Advance financial accounts
Advanced financial accounts refer to a set of financial accounts that go beyond the basic accounting principles of recording transactions and generating financial statements. These accounts are used to provide more detailed and specific information about a company’s financial performance, position, and cash flows. Here are some examples of advanced financial accounts:
- Cost of goods sold (COGS): COGS is the cost of the goods or services sold by a company. It includes the direct costs associated with producing or delivering the product, such as labor, materials, and overhead costs.
- Depreciation and amortization: These accounts represent the reduction in value of long-term assets over time. Depreciation is used for physical assets such as buildings and equipment, while amortization is used for intangible assets such as patents and copyrights.
- Accounts receivable and accounts payable: These accounts represent the money owed to a company by its customers (accounts receivable) and the money owed by a company to its vendors (accounts payable).
- Inventory: This account represents the cost of goods that a company has in stock and has not yet sold.
- Retained earnings: This account represents the cumulative earnings that a company has retained over time, rather than paying them out as dividends.
- Accrued expenses and deferred revenues: These accounts represent expenses that have been incurred but not yet paid (accrued expenses) and revenues that have been earned but not yet received (deferred revenues).
Advanced financial accounts are used to provide more detailed and specific information about a company’s financial performance, position, and cash flows, enabling better decision-making by investors, creditors, and other stakeholders.