Reporting bad debt expense on income statement allows companies to accurately and completely report their financial position. Every company, at some point in its existence, will deal with a customer who is not able to pay off their debts. With this, there will be a need for them to record … Read more

Is a decrease in accounts payable debit or credit? Debits and credits are the bases upon which the double-entry bookkeeping accounting works, hence understanding whether a decrease in the accounts payable will be recorded as a debit or credit is important for accurate record keeping. When corporate organizations or individuals … Read more

Is accounts payable an asset or liability? When companies make purchases, they either pay in cash immediately or receive the goods and services on credit. When the latter happens, the goods or services received will be recorded differently than that of a cash purchase. The money owed to suppliers or … Read more

Accounting is a process whereby the financial transactions of a business or organization are recorded, classified, and summarised systematically. This is done in order to keep a chronological record of the business’s transactions. Hence, the accounting process requires constant updating of the business transactions which are guided by some accounting … Read more

A statement of retained earnings is a financial statement that shows how much net income or net profit a company has earned during a certain period of time, usually a quarter or a year; it also shows how much of that net income was kept or retained by the company … Read more

Is accounts receivable an asset or revenue? Some businesses sell goods or services to their customers on credit. That is, these businesses deliver the goods and services immediately, send an invoice to their customers, and then get paid a few weeks later. In order to keep track of all the … Read more

Is purchase debit or credit? Purchase is an expense that is included on the income statement within the cost of goods sold if it is incurred for purchasing raw materials that are used in the manufacturing process. Every company that is in existence has had reasons for purchasing equipment, inventory, … Read more

Is depreciation expense debit or credit? When companies purchase assets for their business, they try to consider how long these assets would keep their value and how to account for their expense. A depreciation expense is usually recorded for fixed assets and is the cost of the asset over time. … Read more

Is accounts receivable a current asset? Some customers or clients can purchase goods or services from businesses on credit. On such occasions whereby sales are made on credit, the business records the amount that the customer owes the business as accounts receivable. This account on the business’s balance sheet shows … Read more

Are expenses liabilities? Expenses and liabilities both represent a cash outflow that is either incurred in the current period as an expense or to be settled on a future date in the case of a liability. Expenses and liabilities represent two distinct components in a company’s financial statements. In this … Read more