Monetary Unit Principle
Jennifer edwards The monetary unit principle of accounting states that all the transactions must be recorded in the form of currency. In other words a business can only record those transactions that…
The Cost Principle
The cost principle is one of the basic principles of accounting that states that all the assets, liabilities, equities and expenses must be recorded on the financial statements at their…
Accounting Principle: The Matching Principle
The matching principle of accounting is one of the basic principles of accrual base accounting. This principle states that when a business is going to record its revenues it must…
Gross Profit Ratio
Gross profit ratio is the ratio that shows the total amount of profit that will be earned by a company by selling its products and services. The gross profit ratio…
Interest Coverage Ratio
As the name indicates interest coverage ratio is the ratio that depicts the ability of a company to cover its interest expense. This is the ratio that shows whether a…
Gearing Ratio
Gearing ratio can be defined as the ratio a company’s debt to that of its equity. This is also called as debt to equity ratio. High gearing ratio means that…
Asset Purchase Process
Asset purchase is a type of acquisition in which the purchaser only wants to purchase the assets of the seller. Although asset purchase is a common practice but it must…
The Acquisition Process
The acquisition process is a process of acquiring another company, business or a firm that have a related business and can prove beneficial for the acquirer. The process of acquisition…
Different Types of Dividends
Dividend can be defined as the payment made to the stockholders of a company that have a share in the company’s profit as they have invested equity in the company.…
Incremental Cash Flow Analysis
Sometimes the management may decide to incur certain changes within the business operations that may result in a change in the cash flow of the entire business. This change may…
Installment Method of Revenue Recognition
It is the method of paying for a purchase in the form of installments. These installments may be spanned over days, weeks, months or even years. This method of revenue…
Cost to Cost Method of Revenue Recognition
It is a method of revenue recognition that is used by the accountants to find out the percentage of completion of project, revenue associated with project and the cost associated…
Profit Velocity Analysis
Profit Velocity Analysis is a method of evaluating the products to find out which products take highest time to get pushed from the manufacturing bottle neck. Most of the companies…
Bank Statement Explained
A bank statement is a kind of financial statement that is issued by the banks to the companies or individual customers once in the month to show the financial transactions…
Financial Leverage
Financial leverage is the type of debt that a business entity or a firm utilizes to purchase more assets in order to run business operations. A business entity utilizes financial…
Petty Cash Accounting
A small amount of cash that is kept reserved by a business to fulfill sudden but small every day operational needs is called petty cash. The small cash needs may…
Calculation of Stockholder Equity
Stockholder equity can be defined as the financial share of the stockholder in a business. It can also be defined as the residual funds invested by the stockholder in the…
Current Liabilities Explained
Current liability is that entry of the balance sheet that has to be paid by the company to any third party within a year. It is the responsibility of the…