Accounting

The first thing that probably comes to your mind when thinking about assets is likely cash or maybe a piece of property. These are assets that you can see and touch in the form of money, a building, and so on. However, intangible assets are different in that they lack a physically existence. Furthermore, they […]

Q: What is the normal balance of cost of goods sold? Cost of goods sold (COGS) is considered an expense item on the income statement because it represents the direct costs to manufacture products or services that have been sold. Cost of goods sold has a normal balance of a debit because it is an

 What is the difference between the current ratio and the quick ratio? Answered: The current ratio and the quick ratio (also known as the acid test ratio) are commonly used to determine a company’s liquidity.  In other words, these two ratios are used to determine a firm’s ability to pay current liabilities with assets that

[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Is cash a debit or credit in accounting? [otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Cash is an asset. Assets have a normal balance of a debit. This means that cash will increase with a debit and decrease with a credit. An example of a journal entry that would be created from a company

[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Is treasury stock an asset? [otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Treasury stock is stock that has been reacquired or repurchased by a company of their own shares. When stock is reacquired and placed into treasury stock, it is not considered retired. It can be reissued at a future time if the company chooses.

Q: What is restricted cash? A: Restricted cash is money that is not available to freely spend by a business because it is intended to be used for a particular purpose. It is money set aside for a specific purpose that cannot be used for things like everyday operating expenses or investments. Some examples of

[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] What are fixed assets? [otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Fixed assets are tangible assets that are intended to be used for business operations that have a useful life beyond a year. These assets are commonly called property, plant and equipment (PP&E). They are not intended for resale and are not a part of the

[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] What are the journal entries for account receivable? [otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Accounts receivable is the money owed from clients for purchased goods or services on credit. For example, a sports equipment manufacturer might ship sporting goods to a retail store and allow the store 30 days for payment. As the

[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Is depreciation an expense? [otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] To give a short answer, depreciation is an operating expense. Keep reading for an explanation. When a company purchases an asset such as equipment or a building, it is capitalized. This means that the purchase is not recognized as an expense on the

[otw_shortcode_dropcap label=”Q:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] What are noncurrent assets? [otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] Noncurrent assets are assets that are not projected to be converted into cash within the accounting year. They are typically assets that cannot quickly be liquidated. A common definition of noncurrent assets is any assets that is not a current asset. The three