X receives the cash from the new shareholders and also grants them equity in the company. To make the Accounting Equation topic even easier to understand, we created a collection of premium materials called AccountingCoach PRO. Our PRO users get lifetime access to our accounting equation visual tutorial, cheat sheet, flashcards, quick test, and more. […]
Car loans, mortgages, and education loans have an amortization process to pay down debt. Amortization of a loan requires periodic scheduled payments of principal and interest until the loan is paid in full. Every period, the same payment amount is due, but interest expense is paid first, with the remainder of the payment going toward […]
Cost accountants create a constant record of all costs incurred by the business. This data is used to track where the company spends and improve the management of these expenses. Cost accountants are responsible for finding redundancies and places where the company could cut costs. An income statement, also referred to as a profit and […]
It reflects as a debit to the amortization expense account and a credit to the accumulated amortization account. The main drawback of amortized loans is that relatively little principal is paid off in the early stages of the loan, with most of each payment going toward interest. This means that for a mortgage, for example, […]
