. These principles include rules and guidelines they must follow when reporting financial data. Usually, accounting principles come from an accounting body that dictates the accounting standards. For example, the Financial Accounting Standards Board (FASB) issues the Generally Accepted Accounting Principles (GAAP). Most companies follow various […]

Stakeholders use financial ratios to analyze various aspects of a company’s operations. Usually, this analysis can also occur through the financial statements. However, they do not provide the same level of comparability that comes with financial ratios. On top of that, these ratios are also easier to understand than the information provided in the financial

Companies use various financial tools to plan for growth. Usually, these tools include budgets and forecasts, which help companies with that plan. These tools allow companies to forecast the future. By doing so, it provides a reference for future activities. On top of that, budgets and forecasts also act as a control tool that can

Companies prepare various financial statements that report several aspects of their operations. Usually, companies use the balance sheet and income statement to provide a picture of those operations. On top of that, companies may also prepare the cash flow statement and statement of changes in equity. Each of these plays a role in presenting a

Companies use financial forecasting to create budgets and understand their revenue streams. This process helps create an expectation for companies to use as a reference in the future. On top of that, it also allows companies to control actual performance against the set benchmark. For companies, these tools are crucial in helping save costs and

Accounting records need to be updated after every event and transaction. Robust updating systems make it easy for accountants to look at the current position of a business, and it also eases the accessibility of business documents. Likewise, it is necessary to identify and maintain an updated record of scrap inventory. Materials may scrap due

Businesses need money to eliminate the gap between a company’s goals and the current state of affairs. The needs of a business are fulfilled by hiring people, implementation of business projects, and operational activities. So, what is needed to execute these activities successfully? It’s the money or capital, and by effectively using capital, the business

Overview of the concept Par value of the shares is a base amount and must be paid to acquire the company’s share. However, at the time of IPO – (Initial public offering), if the company receives an additional amount over PAR value of the shares (can be seen like profit), it’s said to be an