What is energy dieting for businesses?

When the late-2000s global economic recession occurred, businesses and companies resorted to an “energy diet” to cut their costs and survive the hard phenomenon. Energy dieting in the corporate world includes using more energy-efficient machines, reducing length of use on lights and electricity, saving gas and fuel, and other ways on saving our power usage as well as our power bills. The great thing in energy dieting is that it saves not only our money but it also saves our world. While energy saving cuts our energy cost, it also prevent the total extinguishment of our planet’s energy reserves. Minimization of energy usage (electricity, fuel and gasses) also reduces global warming, which is primarily caused by too much carbon dioxide in the atmosphere. Carbon overload is caused mainly when we burn fossils fuels like coal, oil and gas. Hmmm…as we always talk about the green bucks, we should also discuss the green mother Earth and how to protect it. Read more

Knowing and understanding what is Statement of Changes in Equity

A statement of changes in equity shows all changes in owner’s equity for a period of time. According to IAS 1, this statement of financial reporting is one the five components of complete financial statements (balance sheet, income statement, statement of changes in equity, statement of cash flow and notes to financial statements.

IAS 1 requires an entity to present a statement of changes in equity as a separate component of the financial statements. The statement must show: [IAS 1.96]

(a) profit or loss for the period;

(b) each item of income and expense for the period that is recognised directly in equity, and the total of those items; Read more

How to Compute Profit for a Service Provider Company

A service company is one that sells services to its clients. Different from manufacturing and trading companies, it provides services or works of labor rather than tangible products to its customers. Accounting firms, law firms, schools, janitorial and hotel companies are some of examples of service provider companies. As the operation of this kind differs from the others, the computation and preparation of its statement of operation also differs. Since a service company sells services, we need to compute its cost of services, as computing cost of goods sold in a manufacturing and trading firms which sells goods to its costumers. But in all kind of firms, we compute direct and indirect costs to determine gross and net profit.

The revenues of a service company consist of all its receipts and receivables from rendering services during the period less all refunds associated from them. Unearned revenues collected during the period are not included because they are not related to the services rendered during the period. This concept is called accrual basis. Read more

Elements and components of a complete set of financial statements

Financial statements are often described as the language of business. These statements tell the condition and performance of a business historically, currently and prospectively. They are the tongues of businesses that communicate with their users and readers.

Financial statements are the formal end product or main output of a business’ financial accounting process. These are the means by which the information accumulated and processed in financial accounting is periodically communicated to the users.

General purpose financial statements are those intended to serve users who do not have the authority to demand financial reports tailored for their own needs. The objective of general purpose financial statements is to Read more

What is the difference between a cost and an expense?

So what’s indeed the difference between the two income statement accounts? Before we try to answer that question, we will first try to discover why this question existed anyway? Actually, we try to differentiate two things when they seem to be they same and we can’t figure out their differences. So what are their similarities? Cost and expense both sounds unfavorable elements of income statement since they both cause a decrease to net profit. In the accounting equation, the two are also naturally debit accounts (meaning they increase when debited and decrease when credited). Cost and expenses also cause an outlay in cash or an increase in liability when obtained. For example, a purchase of equipment causes cash outlay when purchased on cash payment and causes an increase in liability when purchased on account. The following is a list of some similarities between a cost and an expense. Read more