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…
Demerger: Definition, Types, Pros and Cons
A demerger is a type of corporate restructuring in which a company splits into two or more separate entities. This separates the company’s operations, assets,…
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…
Disinvestment – Definition, Causes, Types and Examples
Disinvestment is a term used to describe the act of withdrawing financial support or investment from something. Disinvestment typically happens when an organization or individual…
Hazard Insurance for Homeowners: Definition and Importance
Hazard insurance is a type of insurance that protects a property owner against damage caused by fires, severe storms, and other natural events. Hazard insurance…
Hedge Fund – Definition, Meaning, History, Characteristics and Types
A hedge fund is a type of investment vehicle typically used by sophisticated investors to pursue high-risk, high-return strategies. Hedge funds may be open to…
Hedge Fund Manager – Definition, Functions, Types and Requirements
A Hedge Fund Manager is an individual who invests other people’s money into hedge funds. Hedge funds are investment vehicles that pool together capital from…
Discretionary Income – Definition, Meaning, Calculation
What is Discretionary Income? Discretionary income is the amount of money left over for spending, investing, or saving after taxes and other personal necessities are…
Discretionary Expense – Definition, Types and Examples
What is a Discretionary Expense? A discretionary expense is defined as a non-essential expenditure that is chosen rather than required by a person, household, or…
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…
Depth of Market (DOM) – Overview, Examples and Factors
What Is Depth of Market? Depth of market (DOM) is a measure of the number of buy and sell orders for a security or asset…
Capital Asset – Definition, Importance and Example
What is Capital Asset? A capital asset is a type of asset that is used in business operations to generate value or revenue over a…
Difference Between Face Value and Market Value
What Is Face Value? Face value is the value of a financial instrument, typically a bond or stock, that is stated on the instrument itself….
Distributable Net Income (DNI) – Definition, Calculation and Importance
What is Distributable Net Income (DNI)? Distributable Net Income (DNI) is the net income of a company that is available for distribution to its shareholders….
Buyout – Definition, Types, Advantages and Disadvantages
What is Buyout? A buyout is a process of acquisition and an investment transaction of buying all or a controlling percentage of the shares of…
Buy In Management Buyout (BIMBO)
What is A Buy-In Management Buyout bimbo? A buy-in management buyout (BIMBO) is a corporate takeover in which an outside management team joins a company,…
Bridge Loan – Definition, Types, Pros and Cons
What is Bridge Loan? A bridge loan is a short-term loan used for funding an enterprise or business until the company finally gets its long-term…
Earned Income and Earned Income tax Credit (EITC)
What Is Earned Income? Earned income is the money received as pay for work or labor performed. When you earn money, it is usually taxable…
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,…
Buy and Hold – Definition, Strategy, Pros and Cons
What is Buy and Hold? Buy and hold is a passive investment strategy that encourages investors for buying stocks and holding them for the long…
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…
Earmarking – Definition and Examples
Earmarking is a type of funding used by the government, people, or organization to allocate money to specific projects, programs, or initiatives. Earmarks provide an…
Combined Ratio Formula – Definition and Calculation
The combined ratio is a key metric that insurance companies use to measure profitability and evaluate performance. This ratio is determined by dividing the total…
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…
Hedonic Pricing – Advantages and Disadvantages
Hedonic pricing is a pricing model that considers factors such as the cost of producing the good and its internal features, as well as external…
Commercial Bank – Importance, Functions and Examples
A commercial bank is a financial institution that is involved in accepting deposits, offering checking account services, making various loans, and offering basic financial products…
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…
Capital Markets – Definition, Importance and Tips
Capital markets are where securities are traded between investors. It includes primary markets, where new issues are first sold to the public, and secondary markets,…
Herd Mentality – Definition, History and Examples
Herd mentality is a term used to describe the tendency of people to conform to the norms and behaviors of their social group. This can…
Capital Loss – Definition, Meaning and Example
A capital loss is a decrease in the value of a capital asset. Capital assets are things like stocks, bonds, real estate, and personal property….
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,…
Commercial Paper – Types, Advantages and Disadvantages
Commercial Paper (CP) is a short-term debt instrument offered by businesses to finance activities for up to one year. It allows companies to raise cash…
Commercial Credit – Definition, Types and Examples
Commercial credit is a pre-approved amount of money that a company can borrow to meet various financial obligations. Commercial credit is an important tool for…
Budgetary Slack – Role, Causes and Drawbacks
Budgetary slack is your built-in cushion that an organizational budget might have because a manager wants to optimize the company’s performance in comparison to the…
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…
