Audit risk is a risk that an auditor is likely to issue an incorrect opinion on the financial statements of a company. The purpose of auditing records is to lower the audit risk to a low level through testing and evidence. Because investors, creditors, and stakeholders use financial statements, an Read more…
Chart of accounts numbering includes setting up a structure of accounts that an organization can use, and also assigning specific codes to general ledger accounts. A chart of accounts lists all accounts and is useful in aggregating information into financial statements. Usually, the chart is sorted in order by number Read more…
What Does Negative Retained Earnings Mean? If a business has negative retained earnings, this is likely to have a significant impact, particularly on investment and shareholder dividends. But, in order to understand and calculate negative retained earnings, a company must first get to grips with its retained earnings. Getting to Read more…
What is Predetermined Overhead Rate? Predetermined overhead rate is an allocation rate that is used in manufacturing, applying an estimated manufacturing overhead to specific periods or jobs. Applying a predetermined overhead rate can be a valuable tool for manufacturers and is commonly used in business. Typically applied at the beginning Read more…
Charities, churches, and non-profit organizations heavily depend on donations for their daily operations. However, apart from the usual cash donations, which most non-profits prefer, some are in the form of in-kind donations. Below is a guide highlighting the important things you should know about these forms of donations. What Does Read more…
A bad debt expense means that a customer can not continue to pay back their loan installments or outstanding debt. That can happen for many reasons. Financial problems like bankruptcy or unpaid debts to other creditors are among the most common issues that can turn a receivable not collectible. However, Read more…
Managing cash flow is chief to measuring a company’s performance to know how it is fairing and note the areas that need improvement. Regular tracking of key measures is vital for aligning goals and priorities. Days payable outstanding or DPO is among the most effective metrics to track to check Read more…
Financial statements are crucial to any business. Besides revealing past wins and losses, you need these documents to know your current position and future expectations. One such document is a statement of retained earnings. You can create it as an individual document or combine it with your company’s income statement Read more…
Businesses often require some physical assets that help with revenue generation. After some time, these tangible assets begin to wear out or cease to function. To know how a business is truly performing, it needs an authentic accounting report. And to record a conclusive accounting report, an organization needs to Read more…
Many entrepreneurs cannot avoid debt when running a business. While it can be devastating for some, debt is not necessarily bad for your venture. You need to have a proper strategy to pay off debts on time while growing the entity and remaining profitable at the same time. Regarding debt Read more…