The formula to calculate depreciation expense using sum-of-the-years’ digits is shown below. In the second full year of the asset’s life, the amount of depreciation will be $40,000 (4/15 of $150,000). In the third full year of the asset’s life, the depreciation will be $30,000 (3/15 of $150,000). The fourth year depreciation will be $20,000 […]
For every $1 of current liability, the company has $1.19 of quick assets to pay for it. The quick ratio tells you how easily a company can meet its short-term financial obligations. A higher ratio indicates a more liquid company while a lower ratio could be a sign that the company is having liquidity issues. […]
The accounting equation ensures that a company’s balance sheet remains balanced. It serves as a vital tool for financial analysis and reporting. The three primary components of the accounting equation are assets, liabilities, and equity. Assets represent everything a company owns, liabilities are its obligations, and equity is the residual interest of the owners. Assets […]
In a persistently deflationary environment, it is possible for the LIFO reserve to have a negative balance, which is caused by the LIFO inventory valuation being higher than its FIFO valuation. This information is dependent upon future events, which may be outside of the Company’s control and could have a significant impact on its GAAP […]
In order to adequately maintain the docks and provide safe storage for its boats, ABC must routinely replace rotten or damaged boards on the docks. These costs are incurred as part of general maintenance and do not extend the life of the dock at all. This would be an ordinary repair, and the accountants at […]
Think of it like your school bag, where you have different sections or pockets for your books, pencils, and lunch. This method helps people see what the company has (like money, buildings, and patents) and what it owes (like loans or long-term debt) in a clear way. The Classified Balance Sheet is an essential financial […]
These practices not only petty cash ensure compliance with legal and ethical standards but also enhance the firm’s operational efficiency and decision-making capabilities. A robust reporting system provides a comprehensive and transparent view of the firm’s financial health, enabling informed strategic choices that can drive growth, sustainability, and overall success in a competitive legal landscape. […]
Connie’s Candy also wants to understand what overhead cost outcomes will be at 90% capacity and 110% capacity. The following information is the flexible budget Connie’s Candy prepared to show expected overhead at each capacity level. The other component of the total variable overhead variance is the variable overhead efficiency variance. An unfavorable variable overhead […]
Based on this information, the company’s management can add a markup to determine competitive selling prices for their products. Recall from other tutorials that variable costs change in proportion to production. For instance, in our example of Friends Company, the company purchases metal parts (raw material) to produce valves. The more valves are produced, the […]
Although both platforms offer significant resources on their websites for self-service help, Xero also provides free 24/7 online support for all of their users, regardless of their plan level or even timezone. Plus, Xero doesn’t outsource their customer service—all representatives are Xero employees. For example, an accountant might have their “Bookkeeping Services” mapped to their […]
