For example, when a business sells something on predetermined credit terms, the funds from the sale are considered accrued revenue. The accruals must be added via adjusting journal entries so that the financial statements report these amounts. Accrued revenue refers to income or assets that have been earned but not yet received. For instance, a utility company provides electricity to […]
Bookkeeping Accrual Method
Operating Expenses vs SG&A
This means that such costs remain constant with an increase or decrease in the volume of output. To understand what OPEX is, let’s try to first understand what non-operating expenses are. Examples of capital expenditures include development of buildings, vehicles, land, or machinery expected to be used for more than one year. When acquired, they are treated as CapEx to […]
Types of Assets List of Asset Classification on the Balance Sheet
If an asset will have a residual value at the end of its service life that can be realized through sale or trade-in, depreciation should be calculated on cost less the estimated salvage value. Remember, the depreciable life is the term that the asset is used by the owner, but if the asset is not worthless at the end of […]
What is deferred revenue?
As the product or service is delivered over time, it is recognized proportionally as revenue on the income statement. Under a cash basis of accounting, your accountant invoices an annual, one-year subscription for $12,000, for example. Your accountant records the entire revenue amount (from the invoice total) in a single month in your Accounting Advice for Startups financial statements. Money […]
Are Bonds Assets or Liabilities? Explained
(a) Debentures of Rs. 50,000 issued for cash to sundry persons at 90% will be shown on the liability side of the balance sheet. Discount on issue Rs. 5,000 will appear on the assets side under the main heading ‘miscellaneous expenditure’. 15,000—will be merged with the cash of the company and final balance of cash will appear in the balance […]
How to Define, Find, and Record Sales Returns & Allowances
Companies that allow sales returns must provide a refund to their customer. A sales return is usually accounted for either as an increase to a sales returns and allowances contra-account to sales revenue or as a direct decrease in sales revenue. As such, it debits a sales returns and allowances account (or the sales revenue account directly) and credits an […]