Equity, also known as net assets, is a finance term that refers to the amount of money that a company’s owners have invested in it. Also referred to as “owner’s equity” and can include non-monetary assets such as time, energy,
Depreciation is a method of accounting for measuring and distributing the cost of an asset over its useful life. Depreciation refers to the loss of an asset’s value as it ages and can only be applied to tangible assets that
The cost of goods sold, or COGS, refers to the direct costs that go into producing the goods or products that a company sells. Direct costs include the financial resources required to manufacture the product, such as raw materials and
A company’s capital is the money it has available to pay for day-to-day operations and to fund future growth. Working capital refers to liquid capital assets that are available for meeting daily obligations. Working capital is an indicator of a
A company’s burn rate is the rate at which it spends money. It’s an essential part of calculating and managing your cash flow. Simply select a time period to calculate the burn rate (such as a quarter or a year).
The broad definition of an asset is anything possessed that is valuable. But, what exactly are assets in accounting? Fiscal quantifiability must define assets for accounting purposes. Assets are a company’s measurable resources that can be expressed in monetary terms.
An annuity is often referred to as a sort of contractual instrument that a person purchases with the expectation of receiving recurring payments in the future. The Social Security system, which people pay into during their working years in order
The technique of spreading out an asset’s expense over a period of time that normally corresponds with the asset’s useful life is known as amortization in accounting. Since a significant expense produces income over time, amortizing it can help determine
Although no cash has yet been exchanged, accruals are revenues received or costs incurred that have an impact on a company’s net income on the income statement. Since accruals involve non-cash assets and liabilities, they have an impact on the
Unpaid bills or cash that customers owe a business are referred to as “accounts receivable.” The term refers to the accounts that a company is entitled to following the delivery of a good or service. Receivables, also known as accounts