Is Retained Earnings a Current Asset?
No, retained earnings are not a current asset for accounting purposes. A current asset is any asset that will provide an economic benefit for or within one year. Retained earnings refer to the amount...
View ArticleConstant Gross-Margin Percentage NRV Method
Constant Gross-Margin Percentage NRV Method Joint-cost allocation method that allocates joint costs so that the overall gross-margin percentage is identical for each individual product.
View ArticleCost Application
Cost Application is a narrower term than cost allocation; it refers to the allocation of costs to products as distinguished from the allocation of costs to departments’ activities. Also called Cost...
View ArticleStraight-Line Method of Depreciation
The straight-line depreciation method is a common way of allocating “wear and tear” to the cost of an item over its lifespan. This method assumes that an asset declines in value by the same amount...
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Noncurrent Assets
What Is a Noncurrent Asset? Noncurrent or long-term assets are those assets a company owns that are not expected to be converted into or used as cash within one year. They typically have a life of...
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Last In, First Out (LIFO) Method Problem and Solution
Last In, First Out (LIFO): Definition Last in, First Out (LIFO) is an inventory costing method that assumes the costs of the most recent purchases are the costs of the first item sold. The LIFO...
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First In, First Out (FIFO) Method Problem and Solution
First In, First Out (FIFO): Definition First in, first out (FIFO) is an inventory costing method that assumes the costs of the first goods purchased are the costs of the first goods sold. In terms of...
View ArticleABC Analysis
ABC Analysis: Definition ABC analysis (or proportional parts value analysis) is a technique used to exercise control over materials based on their importance or value. ABC Analysis: Explanation Under...
View ArticleTypes of Partnership
This article summarizes the types of partnerships that exist. Active Partner: An active partner is also referred to as a working partner. An active partner performs a direct role in the management and...
View ArticleResponsibility Accounting
Definition Responsibility accounting is a fundamental piece of good budgeting. Budgets must be prepared by the people who will be responsible for achieving them. Explanation When budgets are prepared...
View ArticleThe Basics of Small Business Accounting
When first starting your new business, it can be very easy to overlook arguably the most important aspect: The Accounting. Whilst you may be fantastic at your profession, you may be less enthusiastic...
View ArticleWhen to Know It’s Time to Outsource and Free Your Time
Most people start businesses to improve their quality of life. The company they found offers the potential for a real purpose in life, as well as a much larger income. Sometimes, though, starting a...
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Accounting for Financial Statements
Accounting for Financial Statements Overview Learning about financial statements can be overwhelming for the average person. Financial statements are a series of reports that measure a company’s...
View ArticleHigh-Low Method
High-low method is a method of estimating a cost function that uses only the highest and values of the cost driver within the relevant range.
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Convertible Preferred Stock
What Is Convertible Preferred Stock? Convertible preferred stock is a hybrid security that combines features of both common stocks and bonds. It is a type of stock that can be converted into a...
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