Learn Accounting With Ease, For Free!

Learn Accounting With Ease, for FREE! CommercePapers.com is a site which provides FREE online resources to learn and understand the Fundamentals of Accounting, Accounting Chapters, Accounting Topics, Partnership Accounts And Company Accounts. We intend to harness your accounting skills by helping you understand the basics and rules of accounting and develop your analytical and logical reasoning skills.

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Debt-To-Equity Ratio:

Debt Equity Ratio is the ratio that indicates the pattern of company's finance between debt- capital and equity capital. Here "Debt Capital" refers to that portion of company's assets that are being financed through "Loan" or 'Debt' that has some intrinsic interest-bearing financial obligations. For example debentures, loans, redeemable preference shares, bank overdrafts, etc


In business, the term "Consolidation" refers to the merger and acquisition or combining of assets, liabilities and other financial items of two or more entities into one as a single economic entity.

Budgeting And Financial Forecasting:

Budgeting and financial forecasting are like two sides of a coin. While budgeting helps to prepare the estimates for future, financial forecasting are financial planning techniques that help business personnel in their decision-making process. Budgeting helps in evaluation of revenues that a business wants to realize in the near future period, whereas financial forecasting is used to calculate approximately the amount of revenues that will be achieved.

Capital Reserve And Revenue Reserve:

The accounting mechanism of "Capital Reserve" is used to conserve profits. The system of "Capital Reserve" provides financial stability to the concern. Capital Reserve crop up either from gain on sale of long-term assets or on settlement of liabilities. Capital Reserve may also arise due to the sale of equity shares at a premium. Further, due to legal obligations, some amount revenue profits may also be added to capital reserve but Capital Reserve does not include any free balance that might be used for the distribution of profits.

Inventory Turnover Ratio:

Inventory Turnover Ration refers to the average number of times in an accounting period that a business sells and replenishes its inventory or stock of goods. The time taken or the period is divided by the inventory turnover formula to calculate the days taken to sell the inventory on hand or "inventory turnover days."

Accounting Equations:

The accounting equation helps us to understand the relationship between financial statements. Before understanding cost accounting, we need to understand the meaning of cost object. Cost objects are those product lines, customers, departments or any other thing the cost of which needs to estimated by management. It is a key concept used in managing the costs of a business.