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Prepaid expenses are those paid in advance for goods or services to be received in the future. In cash basis accounting, these expenses are recognized when paid, whereas in accrual accounting, they should be recognized when the goods or services are received. Cash Basis Accounting is a method of bookkeeping where revenues and expenses are […]

While these drivers are commonly used, they are just general guidelines. There are situations where intuition must be exercised to determine the proper driver or assumption to use. Instead, an analyst may have to rely on examining the past trend of COGS to determine assumptions for forecasting COGS into the future. Please download CFI’s free […]

This type of journal entry is made to close temporary accounts (for instance, revenue and expense accounts) and transfer their balances to permanent accounts on the balance sheet (such as retained earnings). Closing entries are a necessary part of the accounting cycle as they allow businesses to generate financial statements and file tax returns every month and year accurately. […]

When Jane gets time and a half, her hourly rate increases to $18 per hour (12 x 1.5) for the extra hours she works. Don’t forget that this is the minimum figure, as laid down by law.An employer may choose a higher rate of overtime pay. Whatever it is, it has to fulfill national or […]