What are Debentures and Why Are They Issued?
Debentures are a type of corporate bond that is created by companies. The money borrowed to create debentures is called the face value. In exchange for the money, the company agrees to pay interest on debentures over a fixed period of time. Once the debenture matures, the company has to pay back the face value […]
What is Change in the Profit Sharing Ratio in Partnership Accounts?
A change in the profit-sharing ratio in partnership accounts refers to the alteration in the distribution of profits among the partners. This can occur for several reasons, such as: Any change in the profit-sharing ratio must be agreed upon by all of the partners and documented in a written agreement. Here is an example of […]
Straight Line Method of Depreciation – Benefits and Limitations
Under Straight Line Depreciation, a fixed proportion of the original cost of the asset (less residual value) is written off each year so that the asset account may be reduced to its residual value at the end of its estimated economic life. This method is often used for assets such as machinery and equipment, buildings, […]
Differences Between Accounting Concepts and Conventions
Although to a layman, both accounting concepts and accounting conventions may sound similar, there are some fundamental differences between them. There are a few different schools of thought when it comes to keeping track of your finances. Some people prefer to follow accounting concepts, while others prefer conventions. What’s the difference between the two? Basically, […]
What is Performance Budgeting?
The process of performance budgeting entails evaluating an organization’s performance within the context of the organization’s particular objectives as well as its overarching goals. To do this, there must be no ambiguity whatsoever on either the short-term or the long-term goals of the company. It is important that the different levels of management have their […]
What are Different Types of Financial Statements?
Financial statements provide essential tools for understanding an entity’s health and performance from various angles, whether you are an investor, creditor, stakeholder, or otherwise. The primary purpose of financial statements is to present the financial information of a company in a reliable and useful format. Financial statements provide a detailed picture of a company’s financial […]
What Are Sweat Equity Shares and Why Are They Issued?
Sweat equity shares are equity shares granted to employees of a company on favourable terms in recognition of their work. Sweat equity shares are one form of share-based compensation for employees. The beneficiaries of sweat equity shares receive incentives in exchange for their contributions to the company’s growth. Moreover, sweat equity shares encourage employees to […]
What is the Procedure to Issue Shares for Capital?
Companies issue shares to raise capital to finance their operations, such as expanding their business, developing new products, or entering new markets. When a company issues shares, it is essentially selling a piece of ownership in the company to investors. In exchange for their investment, shareholders receive a share of the company’s profits, or dividends, if the company is profitable. Typical Procedure to […]
What is Share Capital and How Does it Work?
A share is a unit of ownership in a company that represents a portion of that company’s total value and assets. Each share has a nominal or par value. A firm uses shares to obtain funds, and each share represents a unit of ownership that is offered for sale. A share represents a portion of […]
What are the benefits of business valuation?
Business Valuation A business valuation is a method for determining the value of a company and its assets. When deciding to sell their firm, the vast majority of business owners undergo an evaluation. Other causes include mergers, organisational reorganisation, and the breakdown of partnerships.Regarding the value of a firm, several factors must be taken into […]