A business may incur several types of expenses. There are various ways of categorizing these costs. By nature, a business can classify costs into two categories; direct costs and indirect costs. Direct cost can be directly linked to the production of a product or rendering a service. Indirect costs can be associated with the production […]
Direct Costs Vs Indirect Costs – What are the Key Differences? Read More »
Contributed capital of a company is made up of two items; stocks and additional paid-in capital. The stocks section refers to the issued common stock usually. Thus, the term additional paid-in capital is one part of the total contributed capital. Contributed capital is not borrowed money from investors. Once invested, the company does not need
Contributed Capital and Additional Paid-in Capital – Key Differences Read More »
Additional paid-in capital (APIC) or capital surplus is the money investors pay above the par value of shares. The premium paid above the face values of the newly issued shares is called the share premium or additional paid-in capital. It is received by a company when it issues common or preferred shares. It can only
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Companies can use either debt financing or equity financing to fund their financial needs. Normally, the cost of equity is lower than the cost of debt financing. However, if a company has a significantly larger equity portion without debt, its total cost of capital will go higher. Similarly, if a company has a too high
Debt Financing Vs Equity Financing: Key Differences Read More »
Contributed capital is the amount of money shareholders have invested in the company in exchange for ownership rights. It is also called paid-in capital or shares capital. It is recorded on the balance sheet as the first line item under the owner’s equity section. Common stocks issued and premiums paid for these stocks combined to
What is Contributed Capital? How to Calculate the Contributed Capital? Read More »
Debt financing is one of the two primary sources of funding for any business, the other is equity financing. It is the process of borrowing money from a lender in return for a premium paid in the form of interest. Debt financing comes with greater covenants and strict approval criteria. However, its interest cost is
What is Debt Financing? How It Works, Types, and More Read More »
Companies have two sources of financing; equity and debt. Equity financing is the primary source of funds for any business. It refers to investment against ownership stakes in a company. Private and public companies can use equity financing. However, the methods used to raise funds for both types of companies will vary considerably. The funding
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Whenever a person buys a product, there are a lot of thoughts going on in his mind; for instance product design, durability, specifications, etc. However, the biggest concerns of a consumer while buying a product are its durability, security, and longevity. The warranty gives the consumer an aspect of security. A vendor or a manufacturing
Accounting for Warranty Under US GAAP, ASC 606 Read More »
There are several audit procedures that auditors can use to measure a client’s internal control efficiency. Once they do so, they can establish a level at which they can set the risk for the audit assignment. This process is crucial in saving the auditor’s time while also determining the level of substantive audit procedures to
What is Walkthrough Test? Read More »
During any audit assignment, an auditor will have several objectives. Usually, these goals come from the type and scope of the audit engagement. Both the client and the auditor agree to what the objectives for an audit engagement are. Based on that agreement, the auditor will perform procedures to ensure that they meet the objectives.
Material Misstatements Read More »
