Bookkeeping 101

For example, overhead costs such as the rent for a factory allows workers to manufacture products which can then be sold for a profit. Overheads are also very important cost element along with direct materials and direct labor….

You may also see outstanding shares used as a variable in financial ratios, making them important for fundamental analysis. Buying back stock can also be an easy way to make a business look more attractive to investors. By reducing the number of outs…

If somebody fails to deposit or cash a check you wrote, they will have a hard time negotiating the check after six months. However, you still owe the money, and banks can choose to process the payment. A company’s general ledger account Cash contains…

The only type of Outsourcing that really occurred during this period was when companies hired external suppliers for ancillary services. Unaware of the possible benefits of outsourcing, this early Outsourcing only occurred because most organizations …

The vendors get connected to the manufacturers through a third party known as a supplier. A vendor is a party in the supply chain that makes goods and services available to companies or consumers. The term “vendor” is typically used to describe the e…

GDP (gross domestic product) is the most popular measure of national output. The main challenge in using this method is how to avoid counting the same product more than once. Output is the result of an economic process that has used inputs to produce…

It is justifiable to exclude ‘outlier’ data points from statistical analysis for significance level of 0.005 or less according R.A. However, choosing a value of significance level for outlier detection is one of the problems. The second problem is th…

Technically, a negative liability is a company asset, and so should be classified as a prepaid expense. A negative liability typically appears on the balance sheet when a company pays out more than the amount required by a liability. Unearned revenue…

Current assets consist of cash and cash equivalents, which is generally the first line item on the asset side of the balance sheet when a balance sheet is prepared based on liquidity. Cash equivalents are generally commercial papers that a company in…

Cash equivalents are generally commercial papers that a company invest which is as liquid as cash. Other current assets are accounts receivables which the amount of money the company owes from the debtors to whom they have sold their goods on credit….