Want to try our new Flashcards?

We're about to release more than 500 Flashcards specifically designed to help you retain the most important accounting concepts.

YESPlease notify me when they are ready! NOI'm not interested.

Enter your email

We will send you an email as soon as the new Flashcards are ready.

Thank You!

You have successfully subscribed.

Close this Message

Questions & Answers (Q&A)

Harold Averkamp, CPA, MBA

All 1,075 questions have been answered personally by Harold Averkamp, CPA, MBA. Harold is the sole-author of all the instructional content found on AccountingCoach.com.
Read More…

Q&A Archive (1,075)

What is comprehensive income?

Comprehensive income for a corporation is the combination of the following amounts which occurred during a specified period of time such as a year, quarter, month, etc.: Net income or net loss (which is reported on the income statement), plus Other comprehensive… Read More.

What is DCF?

In accounting, DCF refers to discounted cash flows or to the discounted cash flow techniques such as net present value or internal rate of return. DCF is a preferred method for evaluating capital expenditures (and other investments) because DCF recognizes the time… Read More.

What is the operating cycle?

The operating cycle is also known as the cash conversion cycle. In the context of a manufacturer the operating cycle has been described as the amount of time that it takes for a manufacturer's cash to be converted into products plus the… Read More.

What are gross sales?

Gross sales are the amounts a company earned and recorded from the sales of its products (and perhaps its services). The amounts originate from the company's sales invoices but the total will be adjusted to the accrual basis at the end of… Read More.

Why do we charge depreciation?

We charge depreciation because most of the long-lived assets used in a business have 1) a significant cost, and 2) they will be useful only for a limited number of years. The matching principle (a basic underlying accounting principle) requires that the… Read More.

What are capital expenditures?

Capital expenditures or capex are the amounts spent for tangible assets that will be used for more than one year in the operations of a business. Capital expenditures can be thought of as the amounts spent to acquire or improve a company's… Read More.

What is opportunity cost?

Opportunity cost is the profit that was lost because of some action. To illustrate opportunity cost, let's assume that you want to add a website to your already successful business. You are confident that it will increase your company's profit by $1,500… Read More.

What is a general ledger?

A general ledger is a grouping of perhaps hundreds of accounts that are used to sort and store information from a company's business transactions. The general ledger is organized as follows: balance sheet accounts (assets, liabilities, equity), and income statement accounts (revenues,… Read More.

What are sales discounts?

Sales discounts (if offered by sellers) reduce the amounts owed to the sellers of products, when the buyers pay within the stated discount periods. To illustrate a sales discount let's assume that a manufacturer sells $900 of products and its credit terms… Read More.

What are turnover ratios?

In accounting, turnover ratios are the financial ratios in which an annual income statement amount is divided by the average balance of an asset (or group of assets) throughout the year. Turnover ratios include: accounts receivable turnover ratio inventory turnover ratio total… Read More.