Archive for 2020

This complexity can make small businesses hesitate to properly capitalize their expenses. Expense is the cost that company pays to support the operation which aims to make revenue for the company. Based on the accounting matching principle, the company needs to record expenses in the same accounting period in which the revenue is made. The revenue is the result of the company’s expenses, so both of them must be recorded in the ...

It refers to how quickly the customers who bought goods on credit can pay back the supplier. The earlier the supplier gets the funds, the better it is for business because this fund is a huge source of liquidity. The average collection period amount of time that passes before a company collects its accounts receivable (AR). In other words, it refers to the time it takes, on average, for the company to receive accounts receivable collection period formula payments ...