Accounting Tools

MAY 13, 2024

The areas in the balance sheet in which real accounts are found are assets , liabilities , and equity. Real accounts also include contra asset , contra liability , and contra equity accounts, since these accounts retain their balances beyond the current fiscal year. These amounts then become the beginning balances in the next period.

Accounting 40

Accounting Accounting Bookkeeping Accounts Payable 40

Accounting Tools

MAY 13, 2024

The mid-month convention states that all fixed asset acquisitions are assumed to have been purchased in the middle of the month for depreciation purposes. When using the mid-month convention, you should record a half-month of depreciation for the last month of the asset's useful life. What is the Mid-Month Convention?

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

MAY 13, 2024

A turnover ratio represents the amount of assets or liabilities that a company replaces in relation to its sales. The concept is useful for determining the efficiency with which a business utilizes its assets. It can be impacted by the use of throughput analysis , manufacturing outsourcing, capacity management, and other factors.

Accounts Payable 40

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 40

Accounting Tools

SEPTEMBER 7, 2023

A classified balance sheet presents information about an entity's assets , liabilities , and shareholders' equity that is aggregated (or "classified") into subcategories of accounts. Related Courses The Balance Sheet The Interpretation of Financial Statements What is a Classified Balance Sheet?

Computation 75

Computation Financial Statements Tax Accounting 75

Accounting Tools

OCTOBER 24, 2023

As such, it is recorded as a current asset in the company's balance sheet. Related Articles Payroll Accounting Payroll Entries Related Courses How to Audit Payroll Optimal Accounting for Payroll Payroll Management An advance paid to an employee is essentially a short-term loan from the employer.

Payroll 75

Payroll Auditing Accounting Accounting 75

Accounting Tools

OCTOBER 20, 2023

Related Courses Fixed Asset Accounting How to Audit Fixed Assets Accounting for the sale of land differs from the accounting for the sale of any other type of fixed asset , because there is no accumulated depreciation expense to remove from the accounting records. Why Land is Not Depreciated

General Ledger 75

General Ledger Accounting Accounting Auditing 75

Accounting Tools

NOVEMBER 24, 2023

What is a Short Term Asset? A short term asset is an asset that is to be sold, converted to cash , or liquidated to pay for liabilities within one year. Later, when it is expected that they will be charged to expense within one year, they are reclassified at that time as short term assets.

Accounts Receivable 72

Accounts Receivable Accounts Receivable Account Receivables Accounting 72

Counto

APRIL 23, 2024

This straightforward indicator helps assess your company’s ability to cover short-term obligations using its most liquid assets, ensuring you’re prepared to handle financial commitments efficiently What is the Quick Ratio? The quick ratio measures a company’s ability to access enough liquid assets to cover its current liabilities.

Accounts Receivable 52

Accounts Receivable Accounts Receivable Account Receivables Accruals 52

Accounting Tools

MAY 15, 2024

The intent behind a term loan is usually to provide a business with the funds to acquire cash-generating assets (such as machinery or inventory ) that can then be used to pay back the loan. Term loans are frequently collateralized by some or all of the assets of the borrower.

Corporate Finance 40

Corporate Finance Tax 40

Accounting Tools

MAY 4, 2024

From top to bottom, the template for an income statement is comprised of a header block, a revenue section, a cost of goods sold section, a general and administrative expenses section, and an other income and profit or loss section. In some cases, these expenditures can be recorded as assets and stored for a short time on the balance sheet.

Financial Statements 52

Financial Statements Tax Expense Reports Payroll 52

Accounting Tools

APRIL 17, 2024

All other labor is, by default, classified as indirect labor. If not, then the costs are recorded as part of the ending inventory asset, which appears on the balance sheet. It never appears in the balance sheet as an asset. Related Article How to Calculate a Labor Rate The accounting is noted below.

Cost Accounting 75

Cost Accounting Accounting Accounting 75

Accounting Tools

APRIL 28, 2024

A sinking fund is a set-aside of cash that is to be used at a later date to retire bonds or other forms of debt or preferred stock. It may also be used to fund the replacement or purchase of an asset. The sinking fund concept may also be used by an individual, who saves up money to purchase a major asset, such as a car.

Corporate Finance 40

Corporate Finance Accounting Accounting 40

Accounting Tools

OCTOBER 24, 2023

Efficiency ratios measure the ability of a business to use its assets and liabilities to generate sales. A highly efficient organization has minimized its net investment in assets, and so requires less debt and equity in order to remain in operation.

