Accounting

Average inventory figures for other stretches of time are similarly calculated. The average of inventory is the average amount of inventory available in stock for a specific period. To calculate the average inventory, take the current period inventory balance and add it to the prior period inventory balance. Divide the total by two to get the average inventory amount. For an inventory calculation formula example, the current inventory balance is 30,000 units and the prior inventory balance is 2 […]

The first three steps of the accounting cycle can take place throughout the accounting period. Just like the previous trial balance stages, this step ensures that the debits and credits in your post-closing trial balance match up. The only difference here is that instead of temporary accounts , this balance consists only of permanent accounts like assets, liabilities, and owners’ equity. It’s easy for something to go wrong when manually tracking so many transactions and financial ev […]

Others are creative interpretations put together by management and their accountants. Explicit CostExplicit cost refers to the business expenses that impact the organization’s profitability and are recorded in the general ledger.

The taxable profit of a business is crucial in calculating its tax for a period. That is because tax laws don’t allow businesses to calculate their taxes based on accounting or economic profits. There are various reasons why tax laws restrict businesses fr […]

A term interest in property means a life interest in property, an interest in property for a term of years, or an income interest in a trust. However, if you buy technical books, journals, or information services for use in your business that have a useful life of 1 year or less, you cannot depreciate them. Subtract from the amount figured in any mortgage debt that is not for the depreciable real property, such as the part for the land.

The depreciation for the computer for a full year is $2,0 […]

People are clearing forests primarily for agricultural reasons due to the increase in the population pressure. Some farming practices such as excessive use of pesticides, fungicides, and herbicides equally kill important soil micro-organisms that are essential in replenishing nutrients in the soil.

However, special rules apply when the predominant property is hydrocarbon gas. Another point to remember is that the depletion deduction under the percentage depletion method cannot exceed 100 perce […]

Consequently, a considerable amount of care must be used when estimating accrued expenses. Accounts payable refers to debts a company incurs when it receives goods or services from its vendors before it has actually paid for them. Using the accrual accounting method, when a company incurs an expense, the debt is recorded on the balance sheet as an accounts payable liability and the income statement as an expense. Owners, investors, and creditors can learn a lot from your balance sheet and your […]