Accounting / July 17, 2018 / Willow Mccoy
In some cases, your business may choose to use cash accounting. Cash-based accounting is simple in comparison to accrual accounting. Sales are posted when the cash is received from the customer, regardless of the date that the product was delivered. Expenses are posted in the same manner, or when the cash is disbursed to pay the bill. Smaller businesses and businesses that do not carry inventory often use the cash basis of accounting.
Banks are keenly interested in their net interest margins because they lend at one rate and pay depositors at another. However, comparisons between net interest margins of different banks are not always useful because the nature of each bank's lending and deposit activities varies.
Net interest margin or NIM denotes the difference between the interest income earned and the interest paid by a bank or financial institution relative to its interest-earning assets like cash. Thanks to its frequent usage, it’s become a part of the banking and financial lexicon.
You, as the owner of your business, have the task of determining the right amount to invest in each of your asset accounts. You do that by comparing your firm to other companies in your industry and see how much they have invested in asset accounts. You also keep track of how much you have invested in your asset accounts from year to year and see what works.
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