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December 11, 2020

Charles Lutwidge
Double Declining Balance Method of Depreciation

Double Declining Balance Method of Depreciation

Definition and formula The double declining balance method is the most popular variation of the accelerated depreciation method. Here, the depreciation rate is higher at the start of the asset’s life. This particular method never completely reduces the asset value to..

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December 09, 2020

Charles Lutwidge
Depreciation Expense Overview and Calculation

Depreciation Expense Overview and Calculation

Definition and Explanation Depreciation is the process of gradually transferring the cost of the means of production (long-term assets) to the manufactured product. Depreciation is also used to deduct the costs of buying and improving a rental property. For example, we..

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December 08, 2020

Charles Lutwidge
Overview of Debt to Asset Ratio

Overview of Debt to Asset Ratio

Definition The debt to asset ratio falls under the solvency category of the ratios. Solvency ratios evaluate the entity’s ability to survive over a longer period of time. This ratio calculates what portion of assets the business owner(s) financed with the..

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December 04, 2020

Charles Lutwidge
Flexible Budget

Flexible Budget

Business cost planning can be characterized as a special decision-making process, in which information about the past financial and production activities of an economic entity is analyzed, potential resources are assessed and the organization’s goals for the future as well as..

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December 02, 2020

Charles Lutwidge
Explanation and Calculation of the Owner’s Equity

Explanation and Calculation of the Owner’s Equity

Definition Owner’s equity is the enterprise’s funds embodied in net assets, funds initially invested by its founders or participants, as well as its financial results accumulated (lost) in the course of its activity – profits and losses received (incurred) over the..

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November 30, 2020

Charles Lutwidge
Average Collection Period

Average Collection Period

An effective operation of a company largely depends on the timely receipt of funds from customers. To control overdue payments, an average debt collection period indicator is used. A definition of the average collection period is the average length of time..

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November 27, 2020

Charles Lutwidge
Adjusted Trial Balance Basics

Adjusted Trial Balance Basics

Definition Before proceeding to the preparation of management and financial reports, an Adjusted Trial Balance is prepared. For that, adjustment entries are made to the Unadjusted Trial Balance. The latter are necessary in order to ensure an accurate reflection as well..

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November 25, 2020

Charles Lutwidge
Cost of Goods Manufactured

Cost of Goods Manufactured

To make any goods, a number of different resources are spent. Manufacturing enterprises convert raw materials and supplies into finished products through the use of labor and plant equipment. The sum of all costs incurred will constitute the cost of production..

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November 23, 2020

Charles Lutwidge
Introduction to Capital Expenditure

Introduction to Capital Expenditure

Definition Capital expenditure can be defined as any expenditure incurred in creating, acquiring, expanding, or improving an asset for use by a company. The important point is that the benefit from such capital expenditures will be spread over a number of..

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