What Is Accumulated Depreciation? Accumulated depreciation is the total amount of depreciation expense written off against an asset from the time it was put into service. Put another way, it is the cumulative value of an asset up to a single point in its expected life as it is used […]
Accounting
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What Is Deferred Revenue? Deferred revenue is also known as unearned revenue. The term refers to advance payments a company receives for products or services. These are to be delivered or performed in the future. The company that receives the prepayment records the amount as deferred revenue. It is recorded […]
What Is Gross Profit Margin? Gross profit is the amount remaining after deducting the cost of goods sold (COGS) or direct costs from revenue. Gross profit margin is a measure of a company’s profitability. It is usually calculated as a percentage of revenue. The cost of goods sold is a […]
What Is the Net Income Formula? Net Income Formula: Net income (NI) equals revenues minus expenses, interest, and taxes. It shows how much is left after all expenses are paid. Net income (NI), is also called net earnings. It is calculated by taking total sales and subtracting the expenses necessary […]
What is the Working Capital Formula? The working capital formula is: Working capital = Current Assets – Current Liabilities The working capital formula tells you the short-term liquid assets available after short-term liabilities have been paid off. It measures a company’s short-term liquidity. It is important for financial analysis, financial […]
What Is Straight Line Depreciation? Straight line depreciation is a method of calculating depreciation and amortization. Also known as straight line basis, it is the simplest way to work out the loss of value of an asset over time. Straight line basis is calculated by dividing the difference between an asset’s cost and […]