Categoria: Bookkeeping

As the account is a temporary income statement account, after the account is balanced off, the brought down credit balance of 420 is transferred to the income statement using a closing journal. The balance on the account is now zero ready for the start of the next accounting period. The result of the balancing off...

For example, a small business with a low DPO may want to look at internal processes to see where improvements can be made to improve short-term working capital. Note that you have the option to calculate DPO based on a specific period of time or by using the average AP balance for the period. DPO...

Accounts receivable refers to the amount that your customers owe to you for the goods and services provided to them on credit. Thus, the accounts receivable account gets debited and the sales account gets credited. Further, accounts receivable are recorded as current assets in your company’s balance sheet. On the other hand, accounts payable refers...

In such cases, the seller settles the transaction through the document as per credit memo accounting by returning the difference in price paid by the buyer and the current market price of the product. This is because credit memos are an important accounting tool for correcting invoices, processing returns/refunds, and adjusting customer accounts. However, there are...