A non-operating asset is an asset that is not used in the day-to-day operations of a business. Non-operating assets are typically long-term assets, such as investments in other companies, real estate, or patents. While non-operating assets are not used in the day-to-day operations of a business, they can still be important to the business. For … Read more
Pushdown accounting is a term used to describe the process of moving information from the general ledger of a company down to the individual ledger accounts of that company. This process is used to provide more detailed information to managers and other decision-makers within the company. The main advantage of pushdown accounting is that it … Read more
What is the cost of equity? The cost of equity is the expected return on investment for equity holders. This return compensates investors for the risk of investing in a company. The cost of equity is typically higher than the cost of debt because equity holders are more exposed to the company’s risk. There are … Read more
The triple bottom line is a business framework that incorporates environmental and social responsibility into the financial bottom line. The three bottom lines are: 1. Financial bottom line: This bottom line focuses on the financial performance of the business and is typically the primary focus of businesses. 2. Environmental bottom line: This bottom line focuses … Read more
A write-off is an accounting term that refers to the act of reducing the value of an asset or account because it is no longer fully usable or because it can no longer be used to generate income. For example, a company may write off the value of a piece of equipment that has been … Read more
The equity method of accounting is a method used to account for investments in common stock of another company. Under the equity method, the investment is initially recorded at cost and is then adjusted over time to reflect the investor’s share of the investee’s net income or loss. The equity method is used when the … Read more
Why Financial Accounting Matters: Principles and Meanings Why do we need accounting rules? There are a number of reasons why we need accounting rules. One reason is that accounting rules provide guidance on how to record and report financial transactions. This is important because financial statements are used to make decisions about how to allocate … Read more
A continuous audit is an audit that is conducted on an ongoing basis, rather than being completed in one single engagement. This type of audit can be conducted either internally or externally, and may be performed on a monthly, quarterly, or annual basis. For publicly-traded companies, continuous audits are typically conducted by the company’s independent … Read more
The unit of production method is a way of allocating the cost of a long-lived asset, such as a piece of machinery, over the number of units of output that it produces. The calculation is based on the assumption that the asset will continue to be used until it reaches the end of its useful … Read more
In accounting, basis refers to the original value of an asset minus any depreciation that has been incurred. The unadjusted basis of an asset is its original value before any adjustments are made. For example, the unadjusted basis of a piece of equipment would be its purchase price, minus any depreciation that has been recorded … Read more
