What Is Inventory?

Inventory refers to the raw materials, work-in-progress, and finished goods that a company has on hand. The purpose of inventory is to provide a company with a buffer against fluctuations in demand and to allow for the smooth operation of its production process. Inventory is classified as either current or non-current on a company’s balance … Read more

Shareholder (Stockholder): Definition, Rights, and Types.

Shareholders: Definition, Rights, and Types A shareholder, also known as a stockholder, is an individual or entity who owns shares in a company. Shareholders have certain rights and responsibilities, and there are different types of shareholders. How shareholders affect a business? There are a couple different ways that shareholders can affect a business. One way … Read more

Understanding a Common Size Financial Statement.

A common size financial statement is a financial statement in which each line item is presented as a percentage of a base figure. The base figure can be total assets, total liabilities, or total revenue, depending on the purpose of the common size statement. Common size statements are useful for analyzing trends over time and … Read more

What Is Capitalization in Accounting?

Capitalization in accounting refers to the process of recording certain costs as capital expenses on a company’s balance sheet. These costs are then amortized, or spread out, over the life of the asset that they were used to purchase. This treatment is usually reserved for larger, long-term assets, such as buildings or machinery. Capitalization is … Read more

Understanding Contributed Capital.

Contributed capital is the portion of a company’s equity that comes from investment by shareholders. This can include money invested through the sale of shares, as well as reinvested earnings. The purpose of contributed capital is to give shareholders a portion of ownership in the company in exchange for their investment. This allows shareholders to … Read more