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Retained Earnings Breakpoint: Definition and How to Calculate It

For most companies and businesses, profitability is one of the most critical success metrics. Most stockholders in companies focus on their profit-making ability. This profit is not only crucial for distributing among shareholders but can also provide a source of finance. Companies may choose to either hold their profits or distribute them to their shareholders. […]

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Accounting for Collateral: With Example Under US GAAP – ASC860

What is Collateral? The term collateral represents an asset that one party offers as security in exchange for receiving a loan. The party offering collateral is the lender that owns the asset. The counterparty is the lender that accepts collateral. This collateral may come in as fixed assets, such as property, equipment, vehicles, etc. Some

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Accounting for Cash Sales

Sales revenue of a business comes from either cash sales or credit sales. Cash sales are sales made for cash. That’s mean the seller receives cash payment immediately upon providing goods or services to its customers. In this article, we cover the accounting for cash sales. This includes both sales with sales tax and sales

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Accounting for Credit Sales

Sales on credit are very common in today’s business environment. This is because each business needs to manage its working capital properly. When a business makes sales on credit, such sales correspondent entry will be on the accounts receivable. In contrast, when the company makes a purchase on credit, the correspondent entry of such purchase

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Subordinated Debentures: Definition and How it Works?

Subordinated debt or debentures ranks lower than senior debt and higher than stocks. The term “subordinate” here refers to the priority and ranking of debt repayment in the case of the borrower’s liquidity. For issuers of debt, the senior debt gets the top priority, followed by different types of subordinated debentures, and the stocks at

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What is Income Bond and How it Works?

An income bond is a security instrument in which the investor only receives repayment of the face value. The coupon or interest payments are made only if the issuer generates sufficient income. It is a rarely used instrument in the corporate world. Since there are no guaranteed returns on investment, it does not attract investors.

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Debentures – Definition and Working Mechanism

Debentures are often the alternative name of unsecured bonds. It can be any debt instrument without collateral. It is the form of issuing debt without pledging any assets as collateral. Large companies and government institutes issue debentures to raise funds from capital markets. What is Debenture? A debt instrument that is unsecured and comes without

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Cash Concentration – Definition and Methods

Cash concentration refers to a treasury term that involves the pooling of cash funds from different accounts into a single centralized account. The term is often used together as concentration and disbursement. The cash concentration and disbursement take place to and from a single centralized treasury account of a company. It is also an important

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Bond Indenture – Definition and Working Mechanism

An indenture is a legal contract. A bond indenture is a contract attached with a bond between the issuer and the bondholder. It typically involves a third-party guarantor such as a financial institute or bank that acts as a trustee. A bond indenture specifies the terms and conditions of the bond. It legally binds both

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Top 10 Best Books for Non-Financial Manager

It is conceivable that individuals may find books to be an ideal way to become familiar with some new subject. The customary technique for learning may be useful for certain individuals and in that case books may be their “go-to” place. Discussing finance is perhaps the most complex subject that you may ever get to

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