A cash budget is a budgeting method of representing the expected future income or cash flow of an organization throughout a given timeframe. It refers…
Days Sales Outstanding – Definition, Formula, Importance and Examples
What are Days Sales Outstanding? The days sales outstanding (DSO) is a figure that indicates how successful a company is in collecting money from customers….
Days Payable Outstanding (DPO) – Definition, Calculation and Examples
Days payable outstanding (DPO) is a measure of how quickly a company pays its bills and invoices from its creditors. It refers to the average…
Economic Cost – Definition, Examples and Calculation
What is Economic Cost? The economic cost is the opportunity cost associated with a particular decision or action and it is an evaluation of the…
Carrying Amount – Definition, Formula and How to Calculate?
The carrying amount is the first cost of an asset given in the balance sheet or company’s books of a company minus the accumulated depreciation…
Carriage Outwards – Definition, Meaning and Examples
Carriage outwards is the shipping and handling costs incurred by a supplier that is transporting goods to a purchaser. The supplier might have the option…
Closing Stock – Definition, Calculation, Formula and Examples
Closing stock is the quantity of inventory that a firm has at the end of a financial period. Inventory can be raw materials, work-in-process, or…
Deferred Income Tax (DIT) – Definition, Types and Examples
Deferred income tax (DIT) is an accounting concept that refers to the difference between the reported income of a company and its taxable income. It…
Direct Labor – Definition, Formula, Calculation and Examples
Direct labor is the term used to describe the work done by employees who are directly involved in creating a product or service. This includes…
Direct Expense: Definition, Examples, Importance
Direct expense refers to an immediate and direct financial cost incurred by a business. This could include raw materials, labor, shipping, and other costs associated…
Deferred Income – Definition, Examples and Tips
The deferred income is the money a firm receives in advance for goods or services that haven’t been produced or delivered yet. In other words,…
Diminishing Balance Method – Definition, Formula and Advantages
What is the Diminishing Balance Method? The diminishing balance method is a method of calculating the depreciation expense of an asset for each accounting period….
Direct Materials – Definition, Types, Examples and Advantages
Direct materials are the physical inputs that go into the making of a product or service. These are the raw materials that are used in…
Differential Cost – Definition, Examples and Applications
What is Differential Cost? Differential cost is the difference in total cost between two alternatives. Differential costs can be used to make decisions about which…
Departmental Accounting – Definition, Types and Advantages
Departmental accounting is the process of allocating financial resources and performance measurements to specific departments within an organization. This type of accounting can help businesses…
Budget Variance – Definition, Types and Analysis
What is a Budget Variance? A budget variance is the accounting discrepancies in which actual costs are either lower or higher than the standard, baseline,…
Bookkeeping – Definition, Features, Importance and Steps
Bookkeeping is a process through which a company or an organization keeps a record of a company’s financial transactions by entering the details into a…
Hedge Accounting – Definition, Types and Calculation
Hedge accounting is an accounting method used to manage financial risks and to protect against price changes in assets or liabilities, interest rate changes, foreign…
Days Inventory Outstanding (DIO) – Definition, Formula and Examples
Days Inventory Outstanding (DIO) is a measure of the number of days that a company’s inventory remains unsold. It is calculated by dividing a company’s…
Hard Asset – Definition, Examples, Benefits and Risks
A hard asset is a physical or tangible asset that has value and can be sold and these assets are generally held for a long…
Generally Accepted Accounting principles (GAAP)
GAAP is the acronym for generally accepted accounting principles. GAAP is a set of accounting rules and guidelines that companies must follow when they prepare…
Factory Overhead – Definition, Benefits and Types
Factory overhead is a term used to describe the indirect costs associated with running a manufacturing business. These costs can include things like rent, utilities,…
Capitalization – Definition, Importance and Types
Capitalization is a bookkeeping or accounting technique wherein an expense or cost of an asset is recorded in a permanent account and expensed over the…
Books of Accounts – Definition, Formats and Types
Books of accounts are the documents for including all types of financial information, sales, and expenses of a person or a company. It t is…
Capital Reserves – Definition, Example and Exceptions
A capital reserve is a type of fund or capital that businesses set aside for major long-term investment projects or other anticipated expenses. The capital…
Cash Accounting – Definition, Example, Pros and Cons
Cash accounting is an accounting method under which income or revenue generation occurs when cash receiving takes place and expense recognition occurs when cash payment…
Carrying Costs – Definition, Components, Formula and Types
Carrying costs are the different costs a business is supposed to pay for inventory in stock. Some of the instances of such costs incorporate taxes,…
Budgetary Control – Definition, Features and Benefits
Budgetary control is a process used for managing the revenues and expenditures of an organization. An effective budgetary control system enables managers to utilize budgeted…
Cash on Delivery (COD) Definition – Examples, Pros and Cons
Cash on delivery (COD) is a payment method in which payment for an order is collected when the associated product is delivered to the customer….
Cash Discount – Definition, Advantages and Disadvantages
A cash discount is a reduction offered by a seller at its product’s price when the buyer makes payment right away or within the given…
Capital Account – Definition, Types and Example
A capital account is used for addressing the balance of payments for a country on a national level. In bookkeeping and accounting, it is understood…
Branch Accounting – Definition, Objectives and Methods
Branch accounting is a bookkeeping system that a business or organization uses for keeping up with separate accounting records for each branch or working location…
Bill of Materials (BOM) – Definition, Example, Types and Benefits
Bill of materials is a detailed list of raw materials, sub-assemblies, intermediate assemblies, drawings, documents, and instructions required to manufacture, fabricate, or repair an end…
Absolute Return – Definition, Formula and Features
Absolute return is the return that an asset or portfolio achieves over a specified period. This return can be positive or negative. It is expressed…
Top 20 Accounting Interview Questions and Answers
What are Accounting Interview Questions? Accounting interview questions are the questions that the employer, hiring manager, or interviewer can ask for recruiting someone for the…
Accounts Receivable – Definition, Process and Methods
What is Accounts Receivable? Definition: Accounts Receivable is defined as the pending bills or money that customers or clients owe to a company. It is…
Accounting Concepts – Meaning And Its Types
What is Accounting Concepts? Definition: Accounting concepts are defined as the fundamental rules, assumptions, and principles that work as the foundations of preparing accounts and…
Accounts Receivable Turnover – Definition and Formula
What is Account Receivable Turnover? Definition: The accounts receivable turnover is defined as the efficiency ratio used to measure how efficiently a company is collecting…
Accrued Revenue – Definition, Principles and Examples
What Is Accrued Revenue? Definition: Accrued revenue is defined as the revenue that is recognized by a business but its invoice is yet to be…
Accrued Expenses – Definition, Types and Examples
What is an Accrued Expense? Definition: Accrued expense is defined as an expense of a particular accounting period for which a company accounts for, but…
