Prepaid Expenses It is considered as personal accounts in accounting because they represent an advance payment made by the business for goods or services. It will receive in the future. Personal accounts are those accounts that deal with individuals, firms or entities. That either indebts to the business or have lent money to the business.… Read More »
Prepaid expenses vs preliminary expenses Prepaid expenses vs. preliminary expenses are two different types of expenses in accounting. It refer to the expenses that have been paid in advance but will incur in the future. Examples of prepaid expenses include prepaid rent, prepaid insurance and prepaid advertising. These expenses record as assets on the balance… Read More »
Direct and Indirect Expenses Before diving into the specifics of salaries and wages, it’s essential to understand the basic definitions of direct and indirect expenses: Direct Expenses: These are expenses that can be specifically linked to the creation of goods or the provision of services. They vary depending on the level of production. In other… Read More »
Deferred Revenue Expenditure Understanding : A Comprehensive Guide In the realm of accounting and financial management, understanding various types of expenditures is crucial for accurate financial reporting and decision-making. One such concept is “deferred revenue expenditure.” Although it may sound complex, grasping its essence is vital for managing a company’s finances effectively. 1.… Read More »
Cost control What is the Meaning of Cost Control? In any organization, managing expenses effectively is crucial for maintaining profitability and ensuring financial stability. This is where cost control comes into play. But what exactly is cost control, and why is it so important? Understanding Cost control refers to the process of managing and regulating… Read More »
Nominal Account In accounting, a nominal account is a general ledger account that is use to record revenues, expenses, gains, and losses for a specific accounting period. These accounts are also known as income statement accounts or temporary accounts. Because their balances are reset to zero at the end of each accounting period, typically a… Read More »
The functions of the accounts receivable The functions of accounts receivable in accounting are as follows: 1.Recording Sales: Accounts receivable records the amount of money owed to a business by customers for goods or services sold on credit. It serves as a record of credit-based sales made by the business. 2.Payment Tracking: Accounts receivable tracks… Read More »
Do manufacturing expenses come under trading account No, Manufacturing expenses are not included in the trading account, which is a component of a business’s final accounts used to determine the gross profit or loss. It includes all the direct expenses and revenues related to the purchase and sale of goods during a particular period. For… Read More »
Does Capital expenditure affect the financial statements of a business Capital expenditures are investments made by a business in long-term assets like property, plant, and equipment. These expenditures have important implications for a business’s financial statements: 1.Balance Sheet: Capital expenditures increase the assets of the business. Long-term assets, such as buildings, machinery, and equipment, are… Read More »
How are Sundry expenses treated in a balance sheet Sundry expenses are generally treated as an expense in the income statement of a business and are deducted from the revenue earned to arrive at the net income or profit for the period. They do not appear as a separate item in the balance sheet. But… Read More »
