What is an Accounting ERP System?
Accounting ERP (Enterprise Resource Planning) systems are software solutions that assist firms in managing financial data by offering a centralised platform for accounting, inventory management, sales, and purchasing. Accounting ERP systems provide a single source of truth for financial data, allowing businesses to make better decisions about their operations. In today’s commercial world, organisations must […]
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 an Ideal Current Ratio?
The current ratio is a financial metric that measures a company’s ability to pay its short-term liabilities with its short-term assets. It is calculated by dividing current assets by current liabilities. The resulting ratio provides insight into a company’s liquidity and ability to meet its current obligations. An ideal current ratio varies depending on the […]
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 Are the Different Types of Dividends
Dividends are a key way for companies to distribute profits to their shareholders. When a company generates earnings, it has a few options for what to do. It can reinvest them in the business, pay down debt, or distribute them to shareholders. Dividends are one-way companies reward shareholders for investing in their business. There are […]
What is Material Mix Variance? Meaning and Treatment
Material mix variance is a measure of the deviation in the usage of different materials from standard or expected usage. In other words, material Mix Variance measures the difference between the cost of the standard proportion of materials and the actual proportion of materials consumed in the production process during a period Material Mix Variance […]
What is Sales Volume Variance? | Formula
Sales volume variance is an important concept in accounting and finance that helps businesses understand how their sales performance differs from their original expectations. In this blog post, we will explain sales volume variance, why it is important, and how it is calculated. What is Sales Volume Variance? Sales volume variance measures the difference between […]