What is Marketable Security?

A marketable security, often referred to simply as a marketable, is a financial instrument or investment that can be easily bought or sold in the secondary market, where investors trade securities among themselves. These securities are typically issued in the primary market, where the initial sale or issuance occurs, but their subsequent trading and exchange … Read more

What is Treasury Stock?

Treasury stock, often referred to as treasury shares or reacquired stock, represents shares of a company’s stock that were initially issued to investors and subsequently repurchased by the company itself. These repurchased shares are held in the company’s treasury, which is why they are called treasury stock. Key points to understand about treasury stock include: … Read more

What is Accounting?

Accounting is the systematic process of recording, analyzing, summarizing, and reporting financial transactions and information related to an individual, business, or organization. It serves as the language of business, providing a means to track, measure, and communicate an entity’s financial activities. Here are the key components and aspects of accounting:   Recording: Accountants record financial … Read more

What is Business?

Business is a broad and multifaceted term that encompasses a wide range of activities, but at its core, it refers to the pursuit of profit through the provision of goods or services to consumers.  Here is a concise definition:  Business is the organized effort or activity of individuals or entities that involves the production, purchase, … Read more

What is a Mortgage?

A mortgage is a financial arrangement that allows individuals and families to purchase real estate, such as a home, by borrowing money from a lender, typically a bank or mortgage company. The core concept of a mortgage is that it uses the purchased property as collateral to secure the loan. In other words, the property … Read more

What is a Note receivable?

A “Note Receivable” is a financial instrument representing a debt owed by a borrower to the holder of the note. It is a written promise or guarantee of payment, usually specifying the amount of money to be repaid and the terms and conditions of the repayment. Key characteristics of a Note Receivable include:   Unpaid … Read more

What is Liability?

A liability is a financial obligation or debt that an individual, organization, or entity owes to another party. It represents a responsibility to pay a specific amount in money, goods, or services at a future date or under certain conditions. Liabilities are a fundamental concept in financial accounting and are recorded on a balance sheet, … Read more

What is Bond?

A bond is a financial instrument that plays a vital role in the world of finance and investment. It represents a formal agreement between two parties: the issuer and the bondholder. The issuer can be a government, municipality, corporation, or any entity in need of capital to fund various activities or projects. When an individual … Read more

What is Sinking Fund?

A sinking fund is a financial mechanism that allows individuals, businesses, and organizations to set aside money regularly for specific, anticipated future expenses or financial goals. It’s a disciplined savings strategy designed to ensure that funds are readily available when needed, thereby mitigating the need for loans or financial stress. Sinking funds operate on the … Read more

What is Amortization?

Amortization is a financial process that involves the gradual repayment of a debt or the reduction of an intangible asset’s value over time. It is a common concept in both accounting and finance and has different applications in these fields.   Debt Amortization:    In the context of debt, amortization refers to the systematic repayment of … Read more

Quick Ratio

Quick Ratio: The Quick Ratio represents an indication for the company which heavily emphasizes over its short-term liquidity and its potential to fulfill the temporary obligations with assets having maximum liquidity in particular. Therefore, it embarks on excluding inventories from the current assets and is evaluated by this universal formula – Quick ratio = (Current … Read more

Liquidity and Liquidity Ratios

Liquidity: Liquidity is defined as an extent to which assets as well as marketable securities are bought and even sold back in the markets without manipulating their original price. It’s a high-end trading activity which exhibits its occurrence in manufacturing companies that are willing to spend a great chunk of money over the inventory. Furthermore, … Read more

Current Ratio

Introduction: The current ratio is depicted as another important aspect of ‘Liquidity Ratio’ and ‘Working Capital’ as it marks out the correct proportion of current assets that are available in the business setup in according with the current liabilities. It should be in our best interest that current ratio is quite essential, especially for the … Read more

Investing Activities

Introduction: The investing activities are considered as another integral part of the cash flow statement, as it marks out the money which is being received through the help of long-term assets. It is worth mentioning that after collecting the money, investing activities might as well exhibit a positive trend in the cash-flow statement, whereas it … Read more

Operating Activities

Introduction: The operating activities are considered as the company’s source of income which generates revenue on a regular basis. It highly focuses on the company’s core competencies and associations with their business activities. Furthermore, it evolves around various departments of the organization such as, manufacturing, distributing, selling, marketing and the finance section accordingly. These activities/services … Read more

Retained Earnings

Introduction: Considering it as an imperative aspect in accountancy, ‘Retained Earnings’ indicates the percentage of net earnings that are still unpaid in terms of the dividends. However, the same percentage is stashed and reinvested in the core competencies of the business. It is worth mentioning that on common grounds the incorporations pay off their debt … Read more