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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...
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...
Financial Reporting The goal of financial accounting is to issue financial statements. The first step of financial reporting is recording business transactions. This is lesson 2 in our...