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 […]
Understanding the Face Value of a Share: A Beginner’s Guide
If you’re new to the stock market, you may have heard the term “face value” being used when referring to shares. But what does it actually mean? In this article, we’ll explain what the face value of a share is and how it impacts investors. What is Face Value? The face value of a share […]
What is a Stock Exchange? Features and Functions
The stock exchange is an essential part of the financial system that allows investors to buy and sell securities such as stocks, bonds, and other financial instruments. The stock exchange provides a platform for companies to raise capital and for investors to earn investment returns. In this article, we will explain the features and functions […]
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 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, […]