What is Break Even Point? Definition: The break even point is a point where a business or an investor is not expected to make any loss or profit. It is essentially a point where the total costs of operations (expense) is equal to the total sales or revenues generated. In a business setting, it is
What is Bank Reconciliation? Definition: Bank reconciliation, of bank rec for short, is the procedure of matching amounts on bookkeeping records with their corresponding figures on bank statements. This is an essential aspect of financial management. In accounting, every credit must always be matched with a corresponding debit to balance the accounts. Thus, every payment
What is Additional Paid In Capital? Definition: Additional Paid In Capital (APIC) is simply the amount of money that investors pay in excess of the par value price of the stock. Often called contributed surplus, additional paid-in capital is the share capital value above the stated par value. Initial public offerings act as avenues for
What Is Audit Risk? Definition: Audit risk is the uncertainty that an auditor might issue an unqualified opinion when there is a material misstatement in the financial statements. Creditors, shareholders, and stakeholders rely on financial statements to make informed decisions when it comes to investments. Often issued quarterly, financial statements provide insights into the financial
What is Accumulated Amortization? Definition: Accumulated amortization is the total amount of expense recorded in a balance sheet used in the capitalization intangible assets. Simply put, it is the amount of costs used to maintain an intangible asset over duration in use. Accumulated amortization underscores regular utilization of an intangible asset, calculated on a straight-line
What is a Centralized Government? Definition: A centralized government is a governing body where the leader has ultimate power to make decisions without the need of public approval or input. A government is an essential institution in all countries worldwide. Indeed, institutions in the private sector operate under the directorship of some form of government.
What Is A Balance Sheet Equation? Definition: A Balance Sheet Equation is simply an accounting equation that seeks to ensure the sum of a company’s or business assets is equal to the sum of liabilities and capital invested. The accounting equation uses the double-entry principle, whereby for every debit entry into a balance sheet, there
What is the Balance of Trade? Definition: Balance of Trade is simply the difference between the number of a country’s exports and imports and exports over a given period. It is a measure of valuing a country’s balance of payments and often used to measure the strength of a country’s economy. Countries engage in the
What is Average Fixed Cost? Definition: Average fixed costs are a production cost that remains the same regardless of the amount of goods and services produced. Such costs do not vary with changes in output. Businesses and companies incur a wide array of costs in the production of goods and services. The incurred expenses vary
What is a Chief Financial Officer (CFO)? Definition: A chief financial officer (CFO) handles all related financial matters of an organization. It includes financial planning, record keeping, reporting, and also advising the organization on any impending financial risks. It is a ubiquitous term and is used interchangeably with chief financial and operating officer (CFOO). What