Variable Cost vs Fixed Cost: What’s the Difference?

That’s because as the number of sales increases, so too does the variable costs it incurs. As the production output of cakes increases, the bakery’s variable costs also increase. When the bakery does not bake any cake, its variable costs drop to zero. Variable and fixed costs play into the degree of operating leverage a […]

Interest Expenses: How They Work, Coverage Ratio Explained

It provides information about your cash payments and cash receipts, as well as the net change of cash after all financing and operating activities during a set period. If you ever apply for a small business loan or line of credit, you may be asked to provide your income statement. In this case, on April […]

ERP vs Accounting Software: Differences Explained

This does not inherently mean that accounting software is for smaller businesses and ERP software is for larger businesses. Many enterprises decide to use a dedicated accounting system that can handle multiple entities or multi-currency accounting. Despite these differences, there remains a misconception that leaves many people sharing the terms interchangeably. Understanding the differences between […]

What to Know About These Tricky Employment Agreements

Start with giving the agreement the proper title, then identify parties to the contract. After that, list the terms and conditions of the contract, such as working hours, confidentiality policy, and severance package. Don’t forget to include compensation information (salary, annual bonuses, holidays, overtime payment, etc.). Finally, to avoid conflicts and litigations, it is recommended […]

Guide to Debit Memorandums

A vendor or business issues a debit memorandum to a customer to correct an error in an original invoice or to adjust the amount owed for a transaction. In contrast, a credit memorandum or credit memo is issued by the business issuing a refund credit for a transaction. Debit memos can be created as internal […]