An accounting information system (AIS) is a system of collecting, storing, and processing financial and accounting data that is used by decision makers. An AIS is generally a computer-based system that is used to collect, store, manipulate, and report financial data. The accounting information system consists of three components: 1. The data collection component, which … Read more
Accounting valuation is the process of determining the value of an asset or liability for financial reporting purposes. The value may be based on market value, historic cost, or some other basis. The valuation process requires the use of judgment and professional skills to determine the most appropriate valuation method and estimate the value of … Read more
To accrue means to accumulate over time. In accounting, accruals refer to expenses and revenues that have been incurred, but have not yet been recorded in the accounting records. For example, if a company incurs $1,000 in expenses in January, but does not pay for the expenses until February, the company would record the expenses … Read more
Inventory carrying cost definition, also known as holding cost, is the total cost of owning and storing inventory. This includes the cost of goods, storage, insurance, and inventory shrinkage. The purpose of inventory carrying cost is to help businesses determine the optimal level of inventory to maintain. Too much inventory can tie up working capital … Read more
A loss carryforward is an accounting term that refers to the ability to carry forward a loss from one period to another. This is done in order to offset future profits against the loss, and thereby reduce tax liability. Loss carryforwards can be used to offset income in future years, but they are subject to … Read more
Footings are the foundation of a financial statement. They provide support for the numbers that appear in the statement and help to ensure that the statement is accurate. The term “footings” is often used interchangeably with the term “foundation.” What does it mean to foot something? When you “foot” something, you are totaling up the … Read more
Accounting software is a type of computer program that is designed to help manage and keep track of finances and accounting information. This software can be used by businesses of all sizes, from small businesses to large corporations. There are many different types of accounting software available on the market, each with its own set … Read more
What is the Current Account? The current account is the sum of a country’s net trade in goods and services, net earnings from rents, interest, and dividends, and net transfer payments (such as foreign aid). The current account balance is an important indicator of a country’s economic health. What Is the difference between the current … Read more
A discretionary account is an account where the client has given the financial advisor the authority to make trades on the account without prior approval from the client. The advisor has discretion over how the account is managed, including what trades are made and when they are made. What does discretion used mean? Discretion is … Read more
An accounting interpretation is a formal opinion issued by the Accounting Standards Board that sets out the board’s view on how a particular accounting issue should be interpreted and applied. The term “accounting interpretation” is used to refer to two different types of document: 1. An interpretation of an existing accounting standard; or 2. An … Read more
