Archives: Countly Learning
Reporting of Other Comprehensive Income
When it comes to financial statements, there’s more than just the income statement you should be paying attention to. There’s also Other Comprehensive Income (OCI), a term that doesn’t always get the attention it deserves, but trust me, it’s crucial. So, let’s break it down in simple terms and see why you should care about […]
Related Party Transactions
It is usual for business enterprises to be involved in business with their established professional and social connections. These firms can be significant shareholders, affiliate companies, or partially owned companies. The transactions can be related to sales, leases, loans, etc., referred to as related party transactions (RPT). Though these transactions are legal, they turn destructive […]
Pending Litigations in Contingent Liabilities
What Is a Contingent Liability? A contingent liability arises when unforeseen circumstances occur. These liabilities are documented if the contingency is expected and the figure of the liability can be fairly assessed. The liability may be revealed in a footnote in the financial statements unless both conditions are not fulfilled. In business, these contingent liabilities […]
Other Comprehensive Income
In order to guarantee accurate financial reporting, Indian corporations have implemented accounting standards. The Accounting Standards Board (ASB), a body of the Institute of Chartered Accountants of India (ICAI), is in charge of issuing them. To allow Indian businesses to report internationally, Indian accounting rules are in line with International Financial Reporting rules (IFRS). What […]
Market Risk in India
Every investor, every company, and eventually the whole economy are all impacted by market risk. Market risk is ubiquitous in India, a nation that is a hive of opportunity and volatility. Let’s dissect it: What is market risk, how does it manifest itself in India, and what steps can you take to prevent being burned? […]
Liquidity Risk in India
Liquidity risk—sounds technical, but it’s actually something you experience every day, even if you don’t know it. In a country like India, where the economy is growing fast but still vulnerable to shocks, liquidity risk is something you can’t afford to ignore. So, let’s break it down. What is liquidity risk? When does it pop […]
Line Items Used in Financial Statements
Financial statements are the backbone of any business. They are the first thing you look at to understand the company’s financial state. The three key players in financial reporting—the Income Statement, Balance Sheet, and Cash Flow Statement—tell you everything you need to know about a company’s performance. They break down the numbers into line items, […]
Leasing Commitments as Contingent Liabilities
Business cannot elude leasing. Leasing makes it easier for companies to access various resources for various purposes, i.e., office space, machines, or vehicles, without the requirement of freezing substantial amounts of capital. But leasing commitments can lead to contingent liabilities too. In cases of carelessness, this can bring a tornado of troubles for financial stability. […]
Maintaining Financial Records
Maintaining accurate financial records can turn the tide for any business. For the analyses of financial health for any business, strategic decision-making, or compliance with regulatory needs, maintaining financial records is the thing to focus upon. A systematic approach not only helps in tracking transactions but also provides insights with respect to their financial standing. […]
The Evolution and Future of Accounting: Processes, Methods, Principles, and Trends
Accounting, the backbone of any business, delivers crucial financial information necessary for informed decision-making. Grasping the processes, methods, fundamental principles, and future trends in accounting is vital for ensuring financial health and transparency. This comprehensive guide will delve into these aspects, offering a holistic view of the accounting field. Process of Accounting The accounting process […]
Introduction to Accounting Standards, Purpose, and Advantages
Financial statements are very important for everyone, including internal and external stakeholders. They’re like a report card for business. So, it’s important to control them to make sure they don’t give false information. And the Accounting Standards (AS) give us a way to follow these rules. Let’s look at it. Definition of Accounting Standards Governing […]
Direct vs. Indirect Methods of Cash Flow Statements
Cash flow statements are the backbone of understanding a company’s financial health. They break down how cash moves in and out of a business, focusing on operating, investing, and financing activities. Now, here’s the real deal: when it comes to the operating activities section, businesses can use two methods—direct or indirect. Both methods lead to […]
Differences between Single-Step Vs. Multiple Step Income Statement
Considered a fundamental financial statement, the income statement gives a general picture of the company’s financial performance over a given period—usually on a quarterly or annual basis. It shows in great detail the company’s revenues, costs, profits, and losses over a certain time, therefore producing either a net income or a net loss. The income […]
Common Mistakes to Avoid When Interpreting Financial Statements
Although they might be confusing, financial statements are a treasure mine of information. Reading between the lines is a skill you must possess. Making poor decisions might result from a single incorrect interpretation. Information on the typical errors that frequently arise while interpreting financial accounts will be provided in this guide. Ignoring the Bigger Picture: […]
Understanding Revenue: The Cornerstone of a Profit & Loss Statement
The Profit and Loss (P&L) statement includes revenue. Often referred to as “gross income” or “sales,” revenue is a crucial factor in assessing a company’s financial health. Revenue provides insight into the company’s ability to generate income from its primary operations and serves as the primary performance indicator. What is Revenue? Revenue is also known […]