Accounting is the practice of keeping precise records of the income and expenditures of a business. It is a recognised profession, regulated in most countries by an industry association which offers training and certification to aspiring practitioners.
At the most basic level, accounting is necessary to determine whether the business is profitable or not. Although this [...]
Trade Credit is the practice of businesses selling to other businesses and allowing those other businesses to pay for the goods on a deferred basis. The extent of the deferral varies but, for example, invoices which demand payment within 90 days are not uncommon. Sometimes a percentage discount may be given for earlier payment.
Most businesses [...]
Revenue is money received by a company or other organization. For companies, most revenue comes from selling products or services to individuals or other companies. It is also possible for companies to earn revenue through financial investments.
For accounts to identify a company’s revenue over a given period might seem, at first glance, a simple matter. [...]
A payroll is a document recording all information pertaining to the remuneration of a company’s employees. It will typically include such information as the amounts actually disbursed to the employee, sometimes known as net pay. Any deductions that were made will also be included. These could be direct deductions undertaken by the employer for things [...]
A current liability is the opposite of a current asset. It is a financial obligation which a company is expected to have to discharge within a short period of time, sometimes formally defined as one year or the current financial year. Liabilities are anything for which the company will have to pay out money. The [...]
A current asset is a highly liquid asset which is expected to be used up within a short period time. Examples of current assets include cash, inventories of goods, accounts receivable ( in other words, invoices which have been issued for prior delivery of goods or services and are expected to be paid soon), and [...]
A cash flow statement is an accounting document which shows the amount of cash held by a company over a defined period of time. It records the various transactions the company engaged in and how they affected its cash reserves. The cash flow statement may also record the level of other assets which are deemed [...]
Book-keeping is the practice of maintaining a careful record of all of a person or organisation’s income and expenditures. In modern times, book-keeping is often regarded as essential so that a person or organisation can discharge tax obligations to the government fully and properly. Book-keeping is less complex than accounting but proper book-keeping is an [...]
A balance sheet is a financial statement which describes a company’s overall financial position at a moment in time. It is considered one of the most important forms of financial statement and, in many countries, there is a legal requirement that companies submit a balance sheet to the government on a periodic basis (usually yearly), [...]
A financial audit is an external check on a company’s accounting procedures which verifies that financial statement have been compiled usually a generally accepted methodology and are substantially free from error. Usually it will be performed by a specialised accounting firm. In many countries company are required by law to submit accounts and financial statements [...]