The accounting information system records transactions and summarizes the results. The goal of accounting is to issue financial statements. The accounting system records transactions and prepares...

Liquidity ratios show the ability of a company to pay its short-term debts. These include the current ratio, quick ratio, and cash ratio. Liquidity ratios compare current assets and current...

The current ratio shows a company’s ability to pay its short-term debts. It is the most popular liquidity ratio. The formula is current assets divided by current liabilities. What is the...

A merchandising company sells products or inventory. Accounting for retailers is more complex than for service companies. This is lesson 4 in our financial accounting series. These lessons...

What is an expense? Expense is a cost to operate a business to produce revenue. In accounting, an expense occurs when an asset is used. This could include a cash outflow or consuming an...

Adjusting entries are made at the end of a period to update accounts. An adjusting entry affects an income statement and balance sheet account. This is lesson 3 in our financial accounting...