Bookkeeping

Profits may increase temporarily when business is declining, and losses can increase, again temporarily, while actual business is increasing. To provide a more accurate picture of profitability, the industry has developed a combined ratio that combines a loss ratio and expense ratio over a given period. The loss ratio equals losses for a given period divided by the earned premium for that period. The expense ratio equals expenses divided by the total written premiums for the period. A combined ratio of less than 1 indicates profitability, called the trade profit, while a combined ratio exceeding 1 indicates losses. Statutory accounting reports and audited statutory financialRead More →

When an expense is incurred, it is subtracted from the company’s revenue to determine the company’s gross profit or operating income, depending on the nature of the expense. Ultimately, expenses reduce the company’s net income, which is the final figure after all revenues and expenses have been accounted for. Current liabilities are usually paid with current assets; i.e. the money in the company’s checking account. Rent Managing short-term debt and having adequate working capital is vital to a company’s long-term success. If you have digital asset transactions, you must report them whether or not they result in a taxable gain or loss. Expenses are costsRead More →