Category: ACCOUNTING

Accrued Payroll: Definition, Accounting, Journal Entry, Example, Meaning

Companies pay their employees after predefined intervals. However, accounting requires them to recognize any liability incurred for those expenses regardless of the payment. Therefore, companies use accrued payroll to track it. What is Accrued Payroll? Accrued payroll is a fundamental concept in accounting that represents the accumulated amount of employee …

Equivalent Units of Production: Definition, Calculation, Formula, Example

When allocating costs, companies must determine the number of units produced during a period. However, it becomes more complicated when some units haven’t finished manufacturing. Therefore, companies use equivalent units of production to solve the issue. What are Equivalent Units of Production? Equivalent units of production (EUP) is a concept …

Control Account: Definition, Importance, Accounting, Meaning and Example

Companies may use detailed records to ensure traceability and accuracy. Before transferring these records to the accounting system, they must consolidate them. Therefore, companies may use a control account. What is a Control Account? A control account serves to consolidate and simplify financial record-keeping. Instead of inundating the general ledger …

Ledger Account: Definition, Example, Template, Importance, vs. General Ledger

Companies maintain a general ledger recording of all accounts within the accounting system. These accounts are known as ledger accounts. What is a Ledger Account? A ledger account is a pivotal element in double-entry accounting, constituting a comprehensive record of financial transactions. Organized into categories such as assets, liabilities, equity, …

Enterprise Fund: Definition, Accounting, Importance, Example

There are several types of funds in governmental accounting, each serving specific purposes and accounting for different activities. These funds fall into three broad categories, including governmental, fiduciary, and proprietary funds. Furthermore, each category can have its classifications. One of the classifications within proprietary funds is enterprise funds. What is …

Bad Debt Expense: Definition, Journal Entry, Formula, Accounting, Meaning

Companies often encounter challenges related to the timely collection of receivables. Usually, uncertainties arise when customers, for various reasons, fail to fulfill their payment obligations. In addressing these uncertainties, companies must recognize a bad debt expense. What is Bad Debt Expense? Bad debt expense refers to the anticipated financial loss …

3 Statement Model: Definition, Examples, Importance, vs Discounted Cash Flow

Companies use various financial tools to forecast information. This information helps anticipate future outcomes, enabling informed decision-making, strategic planning, and efficient resource allocation based on anticipated business conditions. One of these tools is the three-statement model. What is the 3 Statement Model? The three-statement model is a core financial modeling …

Depreciable Asset: Definition, Importance, Types, Land

Depreciation refers to the reduction in an asset’s value over its life. In accounting, it is crucial to identify whether a company can depreciate a specific asset. Therefore, companies know what a depreciable asset is. What is a Depreciable Asset? A depreciable asset is a long-term tangible asset that experiences …