Preparation of projected income statement Preparation of projected income statement: The preparation of a projected income statement, it is necessary to predict the anticipated revenues, expenses, and net income for a specific time period in the future. Here are the steps to Preparation of projected income statement: 1.Sales Forecast: Begin by estimating the sales or… Read More »
Net worth vs Authorized capital Net worth vs authorized capital are two separate financial terms with distinct meanings and purposes. Here’s a comparison between the two: 1.Net Worth: Net worth refers to the total value of an individual’s or organization’s assets minus its liabilities. It represents the financial position or wealth of the entity.… Read More »
Projected financial statements Website Link Projected financial statements: for a five-year period offer a distinctive insight into an organization’s anticipated financial performance and position over the given duration. These statements are based on assumptions, forecasts, and expectations about future economic conditions, market trends, and internal factors. Here are the key components typically included in projected… Read More »
Bookkeeping process explained It involves the bookkeeping process explained systematic recording, organizing, and tracking of financial transactions and activities of a business. It provides the foundation for accurate financial reporting and analysis. Here’s an overview of how bookkeeping works: Recording Transactions: Bookkeeping starts with recording all financial transactions of the business. This includes both… Read More »
Bookkeeping vs Accounting Bookkeeping vs accounting are two interrelated yet separate functions within the realm of financial management. The following are the fundamental distinctions between bookkeeping and accounting: Scope: Bookkeeping focuses on the systematic recording and organization of financial transactions. It involves tasks such as maintaining ledgers, recording income and expenses, reconciling accounts, and… Read More »
Signs you need a bookkeeper Signs you need a bookkeeper,A bookkeeper is typically need in the following situations: Small business owners: Small business owners often require the services of a bookkeeper to manage their day-to-day financial transactions, including recording income and expenses, reconciling bank statements, and maintaining accurate financial records. Growing businesses: As a… Read More »
Working capital management Working capital management refers to the administration of a company’s short-term assets and liabilities to ensure it operates efficiently and maintains adequate cash flow. It plays a crucial role in a company’s financial health by balancing liquidity (the ability to meet short-term obligations) with profitability. By optimizing working capital, businesses can sustain… Read More »
Direct and Indirect Expenses Direct and indirect expenses Difference DirectExpense Direct expense or income are those expenses or income that are directly related to the production or sale of goods or services. They are directly traceable to a specific product or service and can be allocated to it without any difficulty. Examples of direct expenses… Read More »
Business Valuation Calculation Business valuation Calculation refers to the process of determining the economic worth of a business, and there are various approaches available to calculate it. These approaches include: 1.Market Approach: This method utilizes comparable market data of recently sold businesses that are similar. By comparing the business with other similar businesses in the… 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 »
