Allowance for Doubtful Accounts

Allowance for doubtful accounts is a contra account that adjusts accounts receivable for the expected amount of uncollectible accounts.   The allowance for doubtful accounts contra […]

An expense is a cost associated with the generation of revenue.   Some expenses, such as depreciation, represent  the reduction in the value of an asset. […]

Revenue is payment or the promise of future payment for the rendering of goods or services.  If the company uses cash-basis accounting, the company will […]

Dividends are distributions of cash, stock, or property made to a corporation’s shareholders.  When a company generates an operating surplus, the company must determine how […]

The direct method cash flow statement presents operating cash flows from the “top down”, according to the sources and uses of cash. In contrast, the […]

Under the indirect method cash flow statement, operating cash flow is calculated by reconciling net income to cash flow.  The reconciliation involves (a) adding back […]

Book value refers to the accounting net worth, or owner’s equity, of the business.  Book value is presented on the balance sheet in the owner’s […]

Current assets are economic resources which the firm expects to sell, convert to cash, or consume within the greater of one year or the firm’s […]

Current liabilities are obligations to the firm which must be settled within the greater of one year or an operating cycle.   Typical current liabilities include […]

Cash flow from investing activities, also called investing cash flow, refers to the net difference between cash sources and cash uses related to a firm’s […]