Accounts Payable 75

Accounts Payable Accounts Payable Accounts Receivable Accounts Receivable 75

Accounting Tools

NOVEMBER 2, 2023

Related Courses Fixed Asset Accounting How to Audit Fixed Assets What are the Causes of Depreciation? Depreciation is a ratable reduction in the carrying amount of a fixed asset. Wear and Tear Any asset will gradually break down over a certain usage period, as parts wear out and need to be replaced.

Auditing 75

Auditing Accounting Accounting 75

Accounting Tools

APRIL 17, 2024

What is a Wasting Asset? A wasting asset is any asset that will decrease in value over time, and which has a specific useful life. The concept can be applied to fixed assets and natural resources, but is sometimes also applied to certain financial instruments.

Computation 40

Computation Auditing Accounting Accounting 40

Accounting Tools

MARCH 3, 2024

Larger and longer-term liabilities are used to pay for the acquisition of assets that can expand the capacity and capabilities of a business. In addition, debt obligations require the debtor to pay back the principal on the loan plus interest, whereas there is no interest payment associated with most other types of liabilities.

Bookkeeping 75

Bookkeeping Auditing Accounting Accounting 75

Accounting Tools

JUNE 20, 2023

Related Courses Accounting for Intangible Assets Fixed Assets Accounting How to Audit Fixed Assets What are Assets? An asset is something that is expected to yield a benefit in a future period. In a business, assets are aggregated into different line items on the balance sheet.

Computation 75

Computation Deposits Auditing Accounting 75

Accounting Tools

OCTOBER 21, 2023

Corporate fraud can encompass the loss of assets by the business, acts perpetrated by the corporation to take funds from others, or the falsification of its reported results and financial position. The person must hold a sufficiently senior position to be able to browbeat other employees into participating in this diversion of assets.

Financial Statements 75

Financial Statements Expense Reports Tax Payroll 75

Accounting Tools

SEPTEMBER 18, 2023

Related Courses Bookkeeper Education Bundle Bookkeeping Guidebook The Balance Sheet What are Total Assets? Total assets refers to the total amount of assets owned by a person or entity. Assets are items of economic value, which are expended over time to yield a benefit for the owner.

Accounts Receivable 75

Accounts Receivable Accounts Receivable Account Receivables Bookkeeping 75

Accounting Tools

DECEMBER 17, 2023

There will be a reduced cost for companies once the two accounting frameworks are more closely aligned, since they will not have to pay to have their financial statements restated to show results under the other framework in cases where they need to report their results in locations where the other framework is required.

Financial Statements 75

Financial Statements Financial Reporting Tax Accounting 75

Accounting Tools

APRIL 9, 2024

A write-down occurs when a business reduces the carrying amount of an asset , other than through normal depreciation and amortization. A write-down is normally done when the market value of an asset declines below its current carrying amount. In a write-off, the entire remaining balance of the asset is reduced to zero.

Auditing 40

Auditing Accounting Accounting 40

Accounting Tools

DECEMBER 28, 2023

Other cash inflows may come from lawsuit settlements or the settlement of insurance claims. Other examples are cash payments for taxes, refunds paid to customers, and contributions. A business might also make cash payments to settle asset retirement obligations , or to pay interest to creditors.

Collections 75

Collections Accounts Receivable Accounts Receivable Account Receivables 75

Accounting Tools

SEPTEMBER 11, 2023

The cash flow adequacy ratio is used to determine whether the cash flows generated by the operations of a business are sufficient to pay for its other ongoing expenses. In essence, cash flows from operations are compared to the payments made for long-term debt reductions, fixed asset acquisitions, and dividends to shareholders.

Financial Statements 75

Financial Statements 75

Accounting Tools

OCTOBER 6, 2023

The basic accounts are: Assets Cash. It may be necessary to also have an "Other Receivables" account for other types of receivables, such as advances to employees. Fixed assets. One account is generally used to compile the accumulated depreciation for all types of fixed assets. Gain on sale of assets.

Accounting 75

Accounting Accounting Bookkeeping CPA 75

Accounting Tools

JUNE 12, 2023

Related Courses Business Ratios Guidebook The Interpretation of Financial Statements The total equity of a business is derived by subtracting its liabilities from its assets. All of the asset and liability line items stated on the balance sheet should be included in this calculation.

