What is the Cost of Goods Sold? Definition | Formula
Cost of Goods Sold (COGS) is a financial metric representing the cost of the products or services a company sells during a given period. It is an important expense item on a company’s income statement and is calculated by subtracting the cost of goods sold from the company’s revenue. COGS is calculated using the direct […]
What is a Joint Venture? Meaning and Purpose
A joint venture is a business agreement between two or more parties to pool their resources to achieve a goal or undertake a specific project. The parties involved in a joint venture agree to share the risks, costs, and profits of the venture. A joint venture can take many forms, such as a limited liability […]
What is a Fictitious Asset in Accounting?
When checking the financial statements of a company or solving an accounting problem you might have come across a term fictitious asset. The term “fictitious asset” is often used interchangeably with “deferred charges.” A deferred charge is an expense that has been paid in advance and will be recognized as an expense over time. For […]
What are sundry expenses?
Sundry expenses refer to all those small, miscellaneous expenses that businesses incur during their operations but don’t fall under any specific category. In this blog post, we will explore what sundry expenses are, their importance, and how they are accounted for. What do Sundry Expenses Include? Sundry expenses can include a wide range of costs, […]
What is Prepaid Expense? Journal Entry in Books
Prepaid expenses are expenses that a company or business pays for in advance but which have not yet been incurred or used. These expenses can include items such as rent, insurance premiums, and utility bills. Prepaid expenses are considered assets because they represent a future benefit to the company. When a company pays for a […]
What is the Matching Principle of Accounting?
The Matching Principle is a fundamental accounting concept that aims to ensure that expenses are recognized in the same period as the related revenues. It is one of the guiding principles of accounting and is essential for accurate financial reporting. The principle is based on the accrual accounting method, which records transactions when they occur, […]
Difference between trial balance and balance sheet
The balance sheet and trial balance are two of the most important financial statements in accounting. While they both play crucial roles in presenting a company’s financial position, they differ in scope and purpose. In this article, we’ll examine the differences between the balance sheet and trial balance. The Balance Sheet A balance sheet, also […]
What is Trade Discount? Treatment of Trade Discounts
Trade discounts are discounts given to customers who purchase goods or services in large quantities or on a regular basis. These discounts are meant to encourage customers to buy more from the seller, and they are often a percentage of the list price. In this blog post, we will explain what trade discounts are and […]
What is Del Credere Commission?
Del credere commission is a type of commission paid to a buyer’s agent or a commission agency in exchange for taking on the buyer’s credit risk. It is, in essence, a commission given to an agent in exchange for securing the buyer’s payment. This kind of compensation is often paid by the seller to the […]
What Do Mean Sundry Debtors and Sundry Creditors?
Sundry debtors and sundry creditors are words frequently used in the business world. These phrases describe the sums of money that a company owes to its suppliers and clients respectively. Business owners and managers should be aware of these words and how they affect their organisation’s financial statements. What are Sundry Debtors? Sundry debtors are […]