ADP RUN articles

The current ratio, sometimes known as the working capital ratio, is a popular alternative to the quick ratio. Current assets are typically any assets that can be converted to cash within one year, which is how the current ratio is defined. Cash, cash equivalents, and marketable securities are a company’s most liquid assets.

An “acid test” is a slang term for a quick test designed to produce instant results. In simple terms, the quick ratio shows the relationship between […]

It is used to show a more accurate representation of a company’s expected net receivables. An allowance for doubtful accounts is considered a “contra asset,” because it reduces the amount of an asset, in this case the accounts receivable. The allowance, sometimes called a bad debt reserve, represents management’s estimate of the amount of accounts receivable that will not be paid by customers.

If actual experience differs, then management adjusts its estimation methodo […]

If you’re looking for an online bookkeeping service that can help you with the entirety of your business financial operations, Bookkeeper360 can do just that. In addition to its core bookkeeping and accounting services, Bookkeeper360 offers six other solution types, from taxes to human resources. Plus, with Bookkeeper360’s custom plans, you can pick and choose which services you want and receive a solution that will truly accommodate your specific business. The two additional Bookke […]

The same principal amount is more expensive to pay off at a 10% interest rate than it is at 5%. Debt to income ratio is a measure of all of your monthly debt payments divided by your gross monthly income. The debt-to-credit ratio is a measure of your outstanding debt divided by your available credit. The debt-to-income ratio is a better measure of your ability to make monthly debt payments, while the debt-to-credit ratio is a better measure of your credit utilization.

Bad debt refers to money […]

A personal balance sheet provides a snapshot of how you’re doing financially. An asset is anything owned by an entity that has economic value and can be converted into cash. A liability is something that a business owes to another party. Assets are different from liabilities and equity, which is important to understand for both personal finances and business accounting.
An asset represents an economic resource owned or controlled by, for example, a company. An economic resource is somet […]

Lenders that offer government-backed mortgages like FHA loans have different guidelines they have to follow for non-arm’s length transactions. For example, for an arm’s length transaction, the down payment for an FHA loan is 3.5% of the purchase price. For a non-arm’s length transaction, however, the down payment must be a minimum of 15%.

The concept is also used in establishing transfer prices between subsidiaries, so that prices are not unusually high or low (which can imp […]