Financial Statements

Revenue is not considered an assets. Even from a double entry point of view, revenue would be a credit where as assets are debits so there no even interchangeable. If revenue was kept on the balance sheet as deferred income it would be as a liability.

If there is no cost of goods sold, then your gross margin is 100%. In other words, all the revenue you receive translates into gross profit. The type of business that would report this kind of result is most likely to perform services and dividing the Profit and Loss Statement into a gross profit and net profit section is irrelevant.

To calculate ROI, the benefit (or return of money or income gained) of an investment is divided by the cost of the investment. ROI is usually shown as a percentage. This formula can also be used to suit a number of different situations.

Here is the formula for ROI:

(Income from Investment - Cost of Investment) / Total Cost of Investment = ROI

yes...on the cr side...

the entry can be done in two ways

1= if house is the propery of the firm but firm deals in some another business

cash account dr

profit and loss account dr

to house account

** this entry is done when house has been sold in cash

2= if firm's business is to deal in houses then entry would be

cash account dr

to sales account

Liquidity refers to the ability of a firm to change its assets to cash. Being an asset, the ability for receivables to pay its debts to the firm will affect the asset's ability to become liquid. A business that collects its accounts receivable in an average of 20 days generally has more cash on hand than a business that requires 45 days.

Sales discount is not an expense account, but is also a deduction to an income statement. It is just a contra account of a revenue account particularly a sales revenue account.

Profit is seen when expenses from the revenue are taken out, while income is seen when all expenses incurred by a business are subtracted. Profit refers to the difference between how much money is spent and earned in a given time period, while income represents the actual amount of money earned in a given time period.

• INUKA Fragrances

Yes, the balance sheet represents a company financial position at a specific period of time. The balance sheet; however, is more useful when (a) there are multiple years of information and (b) analyzed in tandem with the other financial statements [Income and Cash Flow statements].

Financial leverage offers many advantages for a firm to move forward. But like most things, there are some limitations that come with financial leverage as well. For example, when a company uses financial leverage they are technically borrowing funds. Borrowing money is always going to develop a cloud whether it's one that just creates a little shade or one that causes a thunderstorm. When a company borrows constantly, they are creating an image that they might be of high risk. As a result there might be an increase in interest rates and some restrictions could be given to the borrowing organization. Another area that could be affected by the use of financial leverage is the value of the stock. It could drop substantially if the stockholders become concerned. It seems that financial leverage is a good idea for a company when interest rates are low. But it is important to use financial leverage in moderation to avoid some of these limitations. The more debt in the capital structure of the firm, the greater the financial risk to the lender. This results in higher average interest rates to be paid and restrictions on the corporation. Common stockholders may become concerned and drive down the price of the stock.

The Sales Office is in charge of the selling of valuables of an entity.

Thus, all expenses related to this office is debited to selling expenses.

Furthermore, depreciation is a form of expense, and deserves a different account, but since it is related to the sales office, it is debited to selling expenses.

Yes, it is a selling expense.

Expenses which are incurred for the selling of product is called Selling Expenses while expenses incurred on administration of general day to day tasks are called administration expenses

why consolidated financial statements become increasingly important when purchase differential is very large?

because a) fixed assets are having longer liquidity time period in term of realisation in cash or cash equivalent like land & building will take longer time to relaized in cash but current assets like Accounts receivable or inventories have short time period for realisation i.e. 90 days ans so on. b) fixed assets are held in organisation to produce econimic benefit rather than it exist because of an economic process. For example , plant and machineary is used in companies for production where as finished good in stock are result of that production process. c) fixed assets are biggest expenditure for corporation and have a defenite life period for commercial purpose and after that time period they become obsolate for use and then business have to buy them again which will be a big financial issue for any business, to prevent business for this financial hardship , accounting bodies accross the globe used depreciation as a tool to create a sinking fund to replace that asset in future.

An expense such as rent, utilities, insurance goes on the income statement because it is an expense that occurs to operate the business and it affects the net income of said business. If I have an income of $15,000 and I paid out expenses of $10,000 my net income is $5,000.

Net operating income (must be a positive number, otherwise would be net operating loss) is the amount after expenses have been deducted out of sales, BUT before INTEREST and INCOME TAXES have been deducted (also called EBIT: Earning before Interest and Taxes). Therefore, the difference is that Net operating income includes interest and income tax expenses, where as Net Income does not include it.

Sales

(-)CGS

Gross profit

(-)Operating expenses/depreciation

Net operating Income (EBIT)

(-)Interest and income taxes

Net Income

Asset management involves the management of assets, such as investments or property. Liability management is the flip side of the coin: the management of debts, loans and mortgages for example. Most people and indeed most companies have a mixture of assets and liabilities to manage in order to maximise their returns or their growth of wealth. If liabilities are ill-attended, they can result in forced sell-offs of assets and where liabilities are far greater than the assets of course, individuals can be considered to be very highly leveraged, for example a first-time house buyer who may have a high mortgage. Liabilities in themselves are not necessarily a bad thing, but arguably more people have lost most through poor liability management than weak asset management.

"SCOPE" it is the thing that only can be made by person who appeared.

it is depend upon his performance and activity,and his interest.

Financial Accounting is the very easy to learn, understand and can be make everyone scope in this.

It is true. I have failed it by putting false. So the answer is true.

It should be
Loss due to theft of stock A/c Dr
To Trading A/c

Alternately if it can be related to specific purcases made in the same period

Loss due to theft of stock A/c Dr
To Purchase A/c

Since thefts reduce profits , the Loss due to theft of stock A/c shall be later carried as a Dr. to P/s A/c.

IN case of Insurance and claims made the entries will be different. LOss shall not be booked now but the amount shall be shown as outstanding from the Insurance Co.

Kanhayalal Sharma,
Cuttack
maruvihag@gmail.com

"Disclosure" is one of those words in the legal lexicon which can have a multitude of meanings depending on how it is used or how it is applied. When the disclosure referred to is set forth in a document, then that document becomes a disclosure document.

See below link for a discussion of meaning of the word disclosure:

Product costs is the costs are the costs incurred in the making of the product. Manufacturing costs --Direct Materials, Direct Labor, and Manufacturing Overhead. Product cost are also factory costs

Period costs are the selling and administration costs.

Electricity costs for the Accounting dept. is an administration costs

but Electricity costs for the factory is Manufacturing Overhead.

You can reconcile this bank statement by figuring out what each number means. The ending balance of 159.75 is what you currently have. The outstanding deposit of 175.46 is the amount you deposited. The Outstanding checks of 231.69 is the amount you made out in checks.

yes

The balances in all temporary accounts are transferred to the capital or the retained earnings account, leaving the temporary accounts with zero balances. This procedure is necessary to determine a periodic net income (or loss) and prepare books for the next period.