Differences Between Events and Transactions
In accounting, the terms events and transactions are often used interchangeably by those unfamiliar with their technical distinctions. Yet, for accountants and finance professionals, knowledge of the distinctions between these two concepts is central to proper record-keeping, financial reporting, and adherence to accounting standards. Although both transactions and events affect an organization’s financial position, they […]
Creative Accounting and Its Effects on Financial Reporting
Creative accounting is a financial strategy that involves manipulating financial statements to present a more favourable image of a company’s financial health. Although it does not always entail unlawful actions, it tends to test the limits of ethical financial accounting. Firms employ creative accounting in order to overstate earnings, conceal losses, or minimize tax burdens, […]
What is Cash Book? Features and Objectives
The cash book, in its simplest form, is a chronological record of all cash transactions (receipts and payments) made by a business. It serves as a primary book of entry, meaning transactions are recorded here first before being transferred to other ledgers. Essentially, it’s a detailed account of the business’s cash flow, providing a real-time […]
What is a Common-Size Financial Statement in Accounting?
A common-size financial statement is a type of financial statement where each line item is presented as a percentage of a base figure. The base figure is typically total assets or total revenue. Common-size financial statements are useful for analyzing trends over time. For example, if a company’s total assets increase from $100,000 to $200,000, […]
Difference Between Interim and Final Dividend
Dividends are one of the most important means through which firms pay out profits to their shareholders, but dividends are not uniform. Firms can pay dividends at various times within the financial year, mainly as interim dividends and final dividends. Although both are meant to reward investors, they vary with respect to timing, approval procedure, […]
What is Goods and Services Tax (GST)?
Goods and Services Tax (GST) is a broad indirect tax charged on the supply of goods and services. It was brought in to provide a simplified taxation system by consolidating various indirect taxes, including excise duty, service tax, and value-added tax (VAT), into a unified tax regime. GST is aimed at facilitating transparency, curbing tax […]
What Are Stock Control Cards – Pros and Cons Explained
Stock control is a critical function of inventory management, allowing businesses to hold the necessary amount of stock to satisfy demand without excess stock or out-of-stock situations for critical items. Stock control card is one of the essential instruments utilized for effective inventory tracking. Stock control cards contains a complete record of the movement of […]
5 Legit Expenses That Reduce Tax in Books of Accounts
Tax planning is an important part of financial management for companies and individuals. One of the best means of minimisng tax burdens legally is claiming valid business expenses in books of accounts. These expenses reduce taxable income without contravening tax laws. Documenting such expenses and complying with tax rules is important to avoid legal consequences […]
Top 5 Theories of Dividend Decision
Dividend decisions play a very important role in corporate finance because they impact the valuations of a firm’s stocks, investor confidence, and financial strategy. Several theories attempt to explain how companies should decide on their dividend policies. In this post, we are going to learn about the top 5 theories of dividend decision and their […]
What is Weighted Average Cost of Capital?
The Weighted Average Cost of Capital (WACC) is a crucial financial metric that represents a company’s overall cost of financing its assets. It is used by businesses and investors to determine the minimum return required on an investment to maintain its financial health. WACC considers both equity and debt financing, weighting each component according to […]