What Is Repo 105?

Repo 105 is an accounting technique that Lehman Brothers Holdings Inc. used to temporarily remove up to $50 billion of assets from its balance sheet in the months leading up to its 2008 bankruptcy. The technique involved selling securities to an investment bank and then immediately agreeing to buy them back at a higher price, … Read more

Other Current Assets (OCA).

Other current assets (OCA) are those assets which are not classified as either cash or investments, but which are still considered to be liquid and capable of being converted into cash within one year. Common examples of OCA include accounts receivable, short-term loans receivable, and prepayments. The term “other current assets” is used in contrast … Read more

CVP Analysis: What It Is and the Formula for Calculating It.

How to Calculate Cost-Volume-Profit (CVP) Analysis What is the formula of fixed cost? There is no one formula for fixed cost, as it can vary depending on the business and the specific costs involved. However, fixed costs are generally those costs that do not fluctuate with changes in production or sales volume, such as rent, … Read more

Additional Paid-In Capital (APIC).

Additional paid-in capital (APIC), also known as share premium, is the amount of money paid to a company by investors for shares that are worth more than the par value of the shares. The APIC account is a component of a company’s equity and is reported on the balance sheet. APIC is created when a … Read more

How Cookie Jar Reserves Are Used in Accounting.

Cookie jar reserves are funds that a company sets aside in order to cover future expenses. The funds are not earmarked for any specific purpose, but are available to be used at the company’s discretion. Cookie jar reserves can be used to cover a wide range of expenses, including unexpected costs, new product development, and … Read more

Trial Balance.

A trial balance is an accounting report that lists the balances in each of an organization’s Accounts. The purpose of a trial balance is to verify that the total of all Debits equals the total of all Credits for each accounting period. If the total of the Debits does not equal the total of the … Read more

Half-Year Convention for Depreciation Definition.

The half-year convention for depreciation is an accounting method used to account for the depreciation of assets. Under this method, the depreciation expense is recorded in the financial statements for the first six months of the year, regardless of when the asset was purchased. This method is used when the asset is expected to have … Read more

Financial Accounting Standards Board (FASB).

The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations in the United States. The FASB is recognized by the Securities and Exchange Commission (SEC) as the designated accounting standard setter for public companies. The FASB develops and issues … Read more

Audit Cycle.

The audit cycle is the process that auditors use to plan, execute, and report on an audit. The cycle typically starts with the auditor identifying the areas to be audited and then developing a plan for the audit. The auditor then executes the audit, which may involve testing the accuracy of financial records or assessing … Read more

Monetary Item.

A monetary item is any item that can be quantified in terms of money. This includes items such as cash, investments, receivables, payables, and fixed assets. Monetary items are important in accounting because they can be easily converted into cash, which makes them a key component in financial statements. What are monetary terms? Monetary terms … Read more