December 14, 2020
Charles Lutwidge
Quick Ratio
Definition The quick liquidity ratio (QR) is an indicator that shows the solvency of a business entity in the short term. This indicator shows whether it will be able to pay off its short-term liabilities at the expense of the...
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December 09, 2020
Charles Lutwidge
Depreciation Expense Overview and Calculation
Definition and Explanation Depreciation is the process of gradually transferring the cost of the means of production (long-term assets) to the manufactured product. Depreciation is also used to deduct the costs of buying and improving a rental property. For example,...
December 04, 2020
Charles Lutwidge
Flexible Budget
Business cost planning can be characterized as a special decision-making process, in which information about the past financial and production activities of an economic entity is analyzed, potential resources are assessed and the organization’s goals for the future as well...
December 02, 2020
Charles Lutwidge
Explanation and Calculation of the Owner’s Equity
Definition Owner’s equity is the enterprise’s funds embodied in net assets, funds initially invested by its founders or participants, as well as its financial results accumulated (lost) in the course of its activity – profits and losses received (incurred) over...
November 30, 2020
Charles Lutwidge
Average Collection Period
An effective operation of a company largely depends on the timely receipt of funds from customers. To control overdue payments, an average debt collection period indicator is used. A definition of the average collection period is the average length of...
November 27, 2020
Charles Lutwidge
Adjusted Trial Balance Basics
Definition Before proceeding to the preparation of management and financial reports, an Adjusted Trial Balance is prepared. For that, adjustment entries are made to the Unadjusted Trial Balance. The latter are necessary in order to ensure an accurate reflection as...
November 25, 2020
Charles Lutwidge
Cost of Goods Manufactured
To make any goods, a number of different resources are spent. Manufacturing enterprises convert raw materials and supplies into finished products through the use of labor and plant equipment. The sum of all costs incurred will constitute the cost of...
November 23, 2020
Charles Lutwidge
Introduction to Capital Expenditure
Definition Capital expenditure can be defined as any expenditure incurred in creating, acquiring, expanding, or improving an asset for use by a company. The important point is that the benefit from such capital expenditures will be spread over a number...
