A correcting entry is a journal entry used to correct a previous mistake. A transaction that incorrectly uses an accounting principle is called an error of principle. Errors of principle…

Amounts subject to legal dispute are also recorded in a suspense account. For example, payments may be received with invalid or unclear account information. Other details may also be unclear,…

While Herget knew his industry when starting Gearhead, like many entrepreneurs he faced regulatory and financial issues that were new to him. Several of these issues were related to accounting…

These ratios include the Current ratio and the Quick ratio (also know as the acid test ratio). These items are typically presented in the balance sheet in their order of…

Operating cash flow—also referred to as cash flow from operating activities—is the first section presented on the cash flow statement. Operating cash flow (OCF) is a measure of the amount…

Reversals of writedowns are recognized in profit or loss in the period in which the reversal occurs. IFRS Standards define an onerous contract as one in which the unavoidable costs…

Since fixed costs are more challenging to bring down (for example, reducing rent may entail the company moving to a cheaper location), most businesses seek to reduce their variable costs.…

Do not transact business with customers who have a history of defaulting. Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see…

Because the bonds have a 5-year life, there are 10 interest payments (or periods). The periodic interest is an annuity with a 10-period duration, while the maturity value is a…

When the small stock dividend is declared, the market price of $5 per share is used to assign the value to the dividend as $250,000 (500,000 x 10% x $5).…