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Ratio Analysis — AccountingTools

Ratio analysis is the comparison of line items in the financial statements of a business. Ratio analysis is used to evaluate a number of issues with an entity, such as its liquidity, efficiency of operations, and profitability.This type of analysis is particularly useful to analysts outside of a business, since their primary source of information about an organization is its financial statements.

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Net of discount — AccountingTools

For example, a coupon offers 20% off the $100 retail price of a product, net of discounts. Other applicable discounts are a 10% Christmas discount and a 5% volume discount. Thus, the other two discounts are applied first to arrive at an $85 price for the product, after which the 20% coupon offer is applied, resulting in a $17 discount related

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Cash discount definition — AccountingTools

A cash discount is a reduction in the amount of an invoice that the seller allows the buyer. This discount is given in exchange for the buyer paying the invoice earlier than its normal payment date. There are two reasons why a seller might make this offer: To obtain earlier use of cash , which

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Accounting for gift cards | Gift certificates

The essential accounting for gift cards is for the issuer to initially record them as a liability , and then as sales after the card holders use the related funds. There are varying treatments for the residual balances in these cards, as noted below. Background of Gift Cards Gift cards are a

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Accounting for sales discounts — AccountingTools

A sales discount is a reduction in the price of a product or service that is offered by the seller, in exchange for early payment by the buyer. A sales discount may be offered when the seller is short of cash , or if it wants to reduce the recorded amount of its receivables outstanding for other

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How to account for a sales discount — AccountingTools

A sales discount is a reduction taken by a customer from the invoiced price of goods or services, in exchange for early payment to the seller. The seller usually states the standard terms under which a sales discount may be taken in the header bar of its invoices.An example of these terms is "2/10 net 30," which means that a customer can take a two percent discount if it pays the invoice

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How to account for bond issue costs — AccountingTools

If a bond issuance is paid off early, then any remaining bond issuance costs that are still capitalized at that time should be charged to expense when the remaining bonds are retired. Bond Issuance Cost Example. For example, ABC International incurs $50,000 to issue bonds. The bonds will be retired in 10 years.

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How to calculate the present value of a bond - AccountingTools

A bond is a fixed obligation to pay that is issued by a corporation or government entity to investors.The issuer may have an interest in paying off the bond early, so that it can refinance at a lower interest rate.If so, it can be useful to calculate the present value of the bond. The steps to follow in this process are listed below. First, we need to use several assumptions as we work through

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Audit procedures — AccountingTools

Audit procedures are used by auditors to determine the quality of the financial information being provided by their clients, resulting in the expression of an auditor’s opinion.The exact procedures used will vary by client, depending on the nature of the business and the audit assertions that the auditors want to prove.

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Preferred stock accounting — AccountingTools

Preferred Stock Definition. Preferred stock is a type of stock that usually pays a fixed dividend prior to any distributions to the holders of the common stock of the business. This payment is typically cumulative, so any delayed prior payments must be paid to the preferred stockholders before distributions can be made to the holders of common stock. . However, the holders of preferred stock

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Types of discounts — AccountingTools

There are multiple types of discounts from sales that customers can earn. They are typically employed to either attract new customers, retain old ones, enhance financing options, or manage inventory levels. These discounts are as follows: Buy one, get one free . This discount may require a

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