Accounting

What is a Throughput Contract? Throughput Contract Vs Take-or-Pay Contract

Throughput contracts allow two or more parties to set forth terms and conditions for the purchase of commodities and goods for long-term projects. These contracts set the conditions for the minimum order quantity, shipping schedule, and duration of the contract for scheduled deliveries until the contract expires. Let us discuss what is a throughput contract, […]

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Marginal Cost Vs Average Cost – Key Differences

Marginal cost and the average cost of production are two important costing concepts. Both types of costing methods offer valuable information to the management. Let us discuss what is marginal cost, average cost, and their key differences. What is Marginal Cost? The marginal or incremental cost is the additional cost of producing one unit of

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Franchising Vs Licensing – What are the Key Differences?

Franchising and licensing are two popular business models. Both models offer certain advantages and disadvantages to both parties in the arrangement. Let us discuss what are franchising and licensing and their key differences. What is Franchising? Franchising refers to a business agreement between a franchisor and a franchisee where the franchisor remains the legal owner

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Unbilled Revenue – All You Need to Know!

Unbilled Revenue can be defined as revenue that has been earned by the company, but it is not yet recorded on the accounts of the company. It is recognized as the revenue that has been accounted for, but relevant invoices have not yet been sent to the customers. Unbilled revenue simply implies that there are

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What is Portfolio Yield? How to Calculate It?

Portfolio Yield can be defined as the percentage of investment income over the pool’s invested asset portfolio. This ratio is a metric that is commonly used by banks, or microfinance banks to measure the average income that the company receives from the loans. This is mostly calculated on the average of the total loan portfolio.

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Value Added Tax – Is Value Added Tax (VAT) an expense?

VAT is basically a consumption tax that is levied on goods and services at every stage of the supply chain; typically where value is added, from the initial production to the point of sale. The VAT that the user pays depends on the underlying cost of the product, adjusted for any cost of materials in

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Non-Sufficient Fund (NSF) Checks – All You Need to Know Including Journal Entry!

Non-sufficient Fund (NSF) Checks refer to the status of checking accounts that do not have enough money to cover transactions. It is described as the fee charged when a check is represented but cannot be used by the balance in the account. They are also referred to as bounced checks. If the bank receives a

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Drawing Vs Dividends: Is Owner’s Drawing the Same as Dividends?

The owner’s drawings and dividends are two different methods of withdrawing funds from a business. Although both methods have similar impacts on a business and for business owners, they work differently. Let us discuss what are owner’s drawings, dividends, and salary methods and their implications for business owners. What is Owner’s Drawing? Owner’s drawing, owner’s

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Accounting for Foreign Exchange Gains and Losses

Definition of Foreign Exchange Gains and Losses Foreign exchange gains and losses are referred to as losses that are incurred when a company purchases goods and services in foreign currency. The currency fluctuation exists on a normal basis, and as a result of this fluctuation, there is a difference in monetary assets and liabilities, which

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What is a Bottleneck in production? How to avoid bottleneck?

A bottleneck is a point of congestion existing in the production system (for example, assembly lines) that occurs when workloads arrive at a quicker pace which cannot be handled by the production process itself. The inefficiencies that occur as a result of production bottlenecks result in delays in order fulfillment, as well as higher production

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