• Bookkeeping

What Is Equity and How Is It Calculated?

Total equity effectively represents how much a company would have left over in assets if the company went out of business immediately. A company’s equity position can be found on its balance sheet, where there is an entry line for total equity on the right side of the table. A company’s negative equity that remains

Temporary Account Definition, vs Permanent, Example

A temporary account is an account that is closed at the end of every accounting period and starts a new period with a zero balance. The accounts are closed to prevent their balances from being mixed with the balances of the next accounting period. The objective is to show the profits that were generated and

Statement of Retained Earnings Overview, Uses, How to Set Up

As a result, the retention ratio helps investors determine a company’s reinvestment rate. However, companies that hoard too much profit might not be using their cash effectively and might be better off had the money been invested in new equipment, technology, or expanding product lines. New companies typically don’t pay dividends since they’re still growing