What is the Operating Cash Flow Formula? The Operating Cash Flow Formula is used to calculate how much cash a company generated (or consumed) from its operating activities in a period, and is displayed on the Cash Flow Statement. The formula for each company will be different, but the basic structure always includes three components:…
What is Accounting Income? Accounting income is the profit a company retains after paying off all relevant expenses from sales revenue earned. It is synonymous with net income, which is most often found at the end of the income statement. The metric differs from gross income in that the latter accounts only for direct expenses,…
What is the Statement of Comprehensive Income? The statement of comprehensive income is a financial statement that summarizes both standard net income and other comprehensive income (OCI). The net income is the result obtained by preparing an income statement. Whereas, other comprehensive income consists of all unrealized gains and losses on assets that are not…
What is Cash Flow from Operations? Cash flow from operations is the section of a company’s cash flow statement that represents the amount of cash a company generates (or consumes) from carrying out its operating activities over a period of time. Operating activities include generating revenue, paying expenses, and funding working capital. It is calculated…
Accounting Profit vs. Economic Profit Accounting profit is a company’s net earnings on its income statement, whereas economic profit is the value of cash flow that’s generated above all other opportunity costs. This guide will help you thoroughly understand accounting profit vs economic profit, and while they may sound similar, they are actually quite different….
What is a Closing Entry? A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account. Companies use closing entries to reset the balances of temporary accounts − accounts that show balances over a single accounting period −…
What is the XMATCH Function in Excel? The XMATCH function in Microsoft Excel allows us to find the relative position within a data array of a specific entry. Microsoft introduced the XMATCH function in a 2019 update where it was described as a successor of the MATCH function. The MATCH function is one of the…
What is the XLOOKUP Function in Excel? The XLOOKUP Function in Microsoft Excel allows us to look for specific entries in a large array of data. The function requires 3 inputs, the key which is the value you are looking for, the array of values to look for the key. Microsoft introduced the XLOOKUP function…
What is LIFO vs. FIFO? Amid the ongoing LIFO vs. FIFO debate in accounting, deciding which method to use is not always easy. LIFO and FIFO are the two most common techniques used in valuing the cost of goods sold and inventory. More specifically, LIFO is the abbreviation for last-in, first-out, while FIFO means first-in,…
What is the Perpetual Inventory System? The perpetual inventory system involves tracking and updating inventory records after every transaction of goods received or sold through the use of technology. In perpetual inventory systems, a sale of a stock item increases the cost of goods sold (COGS) and also is updated in accounting records to ensure…
