The notes may also provide information on underlying issues relating to the overall financial health of the company. The auditor bases his audit opinion on the financial statement numbers, as well as the notes to the financial statements. Prospective... Read more
Accountants must use their judgment to record transactions that require estimation. The number of years that equipment will remain productive and the portion of accounts receivable that will never be paid are examples of items that require estimation... Read more
An example is an obligation to pay for goods or services received from a counterpart, while cash for them is to be paid out in a later accounting period when its amount is deducted from accrued expenses. Prepaid expenses are payments made in advance ... Read more
Helstrom attended Southern Illinois University at Carbondale and has her Bachelor of Science in accounting. Asymmetric information is, just as the term suggests, unequal, disproportionate, or lopsided information. It is typically used in reference to... Read more
In the direct write off method, a small business owner can debit the Bad Debts Expense account and credit Accounts Receivable. Allowance for credit losses is an estimation of the outstanding payments due to a company that it does not expect to recove... Read more
Both cost and freight and free on board are legal terms in international trade. You will see these terms as part of the International Chamber of Commerce 's collection of global commerce terms, known as Incoterms. If goods are sold F.O.B. destination... Read more
Possible contingent liabilities are as likely to occur as not and remote contingent liabilities are extremely unlikely to occur . In this adjusting entry, the change in the expense is not recorded in the period of the sale. As discussed earlier, no r... Read more
For this example, the fictitious company, XYZ Inc., has $5,000 of capital at the beginning of the period. The owner, Jane Smith, added $1,000 of cash to paid-in capital contributions, and the business earned $2,000 from sales. The owner also withdrew... Read more
The $19 difference between the $469 interest expense and the $450 cash payment is the amount of the discount amortized. The entry on December 31 to record the interest payment using the effective interest method of amortizing interest is shown on the... Read more
The license will only apply to the event for which it is issued and cannot be used for any other event. Packing and crating that is subject to Colorado sales tax is any tangible personal property furnished to prepare tangible personal property purcha... Read more
