Financial Accounting

Accrued receivables are recorded just before recording accounts receivables for credit sales. The term accrued receivables is often used interchangeably with accounts receivables. The major difference between the both lies in the timing for issuing an invoice. When a reporting entity cannot issue an invoice to its customers but is certain of revenue, it can […]

Average operating assets refer to the average of beginning and ending operating assets of a business in an accounting period. It can be calculated by adding the beginning and ending figures of operating assets and then dividing it by two. Operating assets include cash, inventory, equipment, receivables, and any other assets utilized in the operating

Non-interest bearing notes are usually short-term debt instruments that offer no interest to lenders. The return on investment for investors comes through a discount at the par value of these notes. The accounting treatment for these non-interest bearing notes is similar to zero-coupon bonds for issuers. It’s important to calculate the effective interest rate or

A daybook is a source document to create bookkeeping records of an entity. It records all the bookkeeping transactions of a business chronologically. Manual daybooks are rarely used these days and are challenging to create but they offer several benefits to a reporting entity. Let us discuss what is a daybook, what are its uses

Allowances are future expenses that a business anticipates against certain accounts. They can also refer to benefits received by employees as part of their remuneration packages. Businesses must ensure a uniform and transparent method to record these allowances and reconcile them as and when actual transactions occur in the future. Let’s discuss what is an

An unadjusted trial balance is a summary of the general ledger accounts before making any adjustments while the finished product is the adjusted trial balance. Both these types of trial balances come from the same bookkeeping records. However, an adjusted trial balance requires corrections and adjustments for missing entries. Let us discuss what are unadjusted

Accounting can be defined in terms of activity performed by an accountant. It has several types or branches based on activities or classes. Let’s discuss the top 12 accounting branches and their main characteristics. What are the Accounting Branches and What Do They Offer? Accounting branches are types of accounting practices to record, measure, and

Unearned revenue or deferred revenue is a form of advance payment received by a seller against a performance promise to the buyer. It is recorded as soon as the transaction takes place and recognized as a current liability on the balance sheet of the seller. What is Unearned Revenue? Unearned revenue refers to income received

Accounts receivable aging report is an informative document for a business showing details about the receivables schedule from different clients. Let’s discuss how to calculate accounts receivable aging and how this report can help a business in different types of analysis. What is Accounts Receivable Aging? Accounts receivable aging refers to the time taken to

Horizontal or trend analysis is the historic review of the financial statements of a company for a specified period. Let us discuss what is horizontal analysis, how to perform it, and what are its advantages for the users. Horizontal Analysis – Definition Horizontal analysis refers to the historical comparison of financial statement items from one