Accounts receivable conversion (ARC) is a financial metric that measures the percentage of a company’s credit sales that are collected within a certain period of time, typically within one year. This metric is used to assess a company’s credit and collections policies, as well as its overall financial health. A company’s accounts receivable conversion ratio … Read more
Operating profit is a measure of a company’s financial performance from its core business activities. Operating profit is equal to a company’s gross profit minus its operating expenses. Gross profit is equal to a company’s revenue minus its cost of goods sold. Operating expenses include a company’s selling, general, and administrative expenses. Operating profit is … Read more
The Three Main Types of Audits in Finance and Accounting What are control types? There are four types of controls: 1. Preventive controls Preventive controls are designed to prevent errors or irregularities from occurring in the first place. They typically involve procedures and policies that establish a system of checks and balances to ensure that … Read more
Cash management is a broad term that refers to the various activities and strategies employed by businesses to optimize their cash flow and ensure that they have sufficient funds available to meet their financial obligations. Cash management encompasses a wide range of activities, including cash forecasting, cash collection, cash disbursement, and investing excess cash. Businesses … Read more
What is a prepaid expense? A prepaid expense is an advance payment for goods or services that will be received in the future. This type of payment is often made for items that are used on a regular basis, such as office supplies or insurance premiums. What is prepaid balance? A prepaid balance is an … Read more
Dollar-Value LIFO is a valuation method in which the inventory is valued at the current replacement cost of the most recent purchases. This means that the most recent purchases are assumed to be the first to be sold, and the inventory is valued accordingly. The advantage of this method is that it more accurately reflects … Read more
Accounting measurement is the process of recognizing, classifying, and valuing economic events for the purpose of creating financial statements. The three primary types of measurements used in accounting are historic cost, current cost, and replacement cost. What are the 10 words that related in accounting? 1. Assets 2. Liabilities 3. Equity 4. Revenue 5. Expenses … Read more
The basis value is the value of an asset on the balance sheet. The basis value is used to determine the depreciation of the asset. On what basis means? The word “basis” can have many different meanings in accounting, depending on the context in which it is used. Generally speaking, though, the term refers to … Read more
The term “Bill-and-Hold Basis” refers to a type of accounting used to record sales. Under this method, sales are recorded when a customer orders goods, even if the delivery of the goods is delayed. This accounting method is used when a company wants to record a sale but cannot deliver the goods immediately. What does … Read more
Noncurrent assets are those assets which are not expected to be converted into cash within the next year. Examples of noncurrent assets include land, buildings, machinery, and equipment. These assets are typically recorded on a company’s balance sheet at their historical cost, less any accumulated depreciation. What are the examples of non current asset? There … Read more
