Accounting

Because there are so many types of costs, some are easier to work out than others. Some implicit costs might not have a quantifiable monetary value. Because explicit costs represent a real expense in which payment is due, they’re commonly used in business accounting. When money’s tight, a small business owner might decide to forgo a formal salary until the business gets up and running. Total cost is what the firm pays for producing and selling its products. Recall that production in […]

In essence, you can line up the revenues and expenses from one decision next to similar information for the alternative decision, and the difference between all line items in the two columns is the differential cost. All variable costs are not part of the differential cost, and it is to be considered only on the case to case basis. Is needed for this cost as no actual transactions are undertaken, and this is the only evaluation of alternatives. Also, no accounting standards are there presently […]

Company B still has to earn their revenue, even though the customer has already paid for the whole year in advance. For a seller using the cash method, revenue on the sale is not recognized until payment is collected and expenses are not recorded until cash is paid. For companies that don’t follow accrual accounting and use the cash -basis instead, revenue is only recognized when cash is received. Advances are not considered to be a sufficient evidence of sale; thus, no revenue is recorde […]

They are designed to maintain credibility and transparency in the financial world, which enables investors and business operators to make informed financial decisions. Although convergence efforts have stalled since the Financial Accounting Standards Board and IASB completed projects that better align accounting rules in U.S. GAAP and IFRS in February 2013—including revenue recognition, leases, and credit losses on financial instruments—former SEC Chair Mary Jo White said in January 2017 just p […]

The committee and the independent auditor usually hold quarterly meetings to discuss the financial reporting, internal controls, and audit of the firm. The committee reviews the results of an audit with management and external auditors, including matters required to be communicated to the committee under generally accepted auditing standards. Controls over financial reporting, information technology security and operational matters fall under the purview of the committee.

Many boards also sche […]

It can also be viewed as expenses that can be directly attributed to the generation of revenue. Since you incurred liability without an economic benefit in exchange, there is no increase in your net worth but rather there’s a decrease instead. For example, when you pay for rent, your cash is reduced without a corresponding increase in another asset. Aside from these costs, there are other expenses that are necessary in order to keep the business afloat.

The concept of the expense account […]