Foreign Exchange – Gain / Loss

How to Account for Foreign Exchange Accounting for foreign exchange transactions entails registering transactions in currencies other than one’s functional currency. For example, a company engages into a transaction in which it is scheduled to receive a payment in a foreign currency from a customer or to make a payment […]

What are Debits and Credits?

What are Debits and Credits? Business transactions are events that have a monetary impact on the financial statements of an organization. When accounting for these transactions, we record numbers in two accounts, where the debit column is on the left and the credit column is on the right. A debit […]

The Accounting Equation

Every business transaction, from the largest multi-national conglomerate to the corner beauty boutique, has an impact on a company’s financial status. The following items are used to assess a company’s financial position: Possessions (what it owns) Responsibilities (what it owes to others) Ownership Equity (the difference between assets and liabilities) […]

What is Chart of Accounts (COA)?

Every time you record a company transaction—a new bank loan, a customer invoice, or a laptop for the office—you must enter it in the correct account. However, how do you know which account to enter it into? You may find out by looking at the chart of accounts. We’ll go […]

What is Working Capital?

What is working capital? Working capital—also known as “net working capital”—is a measurement of a business’s short-term financial health. Simply put, it indicates your liquidity or ability to pay your bills. You can find it by taking your current assets and subtracting your current liabilities, both of which can be […]

What is Retained Earnings?

What are retained earnings? Your retained earnings are the profits that your business has earned minus any stock dividends or other distributions. In terms of financial reporting, retained earnings account (also known as Member Capital) may be found on your balance sheet in the equity column, alongside shareholders’ equity. Companies […]

Returns Vs Chargebacks

Returns and chargebacks are two unfortunate types of transactions that eCommerce entrepreneurs need to deal with. If you don’t enter and categorize them correctly, you could soon find your books out of whack. A return is simple: someone who purchased your goods wants to return it and receive a refund. […]