Accounting

An idle time is used to describe the time for which assets are not being utilized and do not bring any productive output to the company. As a result, the idle time has a negative impact on business profitability. Although, the business has to continuously incur costs in wages, factory overhead, maintenance costs, etc. So, […]

Definition Standing data is organizational data that is expected to remain unchanged. It’s stored in a computer for a long time and does not require frequent changes. Standing means to stand in one place. In the context of the article, standing data is standing and does not change with time. It’s permanent and can be

Financial statements present a report of a company’s operations for a period. Usually, these statements become available after a company goes through an accounting period. They include four critical financial statements that show different aspects of operations. However, these financial statements present an end-product of the accounting process. Companies must satisfy various factors during the

A perpetuity is a constant and equal cash flow continuing infinitely. Deferred perpetuity is the same cash flow but starts at a deferred time. Theoretically, the value of perpetuity continues infinitely. However, the present value of the future cash flows arising from perpetuity or deferred perpetuity can be discounted. Let us discuss what is a

For businesses, many costs can be unavoidable yet uncertain in terms of time and amount. When a business allocates funds for such expenses, these are called provisions. Under provisions happens when the actual amount of expense exceeds the amount allocated in the provision account. Similarly, over-provision happens when the allocated provision is greater than the

Carried forward C/F balance and brought forward B/F balance plays an integral part in the consistency of an accounting system. These figures ensure that the ledger books of a company are accurate and consistent. Apparently, the closing or balancing figure of a trial balance does not seem a difficult entry. However, these are important figures

Inflation has an inverse relationship with interest rates. It lowers the present value of future cash flows. Thus, it can affect the net present value calculations as well. Let us discuss what is net present value and how does inflation affects it. What is Net Present Value? Net present value (NPV) represents the sum of

Several principles dictate how companies account for various transactions. These principles allow them to record those transactions under the accepted standards. Usually, companies conform to several accounting principles. These apply to all companies and organizations that prepare and present financial statements. One of these includes the matching principle in accounting, which is crucial to expenses

Companies use various accounting principles when preparing their financial statements. These principles include rules and guidelines they must follow when reporting financial data. Usually, accounting principles come from an accounting body that dictates the accounting standards. For example, the Financial Accounting Standards Board (FASB) issues the Generally Accepted Accounting Principles (GAAP). Most companies follow various