What is Historical Cost Principle Definition Historical cost principle refers to the cost of an item it possesses in an arm’s length transaction. In other words, historical cost is the cost paid against anything at the time of acquisition. Assets Read More …
Monetary Unit Assumption Definition Explanation and Examples
We know that money is considered and widely accepted as a unit of account. We also aware of the fact that money is used for payment of articles we acquire in business. Money is a ‘good’ which is also used Read More …
Going Concern Concept Definition Explanation Examples
Going Concern Definition In view of accounting principles where an entity is taken as a third ‘artificial person’ accounting assumes that the business unit will continue its operations for an infinite or long enough time. Going concern concept is also Read More …
Business Entity Concept Definition Explanation Examples & Importance
Definition of Business Entity Concept Business Entity Concept states that the business and the owner are two separate entities and accordingly must be treated separately. This concept is also called ‘Economic Entity Principle’ which explains that all the businesses, related Read More …
Cash Ratio Definition Formula Example Analysis
Cash ratio defines the relationship of cash, cash equivalents and current liabilities. its formula is Cash + Cash Equivalents / Current Liabilities
Quick Ratio Meaning Formula Example and Analysis
Quick ratio is in fact a strict calculation of an entity’s ability to settle its short-term liabilities. It also known as Acid Test Ratio. Its formula is Cash + Securities + Receivable / Current Liabilities
Current Ratio Meaning Formula Example and Analysis
Current ratio measures the liquidity level of an entity. It indicates the ability of the entity to pay its current debts (current liabilities) out of its current assets. This is also called ‘the working capital ratio’. Short term creditors are Read More …
Asset Definition Types and Examples
Definition An asset is an item of economic value which is expected to generate future economic benefits for the entity holding this asset. In more simple words the things purchased and possessed by the business are called assets. Assets are Read More …
Earnings Per Share Formula Examples and Analysis
Definition Earnings Per Share (EPS) which is also called ‘Net Income Per Share is an accounting ratio computed usually at the end of the financial year on the basis of profit earned. This ratio is market prospect and computes profitability levels Read More …
Chart of Accounts – Definition Example Template
Chart of account is a complete list of all accounts that management believes to be used. While setting up chart of account, each account is assigned specific number and name for identification purposes.