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We know that students can sometimes get overwhelmed with all the information in their accounting classes. That’s why we’ve compiled a list of answers to some of the most common questions we get. • What is a debit?
A debit is when an asset account is decreased and an expense account is increased.
• What are debits and credits at the balance sheet level? Debits are when assets are shown on the left side of the balance sheet, while credits are shown on the right side. The total should always be zero.
• How do I calculate gross margin ratio? Gross margin ratio is calculated by dividing net sales by the cost of goods sold (total).
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What is the difference between a cash-basis versus accrual-basis accounting?
The main difference between cash-basis and accrual-basis accounting is the timing of when revenue and expenses are recognized. Under the cash basis, revenue is only recognized when cash is actually received, and expenses are only recognized when they are paid. The accrual basis recognizes revenue when it is earned, regardless of when the cash is actually received. Expenses are also recognized on the accrual basis when they are incurred, regardless of when they are actually paid.
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