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                             Image Credit: Vectors/royalty free.  Budgeting is an essential aspect of personal finance that empowers individuals to manage their money effectively. By setting up a transparent budget, you can monitor your earnings and spending, focus on saving, and reach your financial objectives. In this discussion, we can explore different budgeting techniques to assist you in identifying the most suitable option for your way of life.   1. The 50/30/20 Rule The 50/30/20 rule is a simple budgeting method that divides your net income i.e. (after-tax) into three categories: 50% Needs: Essential expenses such as house rent, utilities, groceries, and fuel etc. 30% Wants: Non-compulsory expenses such as dining out, entertainment, and hobbies. 20% Savings/Debt Repayment: This portion is allocated to savings accounts, investments, or paying off debt. However, Mr. Warren Buffett addresses the ch...

  Image source: Commons Wikimedia               Although money is a vital part of our lives, our relationship with it is frequently complicated and motivated by factors other than rationality. How we earn, spend, save, and invest can be greatly influenced by our thoughts, emotions, and past experiences. This is where knowledge of the complex relationship between our thoughts and our financial decisions—the psychology of money—comes into play. Framing and Biases: Cognitive biases might influence our financial decisions since our brains are programmed to make mental shortcuts. Following are a few typical examples: Loss aversion: We get twice the pleasure from a gain in the same amount of money. Missed investing opportunities and risk-averse behavior may result from this. Anchoring: When making judgments, we place far too much weight on the first piece of information we are given. This may affect how we view the worth of investments or the r...

Image Credit: Canva The term Accounts Payable (AP) describes the sum of money that a company owes its vendors or suppliers for goods and services that have been received but not yet paid for. On the balance sheet of the business, it is a liability. Where to Record Accounts Payable in Financial Accounting? A company logs a transaction in its accounts payable system when it receives products or services on credit. Debiting the appropriate expense account and crediting the accounts payable account are the usual steps in an entry. The company credits cash and debits account payable when it settles the debt. Where do I find Accounts Payable in Financial Statements? Since accounts payable are debts, the business must pay off quickly—typically within a year—they are included in the current liabilities section of the balance sheet. Formula and Performance Metrics Accounts Payable Turnover is calculated as Net credit purchases divided by average accounts payable is how turnover is...

The term "Accounts Receivable" (AR) describes the unpaid balances that a business has not yet received from the customers for delivered goods or rendered services. Put another way, it stands for the sums that customers owe a company for credit sales. Since accounts receivable reflect the right to future cash inflows, it is recorded as an asset on a company's balance sheet. It is an essential component of working capital for a business because prompt collections are necessary to keep cash flow in check. Difference between Accounts Receivables and Trade Receivables Although the terms "trade receivables" and "accounts receivables" are frequently used synonymously, their definitions might vary slightly depending on the situation. Though precise use may differ, both generally relate to the sums that customers owe a company for credit sales. Accounts Receivables: Accounts Receivables refers to any sum of money due to a company, not just sums earned t...