Catégorie : Bookkeeping

The decreased profit has resulted either because actual revenue are less than expected revenues or actual costs incurred are found to be more than expected costs. In finance, unfavorable variance refers to a difference between an actual experience and a budgeted experience in any financial category where the actual outcome is less favorable than the…

They are able to choose an acceleration factor appropriate for their specific situation. In accounting, the depreciation expense is the allocation of the cost of the asset to the accounting periods https://www.wave-accounting.net/ over which it is to be used. The allocation is necessary to comply with the matching principle, ensuring that the expense of owning…

At the end of the year after analyzing the unearned fees account, 40% of the unearned fees have been earned. Insurance policies can require advanced payment of fees for several months at a time, six months, for example. The company does not use all six months of insurance immediately but over the course of the…

Some suppliers offer discounts of 1% or 2% from the sales invoice amount, if the invoice is paid in 10 days instead of the usual 30 days. For instance, let’s assume that a company purchases https://simple-accounting.org/ goods and the supplier’s sales invoice is $28,000 with terms of 1/10, net 30. This means that the company…

In a nutshell, the depreciation method used depends on the nature of the assets in question, as well as the company’s preference. The simplicity of straight line basis is one of its biggest drawbacks. One of the most obvious pitfalls of using this method is that the useful life calculation is based on guesswork. Depreciation…