Accounting Basics 2 min read
Matching Concept
Matching concept is based on the accounting period concept. The expenditures of a firm for a particular accounting period are…
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Need for a Uniform and Common Theory of Accounting
The frequent attempts by experts and professionals on having a “theory” that would guide accountants all over the world is…
Accounting Basics 1 min read
Working Capital Cycle
Generation and disbursement of cash is carried out in the manner depicted by the following diagram:
Accounting Basics 1 min read
Gross Working Capital and Net Working Capital
Gross working capital means the investment in current assets, whereas the Net working capital means the difference of current assets…
Accounting Basics 1 min read
Management Accounting – Working Capital
Working capital is defined by experts as follows – “Working capital is the amount of funds necessary to cover the…
Accounting Basics 3 min read
Management Accounting – Useful Ratios
Short–term Financial Position or Test of Liquidity (a) Current Ratios = Current AssetsCurrent Liabilities (b) Quick or Acid Test or…
Accounting Basics 3 min read
Classification on the Basis of Financial Aspects
Ratios can be further classified based on their functional aspects as discussed below. Liquidity Ratios Liquidity ratios are used to…
Accounting Basics 2 min read
Ratio Classification on the Basis of Financial Statement
Balance Sheet Ratios Ratios calculated from taking various data from the balance sheet are called balance sheet ratio. For example,…
Accounting Basics 2 min read
Limitations of Ratio Analysis
Although Ratio Analysis is a very useful accounting tools to analyze and interpret different accounting equations, it comes with its…
Accounting Basics 1 min read
Advantages of Ratio Analysis
● It is powerful tool to measure short and long-term solvency of a company. ● It is a tool to measure profitability…
Accounting Basics 1 min read
Ratio Analysis and its Applications
Ratio analysis is a medium to understand the financial weakness and soundness of an organization. Keeping in mind the objective…
Accounting Basics 1 min read
Accounting Period Concept
The life of a business unit is indefinite as per the going concern concept. To determine the profit or loss…