When a company is considering making a large purchase, they will often set aside a certain amount of money “just in case” something goes wrong. This money is known as a “just in case” fund, and it is used to cover unexpected costs or losses. For example, if a company is planning to purchase a … Read more
A bargain purchase option is an option that allows the holder to purchase an asset at a price that is below the current market value. This type of option is often used in corporate finance, and can be used to buy assets such as shares, property, or businesses. Bargain purchase options can be used to … Read more
Supply chain finance is a financial tool that can be used to improve your company’s cash flow. Is supply chain finance the same as factoring? Supply chain finance and factoring are two different financing options available to businesses. With supply chain finance, businesses can obtain financing from their suppliers in order to help them with … Read more
Nonbank financial institutions are organizations that provide financial services but don’t take deposits or extend loans. What is the importance of nonbank financial institution in our financial system? Nonbank financial institutions (NBFIs) play an important role in the financial system by providing credit and other financial services to households and businesses. NBFIs include insurance companies, … Read more
Unissued stock is stock that has been authorized by a company’s board of directors but has not yet been issued or sold to investors. Companies will often authorized the issuance of additional shares of stock prior to an actual need to sell them in order to give the company flexibility in the future. For example, … Read more
In corporate finance, an error of principle is a mistake made in the application of a financial principle. This can refer to a mistake made in the valuation of a security, the assessment of risk, or any other financial decision. An error of principle can have serious consequences for a company, and can lead to … Read more
A remittance letter is a letter that is sent along with a payment. The letter typically provides instructions on how the payment is to be applied. For example, the letter may indicate that the payment is for invoices #123 and #456. The term “remittance letter” is most commonly used in the context of corporate finance. … Read more
Definition and Critique. The Big 4 accounting firms are the largest and most well-known professional services firms in the world. They provide audit, assurance, tax, and consulting services to a wide range of clients, including large multinational corporations, small businesses, and individual taxpayers. The Big 4 accounting firms are sometimes criticized for being too big … Read more
Reimbursement is the act of compensated someone for an expense they have incurred. Common examples include corporate reimbursement of an employee for business expenses or a government reimbursement of a citizen for travel expenses. What does reimbursement mean in accounting? Reimbursement in accounting refers to the act of receiving money back from an entity that … Read more
The cash basis is a method of accounting in which revenues and expenses are recorded only when cash is actually received or paid. This is in contrast to the accrual basis, which records revenues and expenses when they are incurred, regardless of when the cash is actually received or paid. The cash basis is often … Read more
