This Accounting category will cover various topics on accounting ranging from financial, management, and advance accounting.
Detachable warrants act as freestanding instruments that companies use to attract investors. Generally, companies attach stocks with debt instruments such as bonds to attract investors. Detachable warrants offer several benefits to the issuers. The accounting treatment of detachable warrants largely depends on the classification of the warrants into liability or equity. Let us discuss what […]
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In layman’s terms, both the warranty and guarantee may seem similar. However, both of these terms differ in definition, accounting treatment, and the obligation for all parties involved. Let us discuss the definitions and see the key differences between a warranty and a guarantee. Warranty – Definition A warranty is an assurance to a customer
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The ASC 460 guides an entity to recognize and record a liability arising from a guarantee. Guarantees can be issued for several purposes, including performance, financial, and revenue guarantees. ASC 460 guidelines provide useful information on whether a contract should be accounted for as a guarantee. Let us discuss the accounting treatment of a guarantee
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Reporting information is critical for a company as stakeholders assess the position of a business by conducting detailed analysis. These reports are useful to identify the weaknesses and strengths of any business and where the business should focus on attaining maximum profitability. Let’s understand detailed aspects of sustainability reporting and integrated reporting. Sustainability Reporting The
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Definition Integrated reporting is concise communication of an entity’s governance strategies, performance, and prospects relevant to the external environment that leads to developing criteria for financial and non-financial value over the period. It provides us with an understanding of how a business is affected by its external environment and gives insights into how capital creates
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An interim reporting is when the business produces a financial overview before completing the financial reporting cycle. These reporting periods are dependent on the discretion of the management, and these periods can be monthly, quarterly, and semi-annually depending on the discretion of management. This type of reporting leads to improved communication between businesses and the
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Days sales outstanding is defined in several ways. However, the simplest way to understand DSO is the days a company takes to collect the payment after purchasing an order. The more limited the DSO, the quicker the organization gathers installment or pending payment from its clients – and the sooner it can utilize its money.
What is Days Sales Outstanding (DSO)? How to Calculate and Improve DSO? Read More »
Return on assets is one of the most crucial matrices to assess profitability and business operations performance. If the business efficiently manages its operations and utilizes assets, the return on assets is expected to be higher and vice versa. Detailed understanding Return on assets is calculated by dividing net income by the total assets. The
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
What is the periodicity assumption in accounting? Read More »
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
True Up in accounting: What is It? Read More »
