An asset is defined as something of current or future value owned by the company. Assets are shown on the balance sheet, which gives a snapshot of a company’s financial position at one point in time. Any time a business spends money, they are creating an expense or an asset in the financial statements.
Three characteristics of assets:
In order to be considered a true asset, the following must all be true:

There is probable future benefit that the asset contribute directly or indirectly to future net cash flows, that is it generates revenue for the company. (Or in the case of a non-profit, the …read more

Turn on the news and you’ll see companies everywhere trying to shore up their balance sheets in anticipation of weak sales and reduced access to credit. Adequate working capital is crucial in these tough times to stay in business.
My predecessor, Ren Garcia, has given us a nice portrayal of a business wimp as one without enough working capital. And Randy Meyers at CFO Magazine has warned that the temptation to extend payments is a sign of working capital trouble.
Here’s how to keep an eye on yours!
Working Capital and Related Ratios
Working capital is defined as the amount …read more

Not all Expenses incurred during a period are paid within the same period. Some Expenses can be paid in a succeeding period. Some Expenses can be prepaid; for example, insurance is usually paid in advance on an annual basis.
When payment of an Expense is paid in a succeeding period, it is recognized within the period in the Income Statement for the period. A corresponding amount is added to Accounts Payable. If there are no penalties attached to the postponement of payment of Expenses, it is a good management financial strategy to postpone –thus conserving Cash …read more