Bookkeeping 101

Purchase Return Journal Entry is the journal entry passed by the company in order to record the transaction of return of the merchandises which were purchased from the supplier where the cash account will be debited in case of the cash purchases or t…

Notwithstanding the foregoing, Buyer agrees to pay the balance of the undisputed amounts on any invoice that is the subject of any dispute within the time periods specified herein. Yet despite the nature of the purchase order as a contract, it is com…

A cash discount is a type of sales discount, sometimes called an early settlement discount, and is recorded in the accounting records using two journals. The first journal is to record the cash being received from the customer. The second journal rec…

It is commitment that transforms the vision of success into actual success. Commitment stands first on the list of values and priorities of successful people. Being committed thus requires that a person is fully engaged in his endeavours and remains …

This is calculated as the number of shares outstanding (as opposed to authorized but not necessarily issued) times the price per share. For example, a company with two million shares outstanding and a price per share of US$40 has a market capitalizat…

A provision is an amount that is put aside to cover a future liability. The purpose of a provision is to make the balance of current year more accurate, as there may be costs which could be accounted for in either the current or previous financial ye…

Furthermore, operating as either type of business structure means that you will need to pay taxes on the company’s profits. A partnership operates as a pass-through tax entity, meaning that the profits and losses pass through to the owners who report…

An LLP has at least one general partner and one limited partner. The general partner is like a sole proprietor — she has full control over business activities and may be held liable for business obligations. The limited partner is a silent partner, …

A company’s EPS, equal to net income divided by the number of outstanding shares, is often easily accessible via the firm’s income statement. The retention ratio, meanwhile, refers to the opposite of the payout ratio, as it instead measures the propo…

More than half of the organizations treat less than 15 percent of their advertising as overhead. For those organizations, if advertising were their only expense, their program spending ratios would be greater than 85 percent—an excellent figure by an…