For public companies, the FASB standard was effective for reporting periods beginning subsequent to December 15, 2018. For calendar year-end companies, this means the standard was adopted on January 1, 2019. On January 1, 2022, Company XYZ signed an eight-year lease agreement for equipment. At…

The AICPA is integral to rule-making in the CPA profession and serves as an advocate for legislative bodies and public interest groups. We are the American Institute of CPAs, the world’s largest member association representing the accounting profession. Our history of serving the public interest…

If the bank loans doot meet the following requirements, they are not recognized as the long-term liability in the company’s balance sheet. It will be shown as notes to the financial statement, and disclosures are required in the financial statements. An obligation that cannot be…

Net Working Capital refers to the difference between the current assets and the current liabilities of your business. It, therefore, presents that part of current assets that are financed using permanent capital like equity capital, bank loans, etc. In this article, you will learn about…

A cash flow pro forma (or cash budget) is your attempt to spot future cash shortfalls in time to take action. Companies with a positive cash flow have more money coming in, while a negative cash flow indicates higher spending. Net cash flow equals the…

The account Inventory Change is an income statement account that when combined with the amount in the Purchases account will result in the cost of goods sold. In this form, increases to the amount of accounts on the left-hand side of the equation are recorded…

Even with technology making its way into the field on a broad scale, humans are still needed for the high-skilled tasks and interpretation of information. The technology is helping to automate repetitive tasks, but businesses still rely heavily on analysis and decisions by individuals to…

This is the knowledge and experience they gain from decades of working with your company. No matter what size the business is, success is the result of continuous hard and smart efforts put in by happy and valued employees. This results in keeping the organization…

Generally, the term of the debt is the best way to determine whether it’s more likely to be a note or a bond. Shorter-term debts — those with a maturity of less than one year — are most likely to be considered notes. Debts with…

If this occurs, current income will be understated while it will be inflated in future periods over which additional depreciation should have been charged. CapEx includes costs related to acquiring or upgrading capital assets such as property, plant, and equipment. These expenses, unlike operating expenses,…