After the 5-year period, if the company were to sell the asset, the account would need to be zeroed out because the asset is not relevant to the company anymore. Therefore, there would be a credit to the asset account, a debit to the accumulated dep... Read more
Since equity accounts for total assets and total liabilities, cash and cash equivalents would only represent a small piece of a company's financial picture. The total number of outstanding shares of a company can change when a company issues new sha... Read more
When plural, as in “millions,” it refers to multiples of 1,000,000. The word “million” is most often used in reference to money, but is also frequently used in exaggeration. The word “million” can be paired with t... Read more
Ultimately, land gets its value based upon how it can be used—i.e., what an owner can build on the site. However, developers are often forced to make offers on property without knowing for sure what they will be able to entitle. One of the primary c... Read more
The higher the gross profit margin, the better, as it indicates that a company is keeping a higher proportion of revenues as profit rather than expenses. An accounting ratio compares two line items in a company’s financial statements, namely m... Read more
Inventories, tax assets, accounts receivable, and accrued revenue are common items of assets for which a change in value will be reflected in cash flow from operating activities. Accounts payable, tax liabilities, deferred revenue, and accrued... Read more
We will also demonstrate some examples to help you understand the concept. Since bonds are an essential part of the capital markets, investors and analysts seek to understand how the different features of a bond interact in order to determine its in... Read more
At a basic level, bad debts happen because customers cannot or will not agree to pay an outstanding invoice. It can also occur if there’s a dispute over the delivery of your product or service. Alternatively, a bad debt expense can be estimate... Read more
It takes into account the amount of money that has been placed in the annuity and how long it's been sitting there, so as to decide the amount of money that should be paid out to an annuity buyer or annuitant. Many monthly bills, such as rent,... Read more
The Acid-Test Ratio, also known as the quick ratio, is a liquidity ratio that measures how sufficient a company’s short-term assets are to cover its current liabilities. In other words, the acid-test ratio is a measure of how well a... Read more
