What is Accounts Receivable (AR)? Accounts Receivable (AR) represents the credit sales of a business, which have not yet been collected from its customers. Companies allow their clients to pay for goods and services over a reasonable extended period of time, provided that the terms have been agreed upon. For certain transactions, a customer may…
What are Available for Sale Securities? Available for sale securities are the default categorization of securities that companies decide to invest in for the purposes of benefiting their financial position. Unlike trading securities, available for sale securities are not bought or sold for the sole purpose of realizing a short-term capital gain. They may be…
What is Sum of Years Depreciation (SYD)? Sum of Years Depreciation (SYD) is a method of accelerated depreciation. Similar to the double declining balance method, sum of years depreciation aims to depreciate a company’s assets at an accelerated rate. Companies may choose the SYD method as the practice will result in a larger depreciation tax…
What are Trading Securities? Trading securities are securities purchased by a company for the purpose of realizing a short-term profit. Companies do not intend to hold such securities for a long period of time; thus, they will only invest if they believe they have a good chance of being compensated for the risk they are…
What is a Trial Balance? A trial balance is a report that lists the balances of all general ledger accounts of a company at a certain point in time. The accounts reflected on a trial balance are related to all major accounting items, including assets, liabilities, equity, revenues, expenses, gains, and losses. It is primarily…
What is a General Ledger (GL)? In accounting, a General Ledger (GL) is a record of all past transactions of a company, organized by accounts. General Ledger (GL) accounts contain all debit and credit transactions affecting them. In addition, they include detailed information about each transaction, such as the date, description, amount, and may also…
What is a Regressive Tax? A regressive tax is a tax applied in a way that the tax rate decreases with the increase of the taxpayer’s income. This type of tax places more burden on low-income demographics rather than the high-income population. The imposed burden is determined by the percentage of the tax amount relative…
What is the Accounting Equation? The accounting equation is a basic principle of accounting and a fundamental element of the balance sheet. The equation is as follows: Assets = Liabilities + Shareholder’s Equity This equation sets the foundation of double-entry accounting, also known as double-entry bookkeeping, and highlights the structure of the balance sheet. Double-entry…
What are Biological Assets? Biological Assets are assets that are living – for example, trees, animals, or cannabis. The balance sheet breaks down a company’s assets at a given point in time, classifying them by type and attributing a value to them. The International Accounting Standard 41 (IAS 41) states that a biological asset is any…
What is Revenue vs Income? This guide provides an overview of the main differences between revenue vs income. Revenue is the sales amount a company earns from providing services or selling products (the “top line”). Income can sometimes be used to mean revenue, or it can also be used to refer to net income, which…
