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One can define accounting as the process of systematic recording, measuring, and communicating information about financial transactions. It’s a system that provides quantitative information about a business or a person’s financial position. An even simpler definition of accounting is that it’s the process of tracking assets, liabilities ...
Zero Beta Portfolio. Zero Cost Collar. Z-Score. Zero Minus Tick. Zero Plus Tick. Zero-Sum Game. Zero-Lot-Line House. Zero Balance Account. From bonds to operating margin to cash flow statements, InvestingAnswers' comprehensive expert articles walk you through complicated financial definitions.
Accounting principles govern how accountants calculate and present the details of a company's financial operations, such as net earnings, gross income, and net cash provided by operating activities. These details can be found in such places as quarterly balance sheets or income statements, 10-Q filings, or annual reports.
An accounting period is a discrete and uniform length of time which serves as a basis for reporting and analyzing companies' financial performance. The uniformity of accounting periods also allows for comparative analysis between companies. An accounting period is the time interval reflected by the data in a financial statement.
Accounting conservatism, along with the other accounting conventions, provides a standardized methodology (or, more realistically, an ethical guideline) that creates reliable financial statements. In turn, accounting conservatism creates a reliable means of comparing financial results from industry to industry and from year to year. Accounting ...
For example, Company XYZ might use one accounting method for calculating depreciation when it reports financial results to investors, but tax laws may require it to use a different method for tax accounting purposes. As a result, Company XYZ might have one net income number on the financial statements filed with the SEC and a different net ...
The CPA designation is a certification of accounting expertise that helps to enforce professional and ethical standards in the industry. CPAs must adhere to the AICPA’s Code of Professional Conduct and are required to maintain independence to provide unbiased judgement. *Note: Other countries have different designations for the CPA qualification.
Accrual accounting is the opposite of cash accounting, which recognizes economic events only when cash is exchanged. The accrual method is more common than the cash method, and the IRS often requires companies to use the accrual method when they have more than a certain level of revenues or carry inventory.
Also called the 'simple rate of return,' the accounting rate of return (ARR) allows companies to evaluate the basic viability and profitability of a project based on projected revenue less any money invested. The ARR may be calculated over one or more years of a project's lifespan. If calculated over several years, the averages of investment ...
The goal of national accounting is to summarize the whole economic picture. Accordingly, the markets watch this information closely because it often signals the overall direction of an economy and thus can provide buy and sell signals for a variety of industries or portfolio strategies. National accounting, also called macro accounting, is a ...