Cash balances are checked by obtaining statements from the bank. Accounts receivable are confirmed by asking customers to verify the balances owed. For inventory, the accountants check purchase orders and receipts, and physically count the raw materi...
The bottom line on the income statement is net income, which interacts with the balance sheet's retained earnings account within shareholders' equity. At the end of each period, a company's net income -- its profit or loss -- is transferred to the ba...
These investments might include things such as building facilities, land, machinery and fleet vehicles. Managers and analysts use the return on assets ratio as a measure of performance. Comparisons between industrywide and internal prior year ratios ...
Alternatively, you can divide the average inventory by the cost of goods sold, and multiply by the number of days in the accounting period. Inventory turnover, or the inventory turnover ratio, is the number of times a business sells and replaces its ...
Depending on how you value your inventory or which method you use, you can arrive at different figures for the same events over a period of time. I know that may sound confusing, but take the example of FIFO accounting. Let’s say that your costs are ...