You can also finance new products, pay debts, or pay stock or cash dividends. This must come before the deduction of operating expenses and overhead costs. Some industries refer to revenue as gross sales because its gross figure gets calculated before deductions. As a result, additional paid-in capital is the amount of equity available to […]
This can be converted into units by calculating the contribution margin (unit sale price less variable costs). Dividing the fixed costs by the contribution margin will reveal how many units are needed to break even. Break-even analysis assumes that the fixed and variable costs remain constant over time. However, costs may change due to factors […]
The last step in the accounting cycle is preparing financial statements—they’ll tell you where your money is and how it got there. It’s probably the biggest reason we go through all the trouble of the first five accounting cycle steps. Once you’ve posted all of your adjusting entries, it’s time to create another trial balance, […]