Most Popular Accounting Topics

Inventory Turnover Ratio

Inventory turnover is the ratio of cost of goods sold by a business to its average inventory during a given accounting period. It is an activity ratio measuring the number of times per period, a business sells and ...

Receivables Turnover Ratio

Accounts receivable turnover is the ratio of net credit sales of a business to its average accounts receivable during a given period, usually a year. It is an activity ratio which estimates the number of times ...

Journal Entries

Analyzing transactions and recording them as journal entries is the first step in the accounting cycle. It begins at the start of an accounting period and continues during the whole period ...

Net Present Value

Net present value is the present value of net cash inflows generated by a project including salvage value, if any, less the initial investment on the project. It is one of the most reliable measures used in capital ...

Times Interest Earned Ratio

Times interest earned (also called interest coverage ratio) is the ratio of earnings before interest and tax (EBIT) of a business to its interest expense during a given period. It is a solvency ratio measuring ...

Adjusted Trial Balance

An Adjusted Trial Balance is a list of the balances of ledger accounts which is created after the preparation of adjusting entries. Adjusted trial balance contains balances of revenues and expenses along ...

Payback Period

Payback period is the time in which the initial cash outflow of an investment is expected to be recovered from the cash inflows generated by the investment. It is one of the simplest investment appraisal techniques ...

Recent Accounting Topics

Bank Reconciliation

A company's cash balance at bank and its cash balance according to its accounting records usually do not match. This is due to the fact that, at any particular date, checks may be outstanding, deposits may be in transit to the bank, errors may have occurred ...

Lower of Cost or Market (LCM) Rule

Lower of cost or market (LCM) rule states that inventory should be measured at cost or market value whichever is lower. This rule overrides the cost principle in case of inventory ...

Gross Profit Method of Inventory Estimation

Gross profit method (also known as gross margin method) is a technique used to estimate the value of ending inventory and cost of goods sold of a period on the basis of the historical or projected gross profit ratio of the business ...

Retail Method of Inventory Estimation

Retail method is a technique used to estimate the value of ending inventory using the cost to retail price ratio ...

Average Cost (AVCO) Method

Average cost method (AVCO) calculates the cost of ending inventory and cost of goods sold for a period on the basis of weighted average cost per unit of inventory ...