Accounting Definitions
Accounting definitions are defined by different authors in different ways. Accounting definitions are easy to understand and in easy language. Accounting definitions provides proper guideline & process in the preparation of different accounts of any thing.
Business Process Reengineering is a process of making an organization more efficient and effective by redesigning the workflows in order to optimize end to end processes and to remove process that don’t add any value to the system. There are seven reengineering principles that
The cost of credit is a financial calculation that is done to find out the cost of the discount that a business is going to offer on an early payment. The cost of credit is used to find out by the account payable department
The liquidity index is a financial indicator that is used to indicate the number of days required by a company to convert its trade receivables and inventory into cash. The liquidity index is the measure of the ability of a business to generate cash
Whenever a customer invoice is tagged as uncollectible this means that the amount receivable is not going to be received and is converted into a bad debt. If an invoice is declared as bad debt invoice it is very necessary to write it off
The concept of time value of money states that the cash received today at this point of time is more valuable as compared to the cash received in future at some other point of time. The major reason to make this statement is that
Variable Annuity is a kind of retirement annuity as it offers death benefits and other integrated features associated with death benefits. Most of the insurance companies offer variable annuities under a condition where an investor planning for the retirement purchases a variable annuity for
Annuity Due can be explained as a series of payments that posses certain characteristics as compared to the other form of the payments. The first characteristic of this kind of payment is that all payments are of same amount that are included in the
Back flush accounting is a type of accounting where the accounting procedures are not conducted until the final manufacturing of the product is not completed. After the completion of manufacturing the accounting is done for all the issues that were carried out from the
Work in Process is a kind of inventory in which all the goods are near to be finished but still some work needed to be done to count these goods as an completely finished goods inventory. The formula of ending work in progress can
Every business has a warranty or claim policy under which a business promises to its customers that it will repair or replace the defective or broken goods within a certain period of time that may span over years, months or days. It is better
Deferred compensation is a type of employee compensation that depends upon the performance of the employee. The arrangement of deferred compensation depends upon the time period for which it is being calculated. For example if a deferred compensation is being calculated for the current
Asset retirement obligation can be defined as a liability that has to be fulfilled by a firm on the retirement of certain fixed asset. The most common example of asset retirement obligation is to return site to its previous condition and state. Whenever a
Standard costing is an accounting technique where the actual cost is substituted with standard costs or expected cost in the accounting records. After recording the costs the next step is to calculate the variance periodically so that the difference between the actual cost and
The selling price variance can be defined as the variance between the anticipated selling price and the actual selling price of the product that result in alteration of the expected revenue. The formula of selling price can be shown as under:- Selling Price Variance
Labor rate variance is a calculation that is related to the labor rate decided by the management. it can be defined as the difference between the standard labor rate and the actual labor rate that is paid to the employees multiplied by total number
The closing procedure in accounting is carried at the end of each and every accounting period. In this procedure all the journal entries are flushed that were being used to maintain temporary accounts and all the authentic information such as balance is shifted to
A joint venture is a type of business or investment that is conducted by more than one investor that acts as business partners to each other. The degree of the control of an investor over the business depends upon the percentage of the investment
The cost method of investment accounting is a method of calculating cost of investment made by an investor. There are two general rules of cost method of investment accounting one state that the investor has no influence over investee if the investor is investing