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Home Dictionary B Bad Debt Expense Bad debt costs are the adverse cost of doing business with clients on credit, as there is always a risk of non-repayment when providing credit. The direct write-off method fixes the exact amount of bad accounts as they are specifically identified. To comply with the matching principle, bad debt expenses must be valued using the allowance method in the same period as the sale occurs. There are two main ways to calculate the allowance for bad debts: the interest-bearing sales method and the receivables maturity method. Next-In, First-Out (NIFO)
September 25, 2022 Next In, First Out (NIFO) is a valuation method in which the value of an item is based on its replacement cost, rather than its original cost. 1%/10 Net 30
September 25, 2022 Deal 1%/10 net 30 is when a 1% discount is offered on services or products if paid within 10 days of the 30 day payment agreement. Absorption Costing
September 25, 2022 Absorptive cost differs from variable cost because it allocates a fixed overhead to each unit of product produced during a period. Accelerated Depreciation
September 25, 2022 Accelerated depreciation is any depreciation method that allows you to recognize higher depreciation costs in previous years. Accountability
September 25, 2022 Accountability is the acceptance of responsibility for one’s actions. This implies a willingness to be transparent, allowing others to observe and evaluate their work. Accountant Responsibility
September 25, 2022 The responsibility of an accountant is the ethical responsibility of an accountant to those who rely on his work. Accounting Conservatism
September 25, 2022 Accounting conservatism is a principle that requires that company accounts be prepared with care and a high degree of verification. Accounting Cycle
September 25, 2022 The accounting cycle is a process designed to facilitate the financial accounting of business activities for business owners. Accounting Method
September 25, 2022 An accounting method consists of the rules and procedures that a company follows in reporting its income and expenses. Accounting Policies
September 25, 2022 Accounting policies are the procedures a company uses to prepare financial statements. Unlike accounting principles, which are rules, accounting policies are the standard for following those rules. Accounting Profit
September 25, 2022 Accounting profit shows the amount of money left after deducting the explicit costs of doing business. Accounting Rate of Return (ARR)
September 25, 2022 The Accounting Rate of Return (ARR) formula is useful in determining a project’s annual percentage rate of return. Accounting Theory
September 25, 2022 Accounting Theory provides guidance on effective accounting and financial reporting. Accounts Receivable Aging
September 25, 2022 Receivables maturity is the process of distinguishing open receivables based on the length of time an invoice remains unpaid. Accounts Receivable Financing
September 25, 2022 Accounts receivable financing provides capital financing for a portion of a company’s receivables. Accrue
September 25, 2022 Accumulation is the accumulation of interest, income or expenses over time - a popular example is interest on a savings account. Accrued Income
September 25, 2022 Accrued income is income that has been received but not yet received. Accrued Liability
September 25, 2022 An accrued liability arises when an entity has incurred expenses but has not yet paid them. Accrued Revenue
September 25, 2022 Accrued revenue is used in accrual accounting where revenue is recorded at the time of sale, even if payment has not yet been received. Accumulated Depreciation
September 25, 2022 Depreciation is taken into account to relate the cost of using long-term fixed capital to the benefits received from its use over time. Acquisition Accounting
September 25, 2022 Acquisition accounting is a set of formal guidelines describing how the acquirer should report the assets, liabilities, non-controlling interests and goodwill of the acquired company. Acquisition Cost
September 25, 2022 Acquisition cost refers to the amount paid for property, plant and equipment, the cost of acquiring a new customer or taking over a competitor. Activity Cost Driver
September 25, 2022 Activity-based costing (ABC) is an accounting method that allocates both direct and indirect costs to an enterprise’s activities. Activity-Based Budgeting (ABB)
September 25, 2022 Activity-Based Budgeting (ABB) is a budgeting method in which cost-related activities are recorded, analyzed and researched. Activity-Based Management (ABM)
September 25, 2022 Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.