What is Straight Line Amortization? Definition: Straight line amortization is a concept in accounting which deals with the allocation of interest rates, especially on intangible assets at a consistent rate during the life of that asset. Straight line amortization is particularly used on bonds to allocate interest, and it also refers to the process in
What is the Monetary Unit Assumption? Definition: The monetary unit assumption is an accounting principle or concept that suggests that the only business events and transactions that a business or company should record in its accounting books are the ones that can be measured financially. The Monetary unit assumption concept therefore assumes that anything that
What is Net Assets? Definition: Net Assets is the value of a company’s total assets, minus liabilities. Just like shareholders equity, net asset affirms what a company owns and what it owes. Consequently, the higher the value of a company net asset, the more valuable it is. Assets, in this case, denote resources or things
What Is Net Credit Sales? Definition: Net credit sales refer to the amount of sales that a firm makes from its customers who pay on credit instead of cash. Likewise, it does not include sales that are paid immediately. The NCS concept is helpful in ascertaining the total credit that a firm allows its customers
What is Overapplied Overhead? Definition: Overapplied overhead refers to the amount of money that goes unused despite being assigned to finance the production of units for a given accounting period. Such costs are synonymous with companies with robust manufacturing operations. Such companies allocate overhead expenses at the beginning of each accounting period on an estimated
What are Plant Assets? Definition: A plant asset is any type of property, mostly equipment, or any other type of asset that a company owns and uses as part of its regular or day-to-day business operations. Plant assets are usually long-term assets or, in other words, assets that last more than a year. Some of
What are Investing Activities? Definition: Investing activities refer to the part of the cash flow statement where the accountant records the inflow and outflow of cash related to acquisition or disposal of long-term assets. Oftentimes, businesses buy and sell assets to ensure that the core activities run smoothly. Usually, the cash flow statement has three
What Is Incurred In Accounting? Definition: Incurred is a term used by accountants to indicate that an expense has occurred or a transaction has taken place and needs recording. The acknowledgment paves the way for the crediting of the expense in the liability account. Incurred is an accepted accounting principle under the accrual basis of
What Is Income? Definition: Income is the return earned from capital invested. In business, entrepreneurs commit their money in certain activities hoping to earn a profit. For the capital to be seen as properly utilized there has to be some kind of return in terms of revenue or income. Specifically, income comes from many sources.
What is an Income Statement? Definition: Income statement, also known as profit and loss statement, is a report that shows how a company or business performed, financially, over a given accounting period. The report offers insights on the revenue generated as well as expenses incurred and net income or loss. Income statement is one of