Target Costing Target costing is a system that is utilized to plan prices, product costs, and margins for a new product. It is a process that begins during the design phase and continues throughout a product’s life cycle. This method of costing is beneficial for companies to ensure consistent profitability in manufacturing. It allows for … Read more
What is Audit Scoping? An audit of financial statements is an independent examination of an organization’s financial statements and note disclosures. The purpose of an audit is to express an opinion on the fairness of the financial statements and disclosures in accordance with generally accepted accounting standards. Audits are conducted by independent certified public accountants … Read more
Periodicity Assumption in Accounting Key Takeaways Periodicity assumption in accounting divides the economic life of a business into accounting periods, allowing for planning and evaluation of financial performance over time. Consistent time periods enable accurate measurement of business progress, identification of problems and areas of improvement, and comparison with competitors’ performance. Different organizations may use … Read more
Accumulated Loss: Understanding its Significance in Accounting Accumulated loss refers to the total losses a company has incurred over a period of time. It is an important concept that provides valuable insights into a company’s financial performance and stability. In this article, we will define accumulated loss, explain its significance, and provide examples of when … Read more
Contribution Margin Vs. Gross Margin: Understanding the Differences There are a variety of measures used to assess the financial performance of a business. Two important measures are Contribution Margin and Gross Margin. The contribution margin is the sales revenue that is left over after all variable costs have been deducted. Gross margin, on the other … Read more
Is Deferred Revenue Income or Liability? Deferred revenue is a form of liability on the balance sheet, representing income that has been received but not yet earned. It is also known as unearned revenue, and is used when a customer pays for products or services before they are delivered. An example is an annual subscription … Read more
What is Bank Confirmation? Bank confirmation is an essential part of the auditing process. It is a formal request made by the auditor to the bank to confirm certain information related to the client’s bank account. The purpose of bank confirmation is to provide the auditor with sufficient and appropriate audit evidence, which is used … Read more
Owner Drawing in Accounting An owner drawing is an accounting entry that records withdrawals made by a sole proprietor from their business entity. Owner drawings are a common element of owner-managed businesses, as they provide the owner with a way to withdraw profits from the business for their personal use. Accounting for owner drawings presents … Read more