An audit that is limited to a particular time span (usually less than a year) or accounts or operation is known as limited audit. Scope of limited audit is less wide compared to full audit. Legal compliance is not mandatory for a limited audit. Examples of Limited Audit Examples of limited audit are: Interim audit … Read more
Primarily, Payroll refers to “the list of all employees of an organization or company”. Nowadays it became a polysemic word. It has some other meanings too, these are: Payroll means the employees of an organization, along with their information. Payroll is the total amount of money an organization pays to its employees during each pay … Read more
Certified Public Accountant or CPA is a professional accounting degree. From another perspective, CPA is the license to provide accounting services to public. In many English speaking countries, CPA is the title for qualified accountants who provide business and financial consulting services. In United States, to become a CPA you must fulfill the ‘3E’ requirement. … Read more
Financial statements are a set of four most significant reports of a business corporation or an organization. It tells about the overall health of a business in terms of finance. A standard set of Financial statements include: Balance Sheet or Statement of Financial Position Income statement or Statement of Income Cash Flow statement or Statement … Read more
What is Earnings before Interest and Taxes (EBIT)? Earnings before interest and taxes (EBIT) is a financial metric that measures a company’s operational profitability. EBIT is calculated by subtracting a company’s expenses excluding interest and taxes from its total sales or revenues. EBIT gives a significant indication of a company’s operating profitability. Because EBIT is … Read more
EBITDA stands for Earnings before Interest, Taxes, Depreciation, and Amortization. It refers to the earnings of a company before interest, taxes, depreciation, and amortization are deducted. That is, it is understood as the gross operating profit calculated before the deduction of financial expenses and accounting deductions. Although it is not part of the income statement … Read more
The EBIT margin is a financial ratio that measures the profitability of a company calculated without taking into account the effect of interest and taxes. It is calculated by dividing EBIT (earnings before interest and taxes) by sales or net income. EBIT margin is also known as operating margin. It is characterized by reflecting the … Read more
Earnings per share (EPS) is the part of a company’s net profit obtained by each outstanding share of common stock. Earnings per share is a financial metric, that indicates the profitability of a company. Earnings Per Share Formula: We can calculate EPS by using the formula below: The number of outstanding shares of a company … Read more
Accelerated depreciation method is a depreciation method that charges major portion of the cost of assets in earlier years and minor portion in later years of assets life. This depreciation method defers tax liabilities in earlier years of assets life since higher depreciation expense reduces taxable income. The logic behind the accelerated depreciation method is … Read more
Normal spoilage is the unavoidable part of spoilage occurs in a production process. It will occur even the production process is operated with the highest efficiency. That is why it is also known as predetermined or planned spoilage. Manufacturers typically set a rate of normal spoilage based on their product type. Cost of normal spoilage … Read more
