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What is Current Cash Coverage Ratio: There are many Debt Coverage Ratios and Current Cash Coverage Ratio is one of them. The Purpose of this Ratio is to measure the ability of the firm in meeting its Current Liabilities of the Business Operations. This ratio is obtained by the relationship of Net Cash From Operating Activities divided by Average Liabilities in order to judge whether the business can sustain its current liabilities of the business operations or not. Formula: Mathematically, we can write as: Current Asset Debt Coverage Ratio = Net Cash From Operating Activities / Average Current Liabilities Here:  Average Current Liabilities = Opening Current Liabilities + Closing Current Liabilities / 2 Example:   If a company has Net Cash From Operating Activities For The Period is Rs.700000, while Opening Liabilities are Rs. 500000 and Closing Liabilities are Rs. 300000, then we can find the ratio as shown below: 7000...

Cash Sale of Inventory / Stock With Example Here we are concerned with the Accounting Journal Entry For Cash Sale of Inventory with the help of a example. Previously, we studied about Inventory , Perpetual Inventory and Periodic Inventory Systems . In case of Cash sale of Inventory, the payment is received from customers and goods or products are decreased from our store. So, two types of Accounts are involved. One is Cash and the second one is Sales. So, Cash a/c  XXX                               Sales a/c  XXX Both Cash and Sales are increased. When Cash is increased it is debited while when Sales is increased, it is credited. Suppose, a retailer shop has 500 pieces of clothes in stock. 300 pieces of clothes (each costs Rs. 1000) are sold at the rate of 1100 for cash, then following Accounting Journal Entry is passed in the Journal of Retailer...

We already studied about Current Assets and Current Liabilities in our previous article, but here we study about the difference between Current Assets And Current Liabilities so that we get a clear idea about these Accounting Terms. It is important to note that the difference between Current Assets And Current Liabilities represent Working Capital that is required for the smooth flow of the business. Mathematically, we ca n write as shown below: Current Assets - Current Liabilities =  Net Working Capital (NWC) Here Net Working Capital is the difference between Net Current Assets - Net Current Liabilities. You may also be interested in “ Difference Between Liabilities And Owner’s Equity ” Current Assets are those resources that are used by the business within the current accounting period. Examples include Cash, Accounts Receivable, Inventory, Prepaid Expenses, Outstanding Revenues, etc. while Current ...

Previously we studied about Cash Sales Journal Entry with Example , but here we focus on Credit Sales Journal Entry or Sales On Account Journal Entry With the help of a n example. Business needs credit from other businesses (suppliers) from time to time in order to operate the business effectively. Such Credit needs to be paid within the operating cycle of the business. A Business gives Sales Discount to Customers if the customers paid the amount of goods sold before the due date. As you know that, the person who bought or purchased goods from business became the Accounts Receivable or Customer of the business, so when goods sold on credit are called Credit Sales. For Example, when the business sold goods worth Rs. 5000 to Mr. A (Customer), then the accountant records the following Accounting Journal Entry in the Journal of Business: Mr. A 5000                   ...