The rule of 72 is an estimate of how quickly an investment doubles. The formula is 72 divided by the interest rate. As returns increase, the years needed to double decrease.
Rule of 72: Formula and Calculator Read More »
A balance sheet is a financial statement that shows the financial position of a company. It shows company assets, liabilities, and equity. The balance sheet is a snapshot of what the company owns and owes on a specific date. The balance sheet is one of the core financial statements. The other financial statements are the
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 are higher, the company has earned a net loss. The income statement is for a period of time. It can
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 financial statements. Chapter 3: Accounting Information System This is Intermediate Accounting Chapter 3. For more Intermediate Accounting topics, see Intermediate Accounting Study Guide. Debits and Credits Double-entry accounting is the
Accounting Information System Read More »
Liquidity ratios show the ability of a company to pay its short-term debts. The liquidity ratios include the current ratio, quick ratio, and cash ratio. Liquidity ratios compare current assets and current liabilities to determine a company’s ability to pay its short-term debt. What is liquidity? Liquidity is a financial concept about an asset’s “nearness
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 expense? Expenses are one of the five types of accounts in the accounting system. All expenses appear on the income statement.
