Accounting

Balance Sheet Vs. Trial Balance: What are the Differences?

Companies use accounting software that helps prepare financial statements. However, the process behind the software is similar to that used by manual accounting processes. This process begins with an accounting entry that enters the system. This entry then enters the general ledger. Within the general ledger, companies have various accounts related to different areas. Usually, …

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7 Main Purpose of Balance Sheet You Should Know

Financial statements users read and analyze each statement to gain insights into a company’s operations. Each of these statements provides specific information that stakeholders will find useful. Usually, companies prepare these financial statements annually or quarterly. In some cases, companies may also present them for a longer or shorter period. The primary financial statements include …

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What are the 3 Classifications on a Balance Sheet?

Financial statements are documents that provide insights into a company’s operations. Usually, companies prepare four financial statements. These include the balance sheet, income statement, cash flows statement, and statement of equity. Sometimes, companies may also prepare two or three of these statements. However, the balance sheet and income statement are crucial to them. Each financial …

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How to Read and Analyze Balance Sheet of a Company?

A company’s financial statements allow its stakeholders to understand its operations better. In most cases, these will include the balance sheet, the income statement, the statement of cash flows, and the statement of retained earnings. Along with these financial statements, companies will also include notes to the financial statements. These notes include information about the …

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Accounting for Written Off Bad Debts: Definition, Example, and Journal Entries

Accounts receivable is an account in the balance sheet that represents the amount owed by customers to a company. This account holds all the receivable balances which may come from various customers. For most companies, this account also represents the total credit sales made by a customer with pending payments. Any company that offers a …

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Accounting for Issuance of Common Stock: Example, Journal Entries, and More

Most companies have limited sources of finance. Usually, these include equity and debt. Of these, the former comes from a company’s shareholders. In exchange for these instruments, the company issues shares, which provide the holder with several rights. These rights include receiving dividends and voting rights. The latter source of finance comes from third parties, …

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Accounting for Issuance of Convertible Bonds: Definition, Example, Journal Entries and More

Investors can invest in various securities and instruments in the market. Usually, they prefer shares and other similar instruments as they provide higher returns. These instruments come with two types of earnings, including dividends and capital gains. However, they also come with higher risks compared to other forms of investments. Some investors may not be …

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Accounting for Issuance of Warrants: Definition, Journal Entries, and More

Risk is a crucial factor when making decisions about investments for investors. Usually, these risks dictate the loss that these investors will make on their assets. These risks also relate to specific situations or circumstances. For some investments, they will be high, while for others, these may be lower. Ultimately, the investor must decide how …

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