Financial Accounting

Depreciation is an accounting practice that helps companies allocate costs of non-current assets. It helps companies to follow the matching principles of accrual accounting as well. Let us discuss what is depreciation and the top reasons for companies to calculate depreciation. What is Depreciation? Depreciation expense or simply depreciation is the process of cost allocation […]

Accrued and deferred revenues are contrasting accounting entries for a business. Accrued income is received after providing goods or services. Contrarily, deferred or unearned income is received in advance before providing goods or services. Let us discuss key differences between accrued revenue and deferred revenue. What is Accrued Revenue? Accrued revenue refers to the revenue

Accounts payables and accrued expenses are similar short-term obligations of a business. While both represent short-term liabilities of a business, they differ in nature and accounting treatment for a business. Let us discuss what are the key differences between accounts payable and accrued expenses for a business. Accounts Payable – Definition Accounts payable (AP) or

Deferred revenue or unearned revenue is essentially the same type of income. It is the income that is received before delivering goods or services. In many cases, it comes in the form of advance payment for a large contract. Some contracts stipulate certain terms that require a proportion of the total amount to be paid

Scrap inventory is the residue, unfinished, or damaged inventory that cannot be used under normal circumstances. All production processes produce scrap and waste material inevitably. If the costs are smaller, a company may account for these costs as overhead costs. However, if scrap costs are significant, a company would need to account for them separately.

Definition of Deferred Consideration Deferred Consideration can be defined as a part of the purchase price that is payable by the buyer in the future, once the deal has been closed. The purchase price is mostly negotiated on the basis of the fair market value, and the mutual understanding between the purchaser, as well as

Tenant Improvements can be described as the renovations or customizations that are made to a said property in order to benefit the tenant. However, the said alterations are only meant to be applicable to improvements in the rented space, like the office. They do not include building improvements that are made outside of the given

Periodicity assumption states that a business can report its financial information in any designated period of time. It means that they can divide the activities of a business into an artificial period. That’s the reason why the periodicity assumption is preferred while presenting financial information. This assumption allows the companies to prepare their financial statements

Accounting has evolved to be complex for providing comprehensive insights to the user of financial statements. The objective of improving financial reporting is to enhance the true representation of the financial and operational information presented in the financial statement. So, the process to enhance user experience requires the business accountant to present financial information that