Category: Accounting News

🖨 Print⏱ 3 min readThe Customer Acquisition Cost (CAC) measures how much a company spends to obtain new, additional customers. Oftentimes, it’s used with the customer lifetime value (LTV) metric, which also projects the customer’s profitability to calculate the newly acquired customer’s value. It’s primarily used to measure a business’ sales and marketing departments to … Continue reading “Understanding the Customer Acquisition Cost”

🖨 Print⏱ 3 min readCompanies that have assets on their balance sheet, but the values of those assets aren’t accurately reflected, are considered to have hidden value. As part of an investor’s fundamental analysis of a potential investment, it looks at a company’s financial statements, the state of the macro economy, and the business’ competitive … Continue reading “Understanding Hidden Values”

🖨 Print⏱ 3 min readAlso known as a Senior Note, Senior Debt consists of a company’s outstanding loans collateralized by the business’ assets. As the name implies, Senior Debt holders are the first claimants of the business’ cash flows and/or liquidated assets if that business defaults on its debt and files for bankruptcy. Subordinated or … Continue reading “Accounting Considerations for Senior Debt”

🖨 Print⏱ 3 min readWhen it comes it understanding a net charge-off (NCO), it’s the difference between any recovery of delinquent debt and gross charge-offs a business sees in a defined accounting time frame. NCOs are debts a company projects with a low likelihood of being collected. It can happen when a customer stops paying … Continue reading “Accounting for Net Charge Offs”

🖨 Print⏱ 3 min readAccording to the May 2019 Financial Stability Report from the Board of Governors of the Federal Reserve System, there was more than $15 billion in outstanding commercial credit. While there are many ways companies can obtain funding, additional paid-in-capital (APIC) is one way to accomplish this goal. Defining APIC This term … Continue reading “How to Account for Additional Paid-in-Capital (APIC)”

🖨 Print⏱ 3 min readWhen it comes to business needs, securing financing is a top priority, particularly when starting out or for ongoing needs such as making payroll or paying for inventory. This financing could include a loan or securing an ongoing credit line, and businesses can do that through Off-Balance Sheet Financing (OBSF). Defining … Continue reading “Financing Via Off-Balance Sheet Options”

🖨 Print⏱ 3 min readWhen it comes to running a business, having outstanding invoices that turn into uncollectible receivables or simply bad debt is a fact of life. The Internal Revenue Service (IRS) has a safe harbor that permits businesses to reduce consideration of such bad debt from taxation if it qualifies. However, understanding how … Continue reading “A Look at the Nonaccrual Experience Method”

🖨 Print⏱ 4 min readBased on statistics from the World Bank, the United States government spent 3.59 percent of its 2022 gross domestic product on research and development. While private businesses spend on their own research and development costs, it’s important for businesses to treat these expenditures appropriately. When it comes to research and development … Continue reading “Capitalizing Versus Expensing Research and Development”