Micro accounting is a process whereby businesses keep track of their finances on a very small scale. This might involve tracking expenditure and income on a daily or weekly basis, or even on an hourly basis. businesses use micro accounting in order to stay on top of their spending and ensure that they are not … Read more
A cash account is an account where cash is kept, such as a checking account, savings account, or money market account. A cash account is a type of asset account. What are the 7 basic accounting categories? There are 7 basic accounting categories: 1) Assets 2) Liabilities 3) Equity 4) Revenues 5) Expenses 6) Gains … Read more
What Net Realizable Value Is and How to Calculate It What is the formula for calculating cost of goods sold? The cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in production, the labor costs … Read more
The rounding error definition is the error that occurs when a value is rounded off to a certain number of decimal places. This can happen when calculating interest, tax, or any other value that is rounded off to a certain number of decimal places. The error occurs because the value is not exact, and the … Read more
Profit Definition: Gross, Operating, and Net Profit Explained What is the relationship between gross profit and operating profit? Operating profit is a company’s total revenue minus its operating expenses, which include things like cost of goods sold, wages, raw materials, and other associated costs. Gross profit, on the other hand, is a company’s total revenue … Read more
Held-to-maturity (HTM) securities are debt securities that a company has the intent and ability to hold until they mature. These securities are typically issued by the federal government, state and local governments, and government-sponsored enterprises. Companies use HTM securities for interest income because they offer a predictable and secure stream of interest payments. The interest … Read more
Ancillary revenue is income derived from sources that are not directly related to the company’s primary business activities. It is often generated by selling products or services that are complementary to the company’s main offerings. For example, a hotel might generate ancillary revenue by selling tickets to local attractions, renting out meeting space, or providing … Read more
Foregone earnings are the earnings that a company would have generated if it had not made a particular decision. This term is often used in the context of capital investment decisions, where a company must choose between different investment options. The option with the highest expected return is said to have the greatest foregone earnings. … Read more
Statutory Accounting Principles (SAP) are the rules and procedures that govern the financial reporting of insurance companies in the United States. These principles are promulgated by the National Association of Insurance Commissioners (NAIC) and are generally accepted as GAAP for the insurance industry. What does statutory accounting principles measure? Statutory accounting principles (SAP) are a … Read more
What is an audit? An audit is an examination of an organization’s financial statements and accompanying disclosures. The purpose of an audit is to provide assurance that the financial statements are free of material misstatement and are a fair representation of the organization’s financial position. There are three main types of audits: financial, operational, and … Read more
