Assets and liabilities
A profit in a society is derived from different areas. May there be a little complicated because as in our personal life, business credit also is running. Many companies sell their products to their customers on credit. An asset with the receivables accounting name use the total amount to the Affairs of clients who do not have the entire balance has not yet paid. Most of the time, is not a society entirely collected at year-end, in particular for the sale of this credit that can be exchanged against claims near the end of the reporting period.
The auditor will record the proceeds of the sale and the cost of goods sold for these sales in the year where sales were made and products delivered to the client. Talking about exercise based, income created and recorded when fresh sales also records when they are created. If the sale on credit, accounts receivable increased account assets. When money is received by the client, the cash account is increased and the accounts receivable account is reduced.
The cost of goods sold is one of the major costs of that property companies, products or services for sale. Even a service of cost. It means exactly what it says that it costs a company pays for the products it sells to its customers. A company makes profit by selling its products at prices that are high enough to cover the costs of producing them, the cost of execution of the company, they have the interest on borrowed money and taxes, with money left over for profit.
When the company acquires products, the cost of them in what is called a account active inventory. The cost deducted from the cash account or added to the accounts payable liability account, depending on whether the company has paid money cash or on credit.
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