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What is Other Comprehensive Income? Other comprehensive income is those revenues, expenses, gains, and losses under both Generally Accepted Accounting Principles and International Financial Reporting Standards that are excluded from net income on the income statement. This means that they are instead listed after net income on the income statement. An example of the reporting presentation of other comprehensive income appears in the following exhibit.
Open banking could help download your paperless statements if it ever gets here! Til then, you need procedures to ensure it happens if you want audit ready.
What is the Cost of Goods Sold? The cost of goods sold is the total expense associated with the goods sold in a reporting period. The cost of goods sold is subtracted from the reported revenues of a business to arrive at its gross margin ; the gross margin reveals the amount of profit generated prior to selling, general and administrative expenses. Formula for the Cost of Goods Sold The cost of goods sold is calculated by aggregating the period-specific expense listed in each of the general ledg
What is the Margin of Safety? The margin of safety is the reduction in sales that can occur before the breakeven point of a business is reached. This informs management of the risk of loss to which a business is subjected by changes in sales. The concept is useful when a significant proportion of sales are at risk of decline or elimination, as may be the case when a sales contract is coming to an end.
Automating time-consuming manual tasks can save your firm hundreds of hours–and thousands of dollars. But it can also have longer-lasting benefits, like helping you attract and retain the next generation of CPAs, and we don’t need to tell you how important that is amid the current generational staffing crisis in the tax and accounting profession. You'll want to save your seat for this new webinar with industry expert Joe Wroblewski, where we'll explore how to: Maximize ROI with Cost-Effective Te
What is Last In, First Out (LIFO)? The last in, first out method is used to place an accounting value on inventory. The LIFO method operates under the assumption that the last item of inventory purchased is the first one sold. Picture a store shelf where a clerk adds items from the front, and customers also take their selections from the front; the remaining items of inventory that are located further from the front of the shelf are rarely picked, and so remain on the shelf – that is a LIFO scen
What are Detachable Warrants? A detachable warrant is a derivative associated with a debt security that gives its owner the right to purchase issuer shares at a fixed exercise price. This type of warrant can be detached from the debt security with which it was originally issued, and then sold by itself in a secondary market. This means that an investor can sell the warrants while retaining the related debt security, or do the reverse and sell the security while retaining the warrants.
What is the LIFO Conformity Rule? The LIFO conformity rule requires that, if the LIFO cost flow method is used to compile taxable income, it must also be used in the financial statements. The rule is designed to prevent organizations from using LIFO accounting to reduce the amount of their taxable income, while using a different inventory cost flow method (such as FIFO ) to derive a higher income figure in their financial statements.
What is the LIFO Conformity Rule? The LIFO conformity rule requires that, if the LIFO cost flow method is used to compile taxable income, it must also be used in the financial statements. The rule is designed to prevent organizations from using LIFO accounting to reduce the amount of their taxable income, while using a different inventory cost flow method (such as FIFO ) to derive a higher income figure in their financial statements.
What is a Line of Credit Fee? In a revolving line of credit , the borrower can make multiple borrowings up to a predetermined maximum loan amount. In exchange for this service, the lender charges the borrower an annual fee and a monthly servicing fee. The lender charges these fees because it has to reserve funds for the use of the borrower, and incurs costs to oversee the various line of credit transactions.
What is a Compensated Absence? A compensated absence is employee time off with pay, which can arise in such situations as sick leave, holidays, vacations, and jury duty. These absences routinely arise for employees, but not for contract workers - who are only paid for the hours they work. How to Account for a Compensated Absence To account for a compensated absence, it is not necessary to separately recognize the expense when it is earned and used within the same period, since it is typically ro
What is a Stock Split? A stock split increases the number of shares outstanding. This issuance does not involve the reduction of any company assets (since no cash is being paid out), nor does it increase the cash inflow to the issuer. For these reasons, a stock split can be considered a neutral event that has no impact on either the issuer or the recipient.
What is a Stock Subscription? Stock subscriptions are a mechanism for allowing employees and investors to consistently purchase shares of company stock over a long period of time, usually at a price that does not include a broker commission. These arrangements are relatively uncommon, but have some advantages for both parties, as described next. Advantages of Stock Subscriptions There are several advantages associated with stock subscriptions, which are as follows: Lower cost for buyers.
Automation generally supercharges any process and brings its value to the forefront. See how infusing automation such as ART (our month-end close solution), into your close can get you to the next level of closing. We will share a live demo of SkyStem's solution, ART and share the key elements of month-end close automation. Through ART, we'll take a look at: What month-end close automation entails Which process steps can and should be automated Benefits of achieving process automation, and Why i
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