It is used in situations where companies are deciding on whether or not to invest in an asset (a project, an acquisition, etc.) based on the future net earnings expected compared to the capital cost. Let us take the example of a company that has recently invested $60 million in setting up a new plant. …
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Preferreds, which offer income potential, are securities that are generally considered hybrid investments, meaning they share characteristics of both stocks and bonds. They can offer more predictable income than do common stocks and are typically rated by the major credit rating agencies. Yet, because preferred shareholders have lower priority in the capital structure as compared …
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The aim is to estimate what percentage of outstanding receivables at year-end will not be collected. This amount becomes the desired ending balance in the Allowance for Uncollectible Accounts. The two methods are not mutually exclusive, and some businesses will have a provision for doubtful debts, writing off specific debts that they know to be …
Aging: Definition in Accounting, Uses, Report Example Leer más »
Accrued expenses refer to the recognition of expenses that have been incurred, but not yet recorded in the company’s financial statements. For example, if a company incurs expenses in December for a service that will be received in January, the expenses would be recorded as an accrual in December, when they were incurred. Most small …
How Do You Record Adjustments for Accrued Revenue? Leer más »
Legacy Professionals LLP takes it’s name seriously, the firms traditions, core values, and principles of its original founders have been passed down over the years. The professional staff is made up of partners and principals that have extensive knowledge and experience, some having over 35 years experience as accountants in Chicago. The leadership team at …
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The company computes a separate factory overhead rate at the end of each month. Besides core competent work, we need to allocate resources to control the flow of material and labor. There must be someone to collect date of material movement and worker allocation. In some companies, it even requires a new IT system to …
What is Job Order Costing? Definition & How to Calculate Leer más »
Insurers estimate claims costs, including IBNR claims, based on their experience. Reserves are adjusted, with a corresponding impact on earnings, in subsequent years as each case develops and more details become known. In the ever-evolving landscape of the insurance sector, understanding the accounting aspects is not just about compliance and number crunching; it’s about grasping …
Insurance Accounting Essentials: Key Principles & Practices Leer más »
