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The income statement shows the performance of a company over a period. The format is revenue minus expenses. If revenues are higher, the company has earned a net profit or net income. If the expenses...
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...
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...
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 asset. What is an...