The net realizable value of the accounts receivable is the accounts receivable minus the allowance for doubtful accounts. A debit balance is an account balance where there is a positive balance in the left side of the account. Accounts that normally have a debit balance include assets, expenses, and losses. Examples of these accounts are […]
If the market price for a share is higher than the BVPS, then the stock may be seen as overvalued. BVPS is typically calculated quarterly or annually, coinciding with the company’s financial reporting periods. In conclusion, the price-to-book value obtained suggests that the market could have undervalued the stock during that time. If we put […]
It allows businesses to maintain financial discipline, focus on projects with higher expected returns, and avoid unnecessary risks. Soft Capital Rationing – In contrast, soft capital rationing arises from a company’s self-imposed restrictions on capital expenditures. For example, a financially conservative company may set a high hurdle rate, requiring a projected return on capital that […]
In this example, the variable overhead rate variance is positive (50 favorable), and the variable overhead efficiency variance is also positive (100 favorable), resulting in an overall positive variable overhead variance (150 favorable). It is entirely possible that an improperly-set standard number of labor hours can result in a variance that does not represent the […]
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Many experienced and knowledgeable bookkeepers honed their skills with on-the-job training. In this post, we’ll cover the differences and similarities between accountants and bookkeepers and their services so you know which to hire. Budgeting involves setting limits on spending in areas like marketing or supplies, keeping your finances in control. Forecasting, on the other hand, […]
Therefore, companies need to be mindful of how much profit they are making and ensure that they are not alienating their customers in the process. Margin is the portion of the selling price that is profit, while markup is the portion of the COGS that is profit. No matter which metric you use, it’s important […]
It also may not fully account for workers’ skills, human capital, and future profits and growth. Therefore, the market value, which is determined by the market (sellers and buyers) and represents how much investors are willing to pay after accounting for all of these factors, will generally be higher. The figure that represents book value […]
Compound journal entry is an accounting entry which affects three or more account heads. A simple journal entry has just two rows i.e. one debit and one credit, whereas a compound journal entry has three or more rows. The account can have debit or credit part, or it can have both debit and credit parts. […]
A favorable material price variance suggests cost effective procurement by the company. Direct Material Price Variance (DMPV) shows the amount by which the total cost of raw materials has deviated from the planned cost as a result of a price change over a period. An unfavorable one might show supplier problems or rising costs in […]