Category Archives: Bookkeeping

12 1 Identify and Describe Current Liabilities Principles of Accounting, Volume 1: Financial Accounting

Income taxes are discussed in greater detail in Record Transactions Incurred in Preparing Payroll. A long-term liability is one the company expects to pay over the course of more than one year. Liabilities must be reported according to the accepted accounting principles. The most common accounting standards are the International Financial Reporting Standards (IFRS). However, many […]

Budgetary Control and Encumbrance Accounting

Additionally, encumbrance accounting allows for more accurate predictions of cash outflow. By monitoring encumbrances and analyzing their balances and activity, companies can gain insights into upcoming expenses and better manage their cash flow. One of the first steps in implementing encumbrance accounting is defining the encumbered amount. This involves identifying the specific liabilities and obligations […]

Employee Turnover Rate: Definition & Calculation

The inventory turnover, also known as sales turnover, helps investors determine the level of risk that they will face if providing operating capital to a company. For example, a company with a $5 million inventory that takes seven months to sell will be considered less profitable than a company with a $2 million inventory that […]

What is the 3-Way Match Process in Accounts Payable?

Traditionally, the accountant is in charge of matching the invoice, PO, and GRN data. All the relevant paper documents need to be gathered in order to manually verify the goods and price information contained in them. It is challenging to search through stacks of documents to locate those relevant to the current transaction. Unavailability of […]