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When using absorption pricing, fixed overhead costs are assigned to a product regardless of whether or not that product was sold during the period being analyzed. In a nutshell, despite being connected with a number of restrictions, it is an effecti... Read more
For companies in the business of lending money, Interest Revenues are reported in the operating section of the multiple-step income statement. The interest revenue account, which is ultimately reflected on company income statements, includes all int... Read more
A business buys one year of general liability insurance in advance, for $12,000. The initial entry is a debit of $12,000 to the prepaid insurance (asset) account, and a credit of $12,000 to the cash (asset) account. In each successive month for the... Read more
This surgical robot has a master-slave manipulator arrangement using articulating robotic arms (slave) controlled by a remote console (master). Images viewed by the operating surgeon in the console are three-dimensional (3D), and instruments allow s... Read more
The company compares the cost of each job with the revenue received to be sure the jobs are profitable. Sometimes the company learns that certain jobs are too costly considering the prices they can charge. For example, Creative Printers recently lea... Read more
Cost of goods sold is found on a business’s income statement, one of the top financial reports in accounting. An income statement reports income for a certain accounting period, such as a year, quarter or month. Logically, all nonoperating cos... Read more
There are two primary methods for estimating the amount of accounts receivable that are not expected to be converted into cash. A reserve for doubtful debts can not only help offset the loss you incur from bad debts, but it also can give you valuabl... Read more
The heater was originally purchased at $2,000.00, it’s been in use for 4 years, and has depreciated an average of 10% per year. To calculate a salvage value, divide the depreciation % per year by 100, and multiply that value by the original p... Read more
Gross margin, which may also be called gross profit margin, looks at a company's gross profit compared to its revenue or sales and is expressed as a percentage. This figure can help companies understand whether there are any inefficiencies and if cu... Read more
