The completed contract method is an accounting method used to recognize revenue from long-term construction projects. Under this method, revenue and expenses are not recognized until the project is completed. This is in contrast to the percentage of completion method, which recognizes revenue and expenses as the project progresses. The completed contract method is generally … Read more
The acquisition cost of an asset is the cost incurred to acquire the asset. This includes the purchase price of the asset, as well as any costs incurred to bring the asset to its current location and condition. The purchase price is the most obvious component of the acquisition cost, but it is not the … Read more
The current account surplus definition is when a country’s exports exceed its imports. This results in the country having more money coming in than going out, and so the country’s reserves increase. The current account surplus can be used to finance a country’s trade deficit or to build up its reserves. What is current account … Read more
Debit Definition: Meaning and Relationship to Credit Which is better credit or debit? There is no easy answer when it comes to deciding whether credit or debit is better. The answer depends on your individual financial situation and needs. If you are someone who tends to carry a balance on your credit card from month … Read more
. The Sarbanes-Oxley Act protects investors by setting standards for corporate governance and financial reporting. What are SOX internal controls? Internal controls are policies and procedures that are put in place by a company to ensure the accuracy and validity of its financial reporting. The Sarbanes-Oxley Act (SOX) of 2002 requires that all public companies … Read more
Accounts Receivable Aging: What It Is, How to Calculate It, and What Its Benefits Are What are the two types of accounts receivable? There are two types of accounts receivable: trade receivables and non-trade receivables. Trade receivables are amounts owed to a company by its customers for goods or services that have been delivered or … Read more
The term “Do It Right The First Time” (DRIFT) is used to describe a situation in which an organization or individual fails to properly account for something during the initial stages of a project or endeavor. This can lead to significant problems down the road, as the organization or individual will likely have to go … Read more
The term “journal definition” refers to the process of creating a new journal in an accounting system. This process typically involves specifying the journal’s name, description, and other relevant details. In some cases, the journal definition may also include specifying the journal’s entry types (e.g. debit or credit entries) and entry sequencing (e.g. chronological or … Read more
Days payable outstanding (DPO) is a measure of the average payment period that a company takes to pay its invoices from trade creditors, such as suppliers. The lower the DPO, the better, because it means the company is paying its invoices in a timely manner. To calculate DPO, divide the number of days in the … Read more
Accounting insolvency is when a company’s liabilities exceed its assets and it is unable to pay its debts when they are due. This can happen when a company has too much debt, or when its income decreases and it is unable to pay its debts. If a company is insolvent, it may have to declare … Read more
