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Net Income = Revenue − Expenses. The equation resulting from making these substitutions in the accounting equation may be referred to as the expanded accounting equation, because it yields the breakdown of the equity component of the equation. [5] Assets = Liabilities + Contributed Capital + Revenue − Expenses − Dividends
Amortization is the acquisition cost minus the residual value of an asset, calculated in a systematic manner over an asset's useful economic life. Depreciation is a corresponding concept for tangible assets. Methodologies for allocating amortization to each accounting period are generally the same as those for depreciation.
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, [1] pronounced / ˈ iː b ɪ t d ɑː,-b ə-, ˈ ɛ-/ [2]) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base.
For example, you may be paying $2,000 every month in rent, mortgage or total cost of living. Some fixed expenses are also paid annually, bi-annually or quarterly.
Variable monthly expenses. These expenses fluctuate from month to month and are often discretionary in nature. Examples include groceries, utilities, entertainment expenses and travel. Variable ...
Unpaid period costs are recorded as accrued expenses (liabilities) to ensure these costs do not falsely offset period revenues and create a fictitious profit. For example, if a sales representative earns a commission at the time of sale (or delivery) but is compensated in the following week, in the next accounting period, the company recognizes ...
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes for an accounting period.
It includes material costs, direct labour, and overhead costs (as in absorption costing), and excludes operating costs (period costs) such as selling, administrative, advertising or R&D, etc. Selling, General and Administrative expenses (SG&A or SGA) - consist of the combined payroll costs. SGA is usually understood as a major portion of non ...