What is meant by Market Size? Market Size is the total market potential of a particular product or service that exists in the market across a given period. It is the maximum revenue that can be generated as a result of the sales revenue generated by the particular product. Calculating the market share of […]
Market Size and Market Share Variance: What Are The Different? Read More »
Definition of Operational Gearing Operational gearing can be defined as the impact of fixed costs on the relationships between sales and profits. If the said company has no operational gearing, the operating profit is likely to increase at the same rate as the sales growth. Operational gearing is also referred to as operating leverage. Therefore,
What is Operational Gearing? Definition, Formula, and Example Read More »
What are Decommissioning Costs? Decommissioning costs are incurred by the company when they need to spend reserves to restore the production site and the production equipment to the desired ecological condition before the operation. In other words, this is the cost that the company is expected to pay at the end of the useful life
How to Account for Decommissioning Costs? Read More »
After the case of Enron and WorldCom, investor confidence in public market investments took a serious hit. In order to remedy this, there have been efforts to restore investor confidence, by increasing the scope of auditors, thereby placing a higher responsibility on the shoulders. Auditors today have more responsibility when it comes to external audits,
What is an Unmodified Audit Report? Read More »
Financial audits are considered one of the most important and primitive phenomena from the company’s perspective. This is primarily because the information that is presented in the audit report is put forth in front of the investors, as well as external stakeholders. Auditors conduct two different types of audits about financial year-ends. Types of Audits
What is a Non-Statutory Audit? Explained Read More »
Definition of Interim Audit An interim audit is defined as an audit that is conducted between two financial years, with the prime objective of checking the transactions that have occurred between the financial year-end of the last year, and the date on which the interim audit is being conducted. An interim audit is conducted in
Interim Audit – Definition, Objectives, Characteristics, and Much more! Read More »
What is Journal Entry Testing? The underlying need for journal entry testing arises when the auditor needs to test the nature, timing, as well as extent of the underlying journal entries. It is mostly undertaken in order to recognize the material misstatement that occurs as a result of fraud when organizations are recording financial transactions,
Journal Entry Testing: Definition, Process, and Importance Read More »
What are Current Assets? Current assets represent all the company’s assets that the company possesses and are expected to be sold with relative ease compared to other assets that the company has. These are the assets exhausted through standard business operations within one year. Current assets report on the company’s balance sheet, and they present
What Does It Mean that Current Liabilities are Greater than Current Assets? Read More »
Inventory is defined as the goods that the Company holds for resale. When an accounting year ends, companies mostly have inventory on hand that is supposed to be sold in the coming year. This inventory is kept in the warehouses, and they are then declared on the financial statements as closing inventory of the Company.
How is Inventory Reported in the Cash Flow Statement? Read More »
Definition of Historical Cost Historical cost accounting is accounting that involves reporting items at their historical cost (at the purchasing prices), not their market value. In other words, under this regime, the asset is recorded at the price that is paid at the time of the acquisition. Under the historical cost accounting concept, accountants are
Historical Cost: Advantages and Disadvantages of Using Historical Cost Read More »
