Category: ACCOUNTING

Betterment in Accounting: What It Is, Accounting, Journal Entry, Example

Assets include resources that companies use to generate revenue. These assets may come in different forms. For most companies, fixed assets are essential in providing a base for operations. However, these differ from other assets as they may require continuous expenditure. Sometimes, this expenditure may fall under betterment. Betterment in …

Interest Rate Floor Tax Treatment, Accounting Entries

Debt instruments may come with a fixed or variable interest rate. With the former, the lender charges a fixed interest rate on the loaned amount. However, variable interest instruments may involve complex calculations. With these instruments, the lender adds a margin to a benchmark interest rate or index to calculate …

Interest Rate Cap Premium

An interest rate cap is a derivative instrument that involves an agreement between two parties. In this agreement, one party assumes the responsibility to pay the other if the interest rate on a variable loan exceeds an agreed limit. The initial contract between both parties sets the timeframe, interest rate …

Drawing Account: Definition, Journal Entry, Accounting, Examples, Meaning

Investors invest in a company or business to receive returns in exchange. For companies, these returns come from dividends paid to shareholders. However, other business entities may not use these. For example, sole proprietorships, partnerships, etc., do not pay dividends. Instead, they allow owners to withdraw their profits through a …

Cost Object: Definition, Examples, Types

Cost allocation requires companies to identify, accumulate and allocate costs to various cost objects. This process is crucial to assigning costs to departments, projects, segments, and other units within a company. Usually, the first step in this process is identifying cost objects to which companies can allocate costs. Therefore, it …