Accounting Articles

What is Gross Profit?  Gross profit refers to the earnings generated by a business after subtracting the expenses linked to manufacturing and distributing its products or services. To determine gross profit, subtract the total sales from the cost of goods sold (COGS),...

What are Financial Ratios?  Financial ratios, alternatively termed as financial or accounting ratios, play a pivotal role in aiding stakeholders, including investors, management, and analysts, in comprehending the business's financial standing and in making informed...

What is Retained Earnings?  The concept of retained earnings revolves around the idea of the profits an entity decides to keep and reinvest into its own operations rather than distributing them to its shareholders as dividends. These earnings accumulate over time,...

What is COGS?  Cost of Goods Sold (COGS) is a term commonly used in accounting and finance to refer to the direct expenses incurred in the production and sale of a product. It includes the costs directly associated with manufacturing and delivering a product to...

What is Amortisation?  According to AASB 138, Amortisation is a financial accounting process that involves the systematic allocation of the depreciable amount of an intangible asset over its useful life. This concept is crucial for businesses to accurately reflect the...

What is Depreciation?  Depreciation is a fundamental concept in accounting that refers to the systematic allocation of the cost of a tangible asset over its useful life. It recognises that assets such as property, plant, and equipment lose value over time due to wear...

What is Working Capital?  Working capital represents the funds an entity has available for its day to day operations. It's calculated by subtracting current liabilities from current assets. Essentially, it's the money available for covering short term expenses like...

What is Accounts Receivable?  Accounts receivable refers to an asset account that monitors the money owed to an entity by its clients or other debtors. This account essentially reflects the sales made by providing credit to customers until the entity receives the...

What is Accounts Payable?  Accounts payable is the money that a business owes to others for goods or services it has received but has not yet paid for. It's like an entity's short term debts or obligations. When looking at an entity's balance sheet, which is a...