Micro Accounting.

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

Cash Account.

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

NRV: The Net Realizable Value and How to Calculate It.

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

Rounding Error Definition.

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.

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

How Companies Use Held-To-Maturity (HTM) Securities for Interest Income.

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

What Is Ancillary Revenue?

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 Definition.

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).

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

Audit: Its Meaning in Finance and Accounting, Three Main Types.

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