This is wave accounting reviews the value of funds that shareholders have invested in the company. When a company is first formed, shareholders will typically put in cash. Cash (an asset) rises by $10M, and Share Capital (an equity account) rises by $10M, balancing out the balance sheet. While we mainly discuss only the BS in this article, the IS shows a company’s revenue and expenses and...

Loosely related to obsolescence, market demand refers to customer preferences, tastes, and other influencing factors. In addition to a good becoming outdated, broad markets may be interested in substitute products, advanced products, or cheaper products. Competition always runs the risk of supplanting a good's market position, even if both goods are still relevant and highly functioning. NRV:...

While cash-based accounting records income and expenses when the transactions occur, accrual-based accounting records income and expenses when they are earned or incurred. refers to a major accounting method that recognizes revenues and expenses at the time cash is received or paid out. This contrasts accrual accounting, which recognizes income at the time the revenue is earned and records...

This is posted to the Common Stock T-account on the credit side (right side). The reason is that these more common transactions have a system of controls built up around them that is designed to detect a variety of issues. Conversely, there are fewer controls over journal entries, which makes it easier for someone to create a fraudulent transaction. These transactions are particularly difficult...