Accounting Tools

JULY 6, 2024

What is Office Equipment? Office equipment is a fixed asset account in which is stored the acquisition costs of office equipment. This account is classified as a long-term asset account, since the asset costs recorded in it are expected to be held for more than one year. It is paired with and offset by an accumulated depreciation account, in which is stored the cumulative amount of depreciation associated with those assets.

Computation 40

Computation Auditing Accounting Accounting 40

Accounting Tools

JULY 6, 2024

What is a Special Order? A special order is any customer order for goods or services that is not routinely handled by a business. Since a business has little experience with these orders, it probably has only a modest understanding of the costs that it will incur. Of particular concern is that these deals may alter the cost structure of the business for the duration of the order.

Cost Accounting 40

Cost Accounting Accounting Accounting 40

Accounting Tools

JULY 6, 2024

What is the Owner’s Drawing Account? The owner's drawing account is used to record the amounts withdrawn from a sole proprietorship by its owner. This is a contra equity account that is paired with and offsets the owner's capital account. At the end of the fiscal year , the balance in this account is transferred to the owner's capital account, thereby setting the drawing account balance to zero to begin the next fiscal year.

Accounting 40

Accounting Accounting Bookkeeping 40

Accounting Tools

JULY 6, 2024

What is the Payback Method? The payback period is the time required to earn back the amount invested in an asset from its net cash flows. It is a simple way to evaluate the risk associated with a proposed project. An investment with a shorter payback period is considered to be better, since the investor's initial outlay is at risk for a shorter period of time.

Budgeting 98

Budgeting Financial Analysis Accounting Accounting 98

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Accounting Tools

JULY 6, 2024

What is a Capital Expenditure? A capital expenditure is the use of funds or assumption of a liability in order to obtain or upgrade physical assets. The intent is for these assets to be used for productive purposes for at least one year. This type of expenditure is made in order to expand the productive or competitive posture of a business. Examples of capital expenditures are funds paid out for buildings, computer equipment, machinery, office equipment, vehicles, and software.

Computation 98

Computation Record Keeping Financial Analysis Budgeting 98

Accounting Tools

JULY 6, 2024

What is an Offsetting Error in Accounting? An offsetting error is a mistake that counteracts another mistake. The concept most commonly occurs in accounts payable , when an expense is charged to the wrong accounting period. For example, an invoice for $10,000 is charged to expense in January when it should have been charged in February. This means the income statement shows a before-tax profit in January that is too low by $10,000 and an income statement in February that is too high by $10,000.

Accounts Payable 40

Accounts Payable Accounts Payable Invoicing Tax 40