Accounting

How to Calculate Cash-flow to Debt Coverage Ratio? (Definition, Formula, Example, and More)

Definition of Cash-flow to Debt Coverage Ratio Current Cash Coverage Ratio can be defined as a liquidity ratio that measures the efficiency of an entity’s cash management. This operating cash ratio measures the percentage of the company’s total debts, which can be covered by the company’s operating cash flow for a given accounting period. In …

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Predetermined Overhead Rate (Definition, Example, Formula, and Calculation)

Definition A predetermined overhead rate is used by businesses to absorb the indirect cost in the cost card of the business. It’s a budgeted rate that is calculated by budgeted inputs. Further, this rate is calculated by dividing budgeted overheads by the budgeted level of activity. However, if there is a difference in the total …

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Average Total Assets (Definition, Formula, Example, and More)

Definition Average total assets are the assets used by businesses throughout the accounting period. These assets are calculated with the opening and closing of the total assets in the business’s balance sheet. This figure is mostly used in calculating the activity ratio, where revenue generated by the business is compared with the total assets implied …

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Accounting for Mortgage Payable: Definition, Journal Entries, Example and More

The liability of an owner to pay the fixed loan that is acquired by a company within the timeline is known as mortgage payable. As there are different types of liabilities i.e., the short-term liability and the long-term liability. Similarly, mortgage payable is considered a long-term liability. Accounting for mortgage payable is made in the …

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How to Record Depreciation Journal Entries? – Accounting for Depreciation with Examples

Overview Depreciation expense is a non-cash accounting practice that is used to spread the cost of an asset over its useful life. A firm can use one of the many depreciation calculation methods available. However, each method calculates the depreciation charge differently. The accounting treatment for the depreciation cost remains the same. Let us discuss …

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Salaries and Wages Payable – A credit or a debit? All you need to know!

Salaries and Wages are considered as the expenses that are incurred as a result of human capital that is hired by the company for purposes of the operation of the company. Therefore, salaries and wages are considered to be fixed operating expenses, that are incurred by the company regularly. Normally, these expenses are paid on …

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Full IFRS vs IFRS for Small and Medium Enterprises (SMEs): A Comprehensive Guide

International Financial Reporting Standards (IFRS) are considered to be universal accounting standards, which are used by organizations to prepare their financial statements, such that they can be presented in a unified manner. IFRS includes a detailed guide and a breakdown regarding the accounting treatment for all the state of affairs of the company. In this …

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Accounting for dividend received: Definition, Example, and Journal Entries

The Dividend is one of the most common accounting words that business owners and shareholders use. But do you know what does “Dividend” means? The Dividend refers to the earnings or portion of the profit that a company pays to its investors or shareholders. A dividend is distributed among the shareholders when the company generates …

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Economy Pricing: Definition, Example, Advantages, and Disadvantages

We’ve always heard the word “Economy” in several different ways in our daily life. Sometimes the economy pricing is used for the country, and sometimes it’s used for domestic or international purposes. If a company or a brand launches its product and sells it for a meager price with minimum margin compared to its competitors, …

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