When a company records a business transaction, it is not recorded in the accounting equation, per se. Rather, transactions are recorded into specific accounts contained in the company’s general ledger. The accounts are designated as an asset, liability, owner’s equity,…
If the corporation were to liquidate, the secured lenders would be paid first, followed by unsecured lenders, preferred stockholders (if any), and lastly the common stockholders. In addition, we show the effect of each transaction on the balance sheet and…
He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run…
The present value factor is multiplied by the payment amount to determine the present value of the annuity. The purpose of the present value annuity due tables (PVAD tables) is to make it possible to carry out annuity due calculations…
Other than the example above, during the normal course of business, there are numerous examples of mixed costs that the company bears and pays. The formula above shows that the mixed cost has both components, which need to be added…
This method is simpler and easier to implement, making it suitable for businesses with uniform production processes and minimal variability in overhead costs. However, because it applies a broad allocation method, traditional costing can sometimes lead to inaccurate cost distribution,…
For instance, reconciling accounts payable involves ensuring recorded liabilities match supplier statements. Accurate records are essential for compliance with International Financial Reporting Standards (IFRS), which require financial statements to reflect a true and fair financial position. Automating the reconciliation process…
At times, the balance as per the cash book and passbook may differ due to an error committed by either the bank or an error in the cash book of your company. At times, your customers may directly deposit funds…
If the loss is reasonably possible but not probable, the company must disclose the nature of the litigation and the potential loss range. However, when disclosing contingencies related to pending litigation, it’s important to avoid revealing the company’s legal strategies.…
However, if the case resolves against the company, a financial obligation will arise. It is difficult to estimate the exact amount of such liabilities as they depend on the type of case and various other external factors. But the company…