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Accounting

Days Inventory Outstanding (DIO): Calculation & Significance

Days inventory outstanding (DIO) is the average number of days that a company holds its inventoryInventoryInventory is a current asset account found on the balance sheet, consisting of all raw ma
Understanding Days Deduction Outstanding (DDO) & Its Impact

Days Deduction Outstanding (DDO) is a key metric or performance indicator in deduction management that is used to demonstrate how effective a company is at resolving deductions. It refers to the numbe
Customer Profitability Analysis: Understanding & Calculating

Customer Profitability Analysis is a tool from managerial accounting that shifts the focus from product line profitabilityCost of Goods Manufactured (COGM)Cost of Goods Manufactured (COGM) is a term u
Customer Acquisition Cost (CAC): Definition & Calculation

Customer acquisition cost (CAC) is the cost related to acquiring a new customer. In other words, CAC refers to the resources and costs incurred to acquire an additional customer. Customer acquisition
Understanding Current Portion of Long-Term Debt

Long-term debt is debt with a maturity of longer than one year. This can be anywhere from two years, to five years, ten years, or even thirty years. The current portion of long-term debt is the amount
Understanding Current Liabilities: Definition & Examples

Current liabilities are financial obligations of a business entity that are due and payable within a year. A liability occurs when a company has undergone a transaction that has generated an expectati
Understanding Current Debt: Definition & Implications

Current debt includes the formal borrowings of a company outside of accounts payableAccounts PayableAccounts payable is a liability incurred when an organization receives goods or services from its su
Understanding Current Assets: Definition & Importance

Current assets are all assets that a company expects to convert to cash within one year. They are commonly used to measure the liquidity of a company. A company’s assets on its balance sheetBala
Understanding Credit Sales: Definition & Benefits | CFI

Credit sales refer to a sale in which the amount owed will be paid at a later date. In other words, credit sales are purchases made by customers who do not render payment in full, in cash, at the
Cost Recovery Method: Understanding Revenue Recognition

The cost recovery method of revenue recognitionRevenue RecognitionRevenue recognition is an accounting principle that outlines the specific conditions under which revenue is recognized. In theory, the
Cost of Goods Sold (COGS): Definition, Calculation & Importance

Cost of Goods Sold (COGS) measures the “direct cost” incurred in the production of any goods or services. It includes material cost, direct labor cost, and direct factory overheads, and is
Understanding Cost of Goods Manufactured (COGM): A Managerial Accounting Guide

Cost of Goods Manufactured (COGM) is a term used in managerial accounting that refers to a schedule or statement that shows the total production costsAbsorption CostingAbsorption costing is a costing
Cost Method Explained: Accounting & Investment Strategies

The cost method of accounting is used for recording certain investmentsInvestment MethodsThis guide and overview of investment methods outlines they main ways investors try to make money and manage ri
Cost Drivers: Understanding What Impacts Your Business Expenses

A cost driver is the direct cause of a costCost StructureCost structure refers to the types of expenses that a business incurs, and is typically composed of fixed and variable costs. Fixed costs
Cost Behavior Analysis: Understanding Cost Relationships & Management

Cost behavior analysis refers to management’s attempt to understand how operating costs change in relation to a change in an organization’s level of activity. These costs may include direc
Cost Allocation: Definition, Methods & Importance

Cost allocation is the process of identifying, accumulating, and assigning costs to costs objects such as departments, products, programs, or a branch of a company. It involves identifying the cost ob
Fixed vs. Variable Costs: A Managerial Accounting Guide

Cost is something that can be classified in several ways, depending on its nature. One of the most popular methods is classification according to fixed costs and variable costs. Fixed costs do not cha
Understanding Contribution Margin After Marketing (CMAM): Definition & Calculation

Contribution margin after marketing (CMAM) refers to the amount of money generated for each unit sold after deducting the variable costsVariable CostsVariable costs are expenses that vary in proportio
Understanding Contribution Margin: A Key Profit Metric

Contribution margin is a business’ sales revenueSales RevenueSales revenue is the income received by a company from its sales of goods or the provision of services. In accounting, the
Contributed Surplus Explained: Understanding Stockholders' Equity

Contributed surplus is an account in the shareholders’ equityStockholders EquityStockholders Equity (also known as Shareholders Equity) is an account on a companys balance sheet that consists of

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Accounting

Accounting