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Accounting

Understanding Underlying Profit: A Deeper Look

Underlying profit is an internal profit calculation that a company uses as it more accurately portrays the earnings of the business than a standard accounting metric such as net profit. A c
Understanding Liability Types: Current, Non-Current & Contingent

There are three primary types of liabilities: current, non-current, and contingent liabilities. Liabilities are legal obligations or debtSenior and Subordinated DebtIn order to understand senior and s
Understanding Budgeting Methods: A Comprehensive Guide

There are four common types of budgets that companies use: (1) incremental, (2) activity-based, (3) value proposition, and (4) zero-based. These four budgeting methods each have their own advantages a
Understanding Asset Types: A Comprehensive Guide

An asset is a resource owned or controlled by an individual, corporationCorporationA corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of operating
Understanding Trial Balances: A Comprehensive Guide

A trial balance is a report that lists the balances of all general ledger accounts of a company at a certain point in time. The accounts reflected on a trial balance are related to all major accountin
Treasury Stock Method: Calculating Diluted Earnings Per Share

The treasury stock method is a way for companies to calculate how many additional shares may be generated from outstanding in-the-money warrants and options. The new additional shares are then used in
Understanding Translation Exposure: A Guide for Businesses

Translation exposure is a kind of accounting risk that arises due to fluctuations in currency exchange rates. SummaryTranslation exposure is a kind of accounting risk that arises due to flu
Trading Securities: Definition, Types & Short-Term Investment Strategies

Trading securities are securities purchased by a company for the purpose of realizing a short-term profit. Companies do not intend to hold such securities for a long period of time; thus, they will on
Top Line vs. Bottom Line: Understanding Key Financial Metrics

The top line and bottom line are two sections of the income statement, or profit & loss (P&L) statement, of a certain company. The top line item on the income statement refers to a
Understanding the Three Core Financial Statements

The three financial statements are: (1) the Income StatementIncome StatementThe Income Statement is one of a companys core financial statements that shows their profit and loss over a period of time.&
Understanding Threats to Auditor Independence: A Comprehensive Guide

In the auditing profession, there are five major threats that may compromise an auditor’s independence. Before an audit engagement, it is crucial that each member of the audit team review the fi
Understanding Temporary Accounts: Fiscal Year End Accounting

A temporary account is an account that is closed at the end of every accounting periodFiscal Year (FY)A fiscal year (FY) is a 12-month or 52-week period of time used by governments and businesses for
Tax Depreciation Explained: A Comprehensive Guide for Taxpayers

Tax depreciation is the depreciation expense claimed by a taxpayer on a tax return to compensate for the loss in the value of the tangible assetsTangible AssetsTangible assets are assets with a physic
Target Costing: A Comprehensive Guide to Value-Based Pricing

Target costing is not just a method of costing, but rather a management technique wherein prices are determined by market conditions, taking into account several factors, such as homogeneous products,
Tangible Assets: Definition, Examples & Importance

Tangible assets are assets with a physical form and that hold value. Examples include property, plant, and equipmentPP&E (Property, Plant and Equipment)PP&E (Property, Plant, and Equipment) is
Understanding T-Accounts: A Guide for Accounting Professionals

If you want a career in accountingAccountingPublic accounting firms consist of accountants whose job is serving business, individuals, governments & nonprofit by preparing financial statements, ta
Sum of Years Depreciation (SYD): Definition & Calculation

Sum of Years Depreciation (SYD) is a method of accelerated depreciation. Similar to the double declining balanceDouble Declining Balance DepreciationThe double declining balance depreciation method is
Understanding Subsequent Events in Financial Reporting

Subsequent events are events that occur after a company’s year-end period but before the release of the financial statementsThree Financial StatementsThe three financial statements are the
Understanding Stranded Assets: Risks and Impacts

Stranded assets are assets that are unable to earn their original economic return due to changes in the landscape in which the assets operate. In simpler terms, stranded assets are assets that are wor
Straight-Line Depreciation: Definition, Calculation & Example

With the straight line depreciation method, the value of an asset is reduced uniformly over each period until it reaches its salvage valueSalvage ValueSalvage value is the estimated amount that a

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Accounting

Accounting