In accounting, it is vital to distinguish between current assets and noncurrent assets—but what exactly is the difference between these two seemingly similar classes? Read on, as this article explains exactly that using simple, hands-on examples taken from realistic scenarios. Under most accounting frameworks, including both US GAAP and IFRS, Investments are generally held at […]Continue reading "Non-Current Assets: Definition, Types & Example"
While an interest coverage ratio of 1.5 may be the minimum acceptable level, two or better is preferred for analysts and investors. For companies with historically more volatile revenues, the interest coverage ratio may not be considered good unless it is well above three. The times interest earned ratio (TIE) compares the operating income (EBIT) […]Continue reading "Times Interest Earned"
We then assign the full standard amount of overhead to all units that were begun and completed in the period. As was the case with direct labor, any difference between the actual overhead cost and the amount charged to production in the period is either charged to the cost of goods sold or apportioned among […]Continue reading "Process Costing Characteristics, Principles, Features, Uses"
The most common examples of prepaid expenses are insurance expense, rent expense, and supplies expense. Some prepaid cards offer no recourse whatsoever if the issuer tanks or in cases of fraud or theft, unlike credit cards and bank debit cards. For example, assume ABC Company purchases insurance for the upcoming twelve month period. ABC Company […]Continue reading "What is Prepaid Insurance? F&A Glossary"