These principles have existed for years but aren’t always applied in the documentation. However, by including each of these elements in your credit memo, you can meet regulatory requirements and assist in monitoring credit risk. In the buyer’s account, suppliers account is debited, and the purchase is credited. On the other hand, refund memo notifies...Continue Reading

All asset, liability, and owner’s equity accounts, with the exception on dividends and distributions, carry forward balances from one period to the next. The remaining balance in Retained Earnings is $4,565 (Figure 5.6). This is the same figure found on the statement of retained earnings. In this chapter, we complete the final steps (steps 8...Continue Reading

Parallel to this, the balance position known as “long-term debt” increases or decreases by the amount raised or repaid, depending on the situation. However, even though PP&E and intangibles decrease as a result of D&A, they can increase during the same period as a result of investment in new machines, real estate and patents, among...Continue Reading

Fixed costs are bills that are the same every year, regardless of how much product you sell. Your store’s rent, waste disposal charges, insurance — these are fixed costs that do not change month to month. Similar to overstocking, understocking can lead to lost sales opportunities and unhappy consumers. Bakeries can accurately predict their inventory...Continue Reading

For example, in the current example both straight-line and double-declining-balance depreciation will provide a total depreciation expense of $48,000 over its five-year depreciable life. Straight-line depreciation is efficient, accounting for assets used consistently over their lifetime, but what about assets that are used with less regularity? The units-of-production depreciation method bases depreciation on the actual...Continue Reading

A credit memo is expressed as a credit memorandum when a contributor withdraws from his bank accounts a check for a specific transaction. A debit memo (debit note) is a document a seller uses to notify a buyer that their account has been debited or charged for a specific transaction. Keep in mind, a debit...Continue Reading

You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided. But it’s in the 15th century that the roots of modern bookkeeping can be found. And fittingly, there are two entries in the history books for who documented the...Continue Reading

The given balance reflects the net amount available after credits and debits. In most businesses, two or three-column cash books (with a bank column) are used to record any transactions made through the bank account. When you do a bank reconciliation, you first find the bank transactions that are responsible for your books and your...Continue Reading

However, it can be complex to calculate, relies on estimates, and may lead to frequent adjustments due to market fluctuations. This helps businesses determine the net amount they can expect to receive from selling an asset after accounting for any additional costs involved in the sale. Therefore, any time you incur a cost or receive...Continue Reading