What is the Income Summary Account? Definition: Income summary is a special type of financial account whereby balances of revenue and expenses for a given accounting period are transferred. Being a summary account, it is designed to receive all temporary accounts made up of revenues and expenses at the end of each accounting period. In
What are Gross Wages? Definition: Gross wages are you overall earnings from your employer before any type of payroll deductions. What comes to mind when someone says to you, ‘your gross salary is X amount of money?’ Well, a majority of people just walk away in content and perhaps without getting down to the details
What are Government Expenditures? Definition: A government expenditure is an economic tool that can be used to influence the economy by redistributing income to increase or decrease economic activity. Every government has an obligation of meeting various expenses such as the provision of healthcare, defense, and social protection services as well as education. It is
What is the General Journal? Definition: The general journal is the accounting book that businesses use to record all of their daily financial transactions with debits and credits. Businesses must record their transactional operations daily. The transactions may include opening stock, purchases, cash receipts, and payments, and other non – financial transactions. All these are
What is the Full Disclosure Principle? Definition: The full discloser principle is an accounting assumption that a company’s financial statement disclose and reveal any important information to financial statement users that would affect their decision making process. This term is ubiquitous in the accounting world. More often than not, the full disclosure principle is applied
What Is Frictional Unemployment? Definition: Frictional unemployment is a phenomenon that occurs when workers leave their jobs and start looking for work somewhere else. This type of unemployment also occurs when workers are transitioning to new jobs. While it is synonymous with fledgling economies, it also occurs in stable economies. Understanding Frictional Unemployment and it’s
What is a Free Market System? Definition: A free market system is an economic system whereby forces of demand and supply are in control. The market system is characterized by zero government control or involvement in the setting up of prices or supply of goods. In contrast, in a regulated market system, the government often
What is Forward Integration? Definition: Forward integration is a business strategy that involves expanding a business operation to take control of products distribution. Instead of a business contracting distributors to distribute its products, it can opt to deal with retailers and consumers directly. Understanding Forward Integration Often referred to as vertical integration, forward integration is
What is a Fixed Cost? Definition: A fixed cost is one of the main expenses that firms, engaged in the production of goods and services, incur. Unlike other costs, fixed costs remain constant and do not change even with a change in production volume. As the cost remains constant, they must be paid independent of
What Are Financing Activities? Definition: Financing activities are operations through which a business or company raises capital to finance operations. Simply put, they are transactions that affect long-term liabilities as well as equity of firms. The transactions involve creditors or investors that invest requested amount of money Above all, financing activities show how businesses raise