adminExamples of Accounting Estimates Accounting Estimates Accounting estimates are an approximation of business transactions, used in accrual basis accounting, that are based on historical evidence and the accountant’s judgment. These estimates are used to make financial statements more complete by anticipating future events that are considered probable. Changes in estimates affect current and future periods, … Read more
Direct Overhead Direct overhead refers to the costs that are associated with running a business on a day-to-day basis. It is comprised of a variety of expenses that are necessary for the operation of a business, including utilities, rent, materials and labor. Direct overhead costs can vary from business to business and are typically dependent … Read more
Direct Labor Cost Direct labor cost refers to the wages, payroll taxes, insurance, and other benefits associated with the labor that is used in the production of goods. This cost can be tracked in a job costing environment, where the time spent on various jobs is recorded. In service industries, employees track their hours by … Read more
Why is an Account Payable not Classified as a Non-current Liability? Non-current liability Non-current liabilities are financial obligations or debts that a company expects to pay in more than one year. They are also referred to as long-term liabilities. Non-current liabilities can be found on the company’s balance sheet, and typically consist of long-term leases, … Read more
Why is Account Payable a Current Liability? Accounts Payable Accounts payable is a type of current liability that represents an organization’s outstanding debt to its suppliers. It is a short-term debt to be paid within a year and is an obligation to pay for goods and services that have been received but not yet paid … Read more
Addition to Retained Earnings Retained earnings are an important part of any successful business. They provide companies with a way to reinvest in themselves and create long-term stability. Adding to retained earnings is when a company adds additional funds to the amount they currently have saved up. This money can be used to invest in … Read more
Accounts Payable Review Maintaining accurate records of accounts payable is critical for any business. Accounts payable review can help to identify errors and discrepancies and ensure that all invoices are paid promptly. The review process typically begins with a reconciliation of the accounts payable ledger. This ensures that all invoices have been recorded accurately and … Read more
Return on Net Operating Assets Operating assets are all the physical and financial resources that a business owns or has access to, which help it generate income. Operating assets can include both fixed and current assets. Fixed assets, such as buildings and equipment, are intended for long-term productivity, whereas current assets are more liquid and … Read more
What Is Variable Overhead Rate Variance? The difference between the budgeted and actual rates of spending for variable overhead is called a variance. This variance is the variable overhead rate variance. As an accountant, you need to be aware of the changing costs that can affect your bottom line. The difference between what you budgeted … Read more
How to Calculate Modified Internal Rate of Return This article will cover how to calculate the modified internal rate of return (MIRR). This includes key definitions, formulas as well as and example calculations that can help you understand this process better. IRR is an important technique in project evaluation. All cash flows arising from a … Read more