Accounting

It is necessary for companies and businesses to differentiate between capital and revenue expenditures. While capital expenditures relate to large investments, revenue expenditures are smaller, day-to-day operating expenses. However, the differentiation between both of these isn’t as straightforward. There are some factors that companies can use to differentiate between their expenses. Before understanding the differences […]

What is Depreciation? In accounting, depreciation is an expense account to record the allocation of the cost of fixed assets or non-current assets over the useful life or life expectancy of the assets. The depreciation is calculated and recorded as an expense in the profit or loss statement. It is a non-cash transaction; therefore, when

What is Trading Security? Trading securities refer to either debt or equity securities that were purchased and are intended to re-sell for short-term profit. When a business or investor buys such securities for the purpose of resales, such securities are classified as trading securities. As per ASC 948, any mortgage-backed securities held for sale required

In order to encourage early payment, each business normally provides a sales discounts if customers make payment within the discount period. In this article, we cover the accounting for sales discounts. This includes the journal entry for sales discounts with or without allowance for sales discount account. Now let’s get started! What are Sales Discounts?

When a business sells products or goods, there is the possibility of a return by its customers due to faulty or obsolescence within the agreed timeframe. The accounting for sales return and allowances is straightforward and the difference between a perpetual inventory system and a periodic inventory system. In this article, we cover the accounting

When we buy products or goods, there is the possibility of a return back to the supplier due to faulty, damaged, or defective within the agreed timeframe. The accounting for purchase return and allowances is straightforward and the recording is different between a perpetual inventory system and a periodic inventory system. In this article, we

Front-line sales typically encounter cash over and short. This is because they involve with cash sales that currency changes are required. In this article, we cover how to account for the cash short and over; especially on the cash over and short journal entry. Now let’s get started! What is Cash Over and Short? Cash

There are two types of purchase discounts and the accounting treatment for these two discounts is different from one and another. These are cash discount and trade discount. In this article, we cover the accounting for cash purchase discounts. This includes the illustration of the net method vs gross method of recording purchase discounts both