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In nonprofit accounting, an "operating reserve" is the unrestricted cash on hand available to sustain an organization, and nonprofit boards usually specify a target of maintaining several months of operating cash or a percentage of their annual income, called an operating reserve ratio.
The operating fund is used to pay for the operating expenses of the association. A reserve fund is used to pay for the infrequent and expensive common area assets maintenance, repair and replacement costs. The reserve fund is crucial for reducing the chances of a special assessment (mentioned in the risks below). Obtaining a reserve study is ...
Assets and expenses are two accounting terms that new business owners often confuse. Here’s what each term means and how to use them in accounting. Assets vs. Expenses: Understanding the Difference
A reserve study is a long-term capital budget planning tool which identifies the current status of the reserve fund and a stable and equitable funding plan to offset ongoing deterioration, resulting in sufficient funds when those anticipated major common area expenditures actually occur. The reserve study consists of two parts: the physical ...
Mortgage reserves refers to cash or other easily accessible assets you could use to make mortgage payments, above and beyond the down payment and closing costs. Reserves are measured in months.
Capital expenditures are the funds used to acquire or upgrade a company's fixed assets, such as expenditures towards property, plant, or equipment (PP&E). [3] In the case when a capital expenditure constitutes a major financial decision for a company, the expenditure must be formalized at an annual shareholders meeting or a special meeting of the Board of Directors.
Fixed Expenses vs. Variable Expenses: Quick Take. If you want to make sure you have enough money for necessities and unplanned expenses, you must create a budget. For that, learning the difference ...
In TOC, operating expense is limited to costs that vary strictly with the quantity produced, like raw materials and purchased components. Everything else is a fixed cost , including labour (unless there is a regular and significant chance that workers will not work a full-time week when they report on their first day).