In addition to the measurement accounting principles that guide the values placed on the shareholder’s equity in a Balance Sheet, there are accounting principles specifying the informative... More »

A Board of Directors of a company is supposed to represent the shareholders prevent the company from using deceptive accounting tactics that mislead investors. Any board member of any... More »

One of the primary tasks of the accountant during the period-end closing process is the calculation of expense accruals, of which there are potentially a great number. There will be... More »

Leverage is that portion of the fixed costs which represents a risk to the firm. Operating leverage, a measure of operating risk, refers to the fixed operating costs found in the firm’s... More »

Consideration should be given to the company’s investment in accounts receivable since there is an opportunity cost associated with holding receivable balances. The major decision... More »

Revenue and cost control are critical to any businesses. A company can improve its bottom-line (profit) and overall operations by analyzing, planning, monitoring, and controlling revenue... More »

Contracting with other firms to obtain necessary goods and services-a process called outsourcing-emerged as a key management strategy during the nineties. Managers hope to benefit from... More »

On my post “Overcome Seasonality On Working Capital”,  I have addressed the problem of a manager selecting the optimal level of working capital for the case of companies facing... More »

The audit function is crucial for ensuring the integrity of a company’s financial systems, which includes not only its financial results but also the control systems and code of ethics... More »

On any acquisition process, once due diligence and valuation of acquiree is completed, the process continued to recording (accounting) the acquisition on the company’s book. And this... More »

Is it possible to outsource the accounting function? The answer is “YES”. The accounting function could be outsourced, though this is usually limited to only a few tasks within... More »

The obvious objective of tax strategy is to minimize the amount of cash paid out for taxes. However, this directly conflicts with the general desire to report as much income as possible... More »

If a company files for bankruptcy, there is a strong likelihood that its creditors will not be paid in full. Upon such a filing, the “best interests of creditors” test is performed.... More »

Depreciation is designed to spread an asset’s cost over its entire useful service life. Its service life is the period over which it is worn out for any reason, at the end of which... More »

There are many types of cash transfers a company can choose for certain payments and payees. However, cash transfers can subject a company to a considerable risk of loss, and so require... More »

In any business decision utilizing company resources, management must ascertain whether or not an asset purchase makes the most sense for its owners. This is true on a micro or macro... More »

Stock market investors and analysts often take sides on the issue of investing in dividend stocks. On one side are the cheerleaders who believe dividend stocks are the next best thing... More »

To raise funds, firms often issue bonds, which obligate the issuer to make payments of interest, and sometimes principal, to the lender on specified dates. Bond is a form of liability.... More »

A fair value estimate for computer software must be considered in the context of the fair value in a hypothetical transaction. Does the software value make sense based on “the amount... More »

The main objective of adjustments on financial statements is to determine the true earning power of the entity in the past. Doing this requires elimination of all nonrecurring items... More »

The cost of capital is defined as the rate of return that is necessary to maintain the market value of the firm (or price of the firm’s stock). Financial managers must know the... More »

A corporate planning model is an integrated business planning model in which marketing and production models are linked to the financial model. More specifically, a corporate model... More »

At one time attest services provided by CPAs were limited to expressing a positive opinion on historical financial statements on the basis of an audit made in accordance with generally... More »

IAS 27 shall be applied in the preparation and presentation of consolidated financial statements for a group of entities under the control of a parent. This Standard does not deal with... More »

Fixed assets are those assets that are used in a productive capacity, are tangible (have physical substance), are relatively long-lived, and provide future benefit that is readily measurable,... More »

Not that many years ago, if you’re in the United State, you would choose a bank from the few available in your town or city. You visited the bank and filled out paperwork to open... More »

In order to correctly understand the mechanics and implications of a firm’s working capital, we need to take into account a firm’s financial needs for operation, or FNOs. A firm’s... More »

Intangible assets (resources) play a fundamental role in economies’ change, from traditional scale-based manufacturing to new innovation-oriented activities. Intellectual property,... More »

IAS 10 addresses the extent to which anything that happens during the postyear-end period when the financial statements are being prepared should be reflected in those financial statements.... More »

IAS recognizes the percentage-of-completion method as the only valid method of accounting for construction contracts. Under an earlier version of IAS 11, both the percentage-of-completion... More »