Accounting

These investments are backed by the U.S. government and will always be paid. It’s not like a private short-term bond or loan where the company can default or go bankrupt. T-bills are a safe, guaranteed investment that can be cashed in at any time. Thus, GAAP recognizes these investments as if they were actual currency.

Since “cash is king” among individual investors and corporations, cash equivalents have an important role in financial management and corporate accounting prac […]

For example, installing an air conditioner in an automobile that did not previously have one is a betterment. Assets are valued using absolute value, relative value, or option pricing models, which require different inputs. As opposed to fair market value, fair value is a legal construct rather than a value set by the market. Fair value tends to be defined by statute—and these statutes vary from one jurisdiction to the next. Book value can be seen basically as a company’s break-up value — […]

On the contrary, if the amount is lesser than zero, then this is a state of economic loss. Uncompetitive markets can earn positive profits due to barriers to entry, market power of the firms, and a general lack of competition. In contrast, implicit costs are the opportunity costs of factors of production that a producer already owns. The implicit cost is what the firm must give up in order to use its resources; in other words, an implicit cost is any cost that results from using an asset instea […]

Additionally, awards that are indexed to a factor other than the common criteria of performance, market and service conditions are also usually classified as liabilities. Chase’s website and/or mobile terms, privacy and security policies don’t apply to the site or app you’re about to visit. Please review its terms, privacy and security policies to see how they apply to you. Chase isn’t responsible for (and doesn’t provide) any products, services or content at this […]

You can think of A/R and A/P, and the job responsibilities involved with each, as mirror images of the other. Accounts receivable is a collection of current assets a company has a right to collect; accounts payable is a collection of current liabilities a company is required to pay . A/R professionals handle the billing of customers and the monitoring and collection of those bills in a timely fashion.
Accounts receivable are found on a firm’s balance sheet, and since they represent funds […]

This is because a business can calculate its economic profits by deducting its total explicit and implicit expenses from its revenues. In other words, a business can calculate its economic profit by subtracting its implicit expenses from its accounting profit.
If the company’s only overhead was a monthly employee expense of $5,000, its operating profit would be $3,000, or ($8,000 – $5,000). However, if there is economic profit, other firms will want to enter the market.
Learn How Fi […]