Fair value is a term with several meanings in the financial world. In investing, it refers to an asset’s sale price agreed upon by a willing buyer and seller, assuming both parties are knowledgeable and enter the transaction freely. For …
Extraordinary items consisted of gains or losses from events that were unusual and infrequent in nature that were separately classified, presented and disclosed on companies’ financial statements. Extraordinary items were usually explained further in the notes to the financial statements. …
An expense is the cost of operations that a company incurs to generate revenue. As the popular saying goes, “it costs money to make money.” Common expenses include payments to suppliers, employee wages, factory leases, and equipment depreciation. Businesses are …
An expenditure represents a payment with either cash or credit to purchase goods or services. An expenditure is recorded at a single point in time (the time of purchase), compared to an expense that is recorded in a period where …
Depreciation is an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy. Depreciation represents how much of an asset’s value has been used up. Depreciating assets helps companies earn revenue …
Depletion is an accrual accounting technique used to allocate the cost of extracting natural resources such as timber, minerals, and oil from the earth. Like depretiation and amortization, depletion is a non-cash expenses that lowers the cost value of an asset …
In financial terms, a deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets. A deficit is synonymous with a shortfall or loss and is the opposite of a surplus. A deficit can occur when a government, …
A deficiency is the numerical difference between the amount of tax that a taxpayer, or taxpaying entity, reports on a tax return and the amount that the Internal Revenue Service (IRS) determines is actually owed. The term only applies to …
A deferral, in accrual accounting, is any account where the income or expense is not recognised until a future date (accounting period), e.g. annuties,charges,taxes,income etc. The deferred item may be carried, dependent on type of deferral, as either an asset or …
Current liabilities are a company’s short-term financial obligations that are due within one year or within a normal operating cycle. An operating cycle, also referred to as the cash conversion cycle, is the time it takes a company to purchase …