Operating expenses can be:
- Administration costs.
- Payroll
- Selling expenses
Flow of costs represents the way in which all different costs that contribute to the final goods or services are calculated to know which is the actual cost per item sold or service provided. All these different costs flow into the actual cost and there are different methods that can be applied in these calculations.
Here are some examples of costs that are considered in these calculations:
- Material costs.
- Overhead costs.
- Labour costs.
- Storage costs.
- Transportation costs.
The account that represent the “cost of good sold” when goods are issued in sales, is an example of account resulting from the flow of costs.
More information can be easily found online, such as in this investopedia post.
Reserves are funds from profits used to strengthen the business’s financial standing to address any future unknown liabilities and losses.
In Finance, a security is any property or good that you promise to give to your borrower if you cannot pay what you owe them.
Shares represent units of ownership of a company. When you buy stock issued by a company, you are buying a number of shares that represent the stock altogether.
A write-down represents a reduction in the book value of an asset. This occurs when its fair market value has fallen below the its book value.
Write-down value = book value – fair market value.
A write-up represents an increase in the book value of an asset. This occurs when its book value is below its fair market value.
Write-up value = fair market value – book value.
A write-off is used to account for losses on assets, such as lost, broken-down or obsolete inventory. It usually involves a debit to an expense account and a credit to the associated asset account.
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