It’s Sunday again, and you know what that means…time for another word of the week! This week’s word/term is “intangible assets.” Intangible assets are things owned by a company that you cannot see or feel, but are very important to the operations of a company. One example of an intangible asset could be a trademark. A trademark allows a company to give itself an identity that cannot be copied by other corporations. Pepsi for example has a trademark on their red, white and blue ball symbol. The company has spent years making that symbol a recognizable representation of the company. There is obviously some value attached to the trademark that prevents other companies from using the Pepsi symbol, and therefore the company must account for this. Intangible assets are listed in the “Other Assets” category of the Balance Sheet. Other intangible assets include: patents, franchises or brands.
Word of the week
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I’m a day late on the word of the week for this week, so without further ado the word of the week is revenue.
Revenue is a very simple, yet important word that everyone should know. Revenues are what keeps a company in business. Without sufficient revenues a business would fail. Put a simply as possible, revenue = price x quantity.
Here is a simple example:
Jim’s Tractor Depot sells two different types of tractors. They sell the BT-550 for $15,000 and the ST-320 for $5000. This month Jim sold 10 BT-550s and 50 ST-320s. The revenues for the BT-550 are ((10 tractors sold) x ($15,000 per tractor)) = $150,000. The revenues for the ST-320 are ((50 tractors sold) x ($5000 per tractor)) = $250,000. The total revenues for Jim’s Tractor Depot are the sum of BT-550 revenues and ST-320 revenues. So, his total revenues for the month are ($150,000 + $250,000) = $400,000.
Word of the week
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