Cash vs accrual – Interest Payable and Interest Expense
Why is there a difference under the cash basis and accrual basis for interest? This article focuses on cash versus the accrual basis for interest, which includes interest paid in cash, interest expense under US GAAP, and interest payable. The main reason that there is a difference between cash and accrual for interest is that […]More
How to solve for cash outflow for dividends?
If you are trying to solve for the actual cash outflow for dividends for a period, then you need to use the balance sheet approach. The balance sheet approach is great for solving cash to accrual and accrual to cash problems. As you can see below, the balance sheet approach always uses the beginning and […]More
What are the fundamental qualitative characteristics of financial statements?
There are two primary qualitative characteristics and their components. You are expected to understand the fundamental qualitative characteristics and the enhancing characteristics. Both characteristics should be present in order for financial information to be useful to readers. The two fundamental characteristics to remember are relevance and faithful representation. Relevance: Key Components Financial information is relevant […]More
Cash to accrual for accrued payroll and compensation expense
This is a tutorial on cash to accrual for accrued payroll and compensation expense.More
What types of expenses are invoiced?
It is important to understand what types of expenses a company will typically receive an invoice for. When a company is buying goods or services, it is standard for the vendor/supplier to send an invoice to the company that is buying the goods or services. The most common types of expenses that have an associated […]More
Cash to accrual for accounts payable and expenses?
If you are confused about how to go from cash to accrual for accounts payable and expenses, then you are in the right spot! Here is the video explanation that walks through all of the information that is laid out below! This tutorial will describe the difference between cash and accrual accounting for accounts payable […]More
Cash to accrual for inventory and cost of goods sold?
If you are confused about how to go from cash to accrual for inventory and cost of good sold, then you are in the right spot! Here is the video explanation that walks through all of the information that is laid out below! This tutorial will describe the difference between cash and accrual accounting for […]More
Are loans made to other businesses recorded in the investing or financing section?
If a company loans money (cash outflow) to another independent company or entity, then the activity would be recorded in the investing section of the cash flow statement. This captured in #2 in the visual below. The rationale is that the company will get a return in the form of interest on the loan, which […]More