The Accounting Equation, Explained
Average equity is calculated by adding the equity at the beginning of the year to the equity at the end of the year and dividing the total by 2. Bondholders are paid and liquidated before preferred shareholders, born and liquidated before common shareholders. Bonds are contractual liabilities with guaranteed annual payments unless the issuer defaults, […]
What Are Net Terms?
Invoices and receipts are similar in concept, but differ in the details. Here’s what differentiates invoices from receipts, and why it’s important to understand. As lenders and investors evaluate your business, they’ll look primarily at revenue growth, gross margin, liquidity, asset efficiencies, and leverage. Staying on top of these metrics will put you in a […]
Everything You Need to Know About the Percentage-of-Completion Method PoC
Though it may seem obvious that construction companies would benefit from using PoC, construction is far from the only industry in which this method is useful. It can be applicable to a wide variety of situations, including for software companies that create custom products for clients that require ongoing development and frequent modifications. If you […]
What is the significance of FOB Shipping Point and FOB Destination?
The difference between shipping point and destination is at what point does the seller transfer ownership of the shipment to the buyer. By identifying who is responsible for the shipment at certain points of transit, both the buyer and seller avoid ambiguity in the shipping contract. With the FOB shipping point, the buyer takes the […]