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Certificates of Achievement . We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping. The certificates include Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Financial Ratios, Bank Reconciliation, and Payroll Accounting.

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What should be the entry when goods are purchased at a

A small volume buyer receives only a 10% discount. If a high volume company purchases $40,000 of goods, its cost will be $28,000 ($40,000 X 70%). To comply with the cost principle the company will debit Purchases (or Inventory) for $28,000 and will credit Accounts Payable for $28,000. Early payment discount. Some suppliers offer discounts of 1%

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What is an early payment discount

Definition of Early Payment Discount An early payment discount is a reduction in the amount on a supplier's invoice if the customer pays the supplier promptly. The early payment discount is also known as a cash discount. (The seller may refer to the early payment discount as a sales discount. The

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Are sales discounts reported as an expense

Sales discounts are also known as cash discounts or early payment discounts. Sales discounts (along with sales returns and allowances) are deducted from gross sales to arrive at the company's net sales. Hence, the general ledger account Sales Discounts is a contra revenue account. Sales discounts are not reported as an expense.

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What is the difference between an invoice and a voucher

What is the difference between an invoice and a voucher? Definition of an Invoice. An invoice received from a vendor is a billing for goods or services that it had provided. The vendor's invoice will include the quantities of the items provided, brief descriptions, unit prices, amount due, credit terms, where to remit payment, etc.

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If I want a gross margin of 25%, what percent should I

Restating the previous point, we have: SP - 0.25SP = $75. After dividing each side of the equation by 0.75, we have: SP = $100. With a selling price of $100 and a cost of $75, the $25 markup as a percentage of the $75 cost is 33.33% ($25/$75). The gross profit of $25 ($100 - $75) also means a gross margin of 25% ($25 gross profit divided by the

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How should the sale of gift certificates be recorded in

The sale of a gift certificate should be recorded with a debit to Cash and a credit to a liability account such as Gift Certificates Outstanding. Note that revenue is not recorded at this point. Rather, the retailer is recording its obligation/liability to provide merchandise or services for the amount of the certificate sold.

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Financial Statements Explanation AccountingCoach

Accrual Method of Accounting. The adjusting entries we mentioned are needed to comply with the accrual method (or basis) of accounting, which is required for most corporations.(Individuals and very small companies may be allowed to use the cash method of accounting.). Under the accrual method of accounting the financial statements will report sales and receivables when …

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Accounting Basics Explanation AccountingCoach

Those are the people who start off on the wrong foot and end up in Marilyn's office looking for financial advice. If Joe enters all of Direct Delivery's transactions into his computer, good accounting software will allow Joe to print out his financial statements with a click of a button. In Parts 2 through 7 Marilyn will explain the content and

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What is a contra revenue account

A contra revenue account is a revenue account that is expected to have a debit balance (instead of the usual credit balance ). In other words, its expected balance is contrary to—or opposite of—the usual credit balance in a revenue account. A contra revenue account allows a company to see the original amount sold and to also see the items

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Financial Ratios and Analysis Explanation AccountingCoach

Financial ratios relate or connect two amounts from a company's financial statements (balance sheet, income statement, statement of cash flows, etc.). The purpose of financial ratios is to enhance one's understanding of a company's operations, use of debt, etc. The use of financial ratios is also referred to as financial ratio analysis or ratio analysis.

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Why would someone buy a bond at a premium

Why would someone buy a bond at a premium? A person would buy a bond at a premium (pay more than its maturity value) because the bond's stated interest rate (and therefore its interest payments) are greater than those expected by the current bond market. It is also possible that a bond investor will have no choice. For example, if you wish to purchase a bond maturing in 8 …

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Bonds Payable Explanation AccountingCoach

The corporation issuing the bond is borrowing money from an investor who becomes a lender and bondholder. A bond is a formal contract that requires the issuing corporation to pay the bondholders: Interest every six months based on the bond's stated interest rate. The principal or face amount on the bond's maturity date.

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What Is An Income Statement AccountingCoach

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Adjusting Entries Explanation AccountingCoach

Adjusting entries are accounting journal entries that convert a company's accounting records to the accrual basis of accounting.An adjusting journal entry is typically made just prior to issuing a company's financial statements.. To demonstrate the need for an accounting adjusting entry let's assume that a company borrowed money from its bank on December 1, 2020 and that the …

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Calculating the Future Value of a Single Amount (FV

Certificates of Achievement . We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping. The certificates include Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Financial Ratios, Bank Reconciliation, and Payroll Accounting.

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How do I calculate the after-tax cost of debt

The after-tax cost of the debt is computed as follows: $10,000 paid to the lender minus $3,000 of income tax savings equals a net cost of $7,000 per year on the $100,000 loan. This means the after-tax cost is 7% ($7,000 divided by $100,000) per year. Using the example above, the after-tax interest rate can also be calculated.

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Components of the Income Statement AccountingCoach

The gross profit percentages (or gross margins) for Example Corporation have been improving as shown by the following calculations: Year 2020 was 22.1% = gross profit of $880 / net sales of $3,980. Year 2019 was 21.3% = gross profit of $800 / net sales of $3,750. Year 2018 was 20.6% = gross profit of $700 / net sales of $3,400.

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