Questions & Answers (Q&A)

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Harold Averkamp, CPA, MBA

All 1044 questions have been answered personally by Harold Averkamp, CPA, MBA. Harold is the sole-author of all the instructional content found on AccountingCoach.com.
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Q&A Archive

What is the difference between FIFO and LIFO?

The difference between FIFO and LIFO results from the order in which changing unit costs are removed from inventory and become the cost of goods sold. When the unit costs have increased, LIFO will result in a larger cost of goods sold… Read More.

What is the difference between adjusting entries and correcting entries?

Generally, adjusting entries are required every accounting period so that a company's financial statements reflect the accrual method of accounting. It is typical for the adjusting entries to be dated as of the last day of the accounting period and to include… Read More.

What is the difference between the current ratio and working capital?

The current ratio is the proportion (or quotient or fraction) of the amount of current assets divided by the amount of current liabilities. Working capital is not a ratio, proportion or quotient, but rather it is an amount. Working capital is the… Read More.

What is the difference between revenues and earnings?

A U.S. corporation's revenues are reported on the top line of its income statement, while its earnings are reported on the bottom line (or near the bottom) of the income statement. Revenues is the gross amount earned from selling goods or providing… Read More.

What is the difference between revenues and receipts?

A company's revenues are amounts it has earned as the result of business activities such as selling merchandise or performing services. Under the accrual method of accounting, revenues are reported on the income statement in the period in which they are earned… Read More.

What is the difference between inventory and the cost of goods sold?

Inventory for a retailer or distributor is the merchandise that was purchased and has not yet been sold to customers. For a manufacturer, inventory consists of raw materials, packaging materials, work-in-process, and the finished goods that are owned and on hand. Inventory… Read More.

What is the difference between the current ratio and the quick ratio?

The current ratio is the proportion (or quotient or fraction) of the amount of current assets divided by the amount of current liabilities. The quick ratio (or the acid test ratio) is the proportion of 1) only the most liquid current assets… Read More.

What is a standard cost?

A standard cost has been described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or a "should be" cost. Standard costs are often a part of a manufacturer's annual profit plan and… Read More.

What is the difference between expenses and payments?

Under the accrual method of accounting, expenses are costs that have been used up or have been incurred in the process of earning revenues and/or operating a business. For example, a retailer will report its cost of the goods sold as an… Read More.

What is the IRS mileage rate for use of a car in business in 2015?

The optional standard rate allowed by the Internal Revenue Service for the business use of a car in the year 2015 is 57.5 cents per mile. (This compares to 56 cents per mile in the year 2014.) In addition to the 57.5… Read More.