Business Performance

Business Performance       The main purpose of a business is to generate profit, in other words, indicate a healthy business performance. To do this, businesses attract investors and use the investment to fund their activities. By the end of every financial year, they report a profit or loss. The earnings made from those…

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Cashflow Statement

Cashflow Statement       Cashflow statement is essential to accrual accounting method. When using accrual accounting, actual company transactions occur at a different time from when they are stated. Therefore, in order to keep track of the cash flow and to prevent cash deficit, a cash flow statement is prepared. It is important to…

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Sources and uses of funds

Sources and Uses of Funds       Sources and uses of funds refer to the process of providing and spending of funds. Businesses rely on different sources to provide the financial resources they require to operate. In other words, a business has to find sources that can fuel its activities so that it can…

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What is Break-even Point?

What is Break-even Point?        The break-even point is when the revenues of a company enable it to cover its costs. At this stage, the company manages to keep the business running, but does not yield a profit. The break-even point determines the number of products or the amount of sales that enables…

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Profit and Loss statement

Profit and Loss statement     Profit and loss statement shows business gains or losses at the end of the fiscal year. It shows the degree of coverage of costs and the amount of profit made in the end. Profit and loss account can be prepared using two methods: direct and indirect method. The difference…

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Depreciation and Amortization of Assets

Depreciation and Amortization of Assets       Depreciation and amortization are related to the value of tangible and intangible assets. While tangible assets exist physically and therefore are prone to wearing out due to use, intangible assets may lose their value. This post explains about what depreciation and amortization mean and how they are…

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Intangible Assets: intellectual property, brand name, goodwill

Intangible Assets: intellectual property, brand name, goodwill         Intangible assets may not be visible to the eye, yet they affect the value of a company. The value of these assets becomes important in mergers and acquisitions. Intangible assets include intellectual properties, brand name, and goodwill.   Intellectual Property     World Intellectual…

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Cash vs. Accrual basis Accounting

Cash vs. Accrual basis Accounting   The accounting system is based on two types distinct approaches. Once chosen, it becomes a default accounting system and all records are made according to its rules. A company chooses its accounting basis according to the way it handles financial transactions. Cash basis and accrual accounting are the accounting…

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