Accounting

What Are the Five Source Accounting Documents? (All You Need To Know)

Introduction It comes from the source, meaning the source of the document. The source accounting documents or simply source documents are financial document which provide financial details about a company. Consider this, whenever there is a financial purchase or a slip from the supplier, it creates a financial trial, and this financial trial is referred …

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What is a Budgeted Balance Sheet and How to Prepare It?

Introduction Budgeted balance sheet is just like a balance sheet, i.e., it contains all the assets, liabilities, payables, capital depreciation, amortization etc, exactly like a balance sheet, but there is one big difference and that is that the budgeted balance sheet unlike the balance sheet presents the future balance sheet, whereas balance sheet shows the …

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What is the Rule 407 letter? – Definition, Explanation, Example, and More

Definition Rule 407 was a law that required a letter which requires an employee working in Financial Industry regulatory authority or FINRA, which allowed the employee to hold investments in equities or bonds in personal accounts. The employees must disclose personal bank account information about the account in which they are holding the security. It …

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What is Activity-Based Costing and How Does It Work (Explained)

What is Activity-Based Costing? Activity-based costing is a process for computing production costs. It distributes overhead costs into different production-related activities. ABC is a procedure that applies overhead allocation to the products that utilize those activities, allowing it to be more exact than traditional allocation. ABC works effectively in complex processes where there isn’t a single …

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Income Statement Under Absorption Costing? (All You Need to Know)

What Is Absorption Costing? Absorption costing is a tool used in management accounting to capture entire expenses connected to manufacturing a certain product. For external reporting, generally recognized accounting principles (GAAP) demand absorption costing. Moreover, it is a costing process for valuing inventory. It’s also known as complete costing because it accounts for all direct …

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