This Accounting category will cover various topics on accounting ranging from financial, management, and advance accounting.
The compound annual growth rate, commonly called CAGR, is the compounding of rates of return over a specified period. It is useful for investors and businesses to compare the performances of different investments over the same period. Let us discuss what is CAGR and how to calculate it along with its uses. What is the …
What is Compound Annual Growth Rate (CAGR) and How to Calculate It? Read More »
Year-over-year or year-on-year (YOY) is a comparison term you have seen everywhere. It is used to compare two annual figures and is most commonly used in financial data sets. YOY analyses are common for economic, business, and investment analyses. It is a simple term and can be calculated easily for any type of data. Let …
Deferred revenue is unearned income that a business received in advance. It is recorded as a current liability on the balance sheet of a business. Once the seller delivers the promised goods/services, the current liability is removed and turned into earned revenue in the income statement. Let us discuss what is deferred revenue, how it …
Depreciation, amortization, and depletion are all cost allocation methods for different types of long-term assets owned by businesses. All of these are accounting terms with non-cash entries and effects on profits. These accounting methods help companies follow the accrual accounting principles of matching entries. Let us discuss what these terms and the key differences between …
Depreciation Vs Amortization Vs Depletion – What is the Difference Between Them? Read More »
Gross profit and net profit are two important profitability metrics. Both these terms offer valuable insights into a company’s financial performance history. Let us discuss what are these terms and the key differences between them. What is Gross Profit? Gross profit is the amount of profit a business makes after deducting the costs to produce …
Gross Profit Vs Net Profit – What’s the Difference? Read More »
Ratio analysis is a tool to analyze the financial performance of a business. It offers some advantages and disadvantages. Analysts must be aware of the potential limitations of ratio analysis. By understanding these limitations, analysts can make adjustments to evaluate the financial performance of a business that is closer to reality. What is Ratio Analysis? …
The triple bottom line (TBL) or 3BL is a framework that aims to bring the people and planet aspects along with the conventional one of profit. The TBL theory suggests that businesses must adopt better social and economic policies that bring benefits in all three aspects rather than focusing on profits only. Let us discuss …
The current and quick ratios are good indicators of the short-term liquidity of a business. These ratios can also provide help in analyzing the long-term solvency as well. Both ratios use a similar form of current assets and current liabilities. However, the interpretation of both these ratios varies with some key differences. What is the …
Current Ratio vs Quick Ratio – What are the Key Differences? Read More »
What is a Quick Ratio? The quick ratio is the short-term liquidity test of a business. It is an accounting ratio that measures the ability of a business to pay current liabilities using cash and cash equivalents. The quick ratio considers assets that can be converted quickly into cash, hence the name quick ratio. The …
How to Calculate Quick Ratio? How It Can be Improved? Read More »
A nominal ledger is the primary source document for the accounting records of a business. It forms the basis of an accounting system in any business. Nominal ledger records all financial transactions categorizes them into different classes and provides useful information to the users. Let us discuss what is a nominal ledger, how it works, …
