ACCOUNTING

A cost center is a segment of an organization that is responsible for controlling costs for a particular product, service, or customer. Cost centers are used in many different industries, including manufacturing, retail, and service industries. Primary Purpose: Key Characteristics: Examples: Benefits: Drawbacks: FAQs

Accumulated depreciation is an account used to track the cumulative depreciation expense for a company’s assets. It is calculated by taking the accumulated depreciation expense for each asset and adding it to the depreciation expense for the period. Formula for accumulated depreciation: Accumulated depreciation = Total depreciation expense – Current depreciation expense Explanation: Uses of […]

Definition: Receivables are accounts receivable, amounts due from customers for goods sold or services rendered on credit. They are current assets that represent amounts that are owed to the company by its customers. Types of Receivables: Accounts Payable: Accounts payable are amounts due to suppliers or creditors for goods or services received. They are current […]

Sunk cost fallacy is a cognitive bias refers to the phenomenon where people continue to invest resources (e.g., time, money, effort) in a failing project or situation in the belief that they have already invested too much to quit. Reasons for sunk cost fallacy: Examples of sunk cost fallacy: How to overcome sunk cost fallacy: […]

Definition: Internal audit is an independent, assurance function within an organization that provides risk-based assurance about the organization’s governance, control, and accountability processes. It is performed by the organization’s own internal auditors, who are not involved in the day-to-day operations of the organization. Key Objectives: Types of Internal Audits: Professional Standards: Internal auditors follow professional […]

Accounting software is a powerful tool used by businesses to manage their finances. It helps automate tasks, streamline processes, and provide real-time financial insights. There are many different software options available, each with its own unique features and benefits. Types of Accounting Software: Key Features: Benefits: Popular Accounting Software: Factors to Consider: Always consider your […]

Absorption costing is a method of accounting that records cost of goods sold as part of cost of goods sold rather than as separate expenses. This method is commonly used in situations where a company manufactures or assembles its own products. Key Principles of Absorption Costing: Advantages: Disadvantages: Examples: Conclusion: Absorption costing is a commonly […]

Managerial accounting is a specialized type of accounting that provides financial information and analysis to help managers make informed decisions. It is not simply the preparation of financial statements, but also involves providing insights into the financial performance of the organization, identifying trends and patterns, and helping to develop strategies for achieving organizational goals. Key […]

Noncurrent liabilities are obligations that are due to be paid in the future, but are not payable within one accounting period. Examples of noncurrent liabilities include long-term debt, long-term leases, and pension liabilities.

Gross working capital (GWC) is a measure of a company’s current assets that are used to finance its current liabilities. It is calculated by subtracting current liabilities from current assets. Formula: GWC = Current Assets – Current Liabilities Components of GWC: Interpretation: GWC measures the company’s ability to meet its current obligations. A high GWC […]