Financial Statements 75

Financial Statements Accounts Payable Accounts Payable Accounts Receivable 75

Accounting Tools

OCTOBER 28, 2023

A properly structured budget points out what aspects of the business produce money and which ones use it, which forces management to consider whether it should drop some parts of the business or expand in others. In some cases, management may decide to sell off certain assets in order to generate enough cash to obtain other assets.

Budgeting 75

Budgeting Accounting Accounting 75

Accounting Tools

MARCH 22, 2024

Cash collateral is cash , negotiable instruments, documents of title, securities , deposit accounts, and other cash equivalents in which a bankrupt estate and its creditors have an interest. In the absence of a court order to the contrary, cash collateral must be segregated from other assets.

Deposits 40

Deposits Tax Accounting Accounting 40

Accounting Tools

FEBRUARY 16, 2024

The intent of these latter measurements is to examine the efficiency with which management can produce profits, in comparison to the amount of equity or assets at their disposal. These asset reduction policies can have a negative effect on profits, however, if they adversely impact operations. These ratios are noted below.

Accruals 75

Accruals Financial Statements Accounts Receivable Accounts Receivable 75

Accounting Tools

OCTOBER 7, 2023

The cost is recorded as an asset until such time as the underlying goods or services are consumed; at that point, the cost is charged to expense. A deferred expense is initially recorded as an asset, so that it appears on the balance sheet (usually as a current asset , since it will probably be consumed within one year).

Financial Statements 75

Financial Statements Cost Accounting Financial Reporting Accounting Software 75

Accounting Tools

APRIL 18, 2024

Based on the experience of other companies who have been subjected to this type of litigation, it is probable that Armadillo will have to pay $8 million to settle the litigation. If the best estimate of the amount of the loss is within a range, accrue whichever amount appears to be a better estimate than the other estimates in the range.

Accounting 75

Accounting Accounting Financial Statements Auditing 75

Accounting Tools

OCTOBER 22, 2023

Also, one should be conservative in recording the amount of assets , and not underestimate liabilities. Another way of looking at prudence is to only record a revenue transaction or an asset when it is certain, and record an expense transaction or liability when it is probable. The prudence concept is only a general guideline.

Financial Statements 75

Financial Statements Bookkeeping Financial Reporting Accounting 75

Accounting Tools

JUNE 20, 2023

Related Courses Corporate Finance Treasurer's Guidebook The difference between recourse and non-recourse debt is the ability of the lender to take the assets of the borrower if the debt is not paid. Non-recourse debt favors the borrower, while recourse debt favors the lender.

Corporate Finance 75

Corporate Finance Tax Accounting Accounting 75

Accounting Tools

MAY 7, 2024

Measure depreciation, amortization, and depletion based on either the average current cost of the service potential of the underlying fixed assets or their lower recoverable amount during the usage period. Review fixed assets to determine when they were acquired. Related Articles Constant Dollar Accounting Current Value Accounting

Financial Statements 40

Financial Statements Accounting Accounting Tax 40

Accounting Tools

DECEMBER 23, 2023

An alternative definition is that an expense is the reduction in value of an asset as it is used to generate revenue. If the underlying asset is to be used over a long period of time, the expense takes the form of depreciation , and is charged ratably over the useful life of the asset. Debit to expense, credit to asset account.

Accruals 75

Accruals Bookkeeping Accounts Payable Accounts Payable 75

Accounting Tools

DECEMBER 30, 2023

A settlor is the party whose role is to transfer control of an asset to a trustee, who then manages it on behalf of various beneficiaries. Trusts are used to hold money and other assets during the period following the death of the settlor, so that the associated assets can be readily transferred to the designated beneficiaries.

Accounting 40

Accounting Accounting 40

Accounting Tools

OCTOBER 28, 2023

Actual return on plan assets This is the difference between the fair values of beginning and ending plan assets, adjusted for contributions and benefit payments. Amortization of Prior Service Costs These costs are charged to other comprehensive income on the date of the amendment, and then amortized to earnings over time.

Accounting 75

Accounting Accounting Cost Accounting 75

Accounting Tools

JANUARY 26, 2024

Defalcation is the theft or misuse of funds or other assets by someone who has responsibility to protect those assets. It is usually committed by a professional who is presumed to have a sufficient level of expertise to be able to handle funds or assets in a safe manner. What is Defalcation?

Auditing 40

Auditing Accounting Accounting 40