What Is Accounting Practice? Accounting practice is the process and activity of recording the day-to-day financial operations of a business entity. Accounting practice is necessary to produce the legally required annual financial statements of a company. There are different accounting methods that companies can choose to use, and there are principles that companies must abide
What Is Accounting Profit? Accounting profit is a company’s total earnings, calculated according to generally accepted accounting principles (GAAP). It includes the explicit costs of doing business, such as operating expenses, depreciation, interest, and taxes. Key Takeaways Accounting profit shows the amount of money left over after deducting the explicit costs of running the business.Explicit costs include labor, inventory
What Is an Accounting Ratio? Accounting ratios, an important sub-set of financial ratios, are a group of metrics used to measure the efficiency and profitability of a company based on its financial reports. They provide a way of expressing the relationship between one accounting data point to another and are the basis of ratio analysis.
What Are Accounting Records? Accounting records are all of the documentation and books involved in the preparation of financial statements or records relevant to audits and financial reviews. Accounting records include records of assets and liabilities, monetary transactions, ledgers, journals, and any supporting documents such as checks and invoices. Key Takeaways Accounting records are all
What Is Accounting Software? Accounting software is a computer program that assists bookkeepers and accountants in recording and reporting a firm’s financial transactions. The functionality of accounting software differs from product to product. Larger firms may choose to implement a customized solution that integrates a vast amount of data from many different departments. Small firms
What Is Accounting Valuation? Accounting valuation is the process of valuing a company’s assets and liabilities in accordance with Generally Accepted Accounting Principles (GAAP) for the purposes of financial reporting. Key Takeaways Accounting valuation assesses a company’s assets versus its liabilities for financial-reporting purposes.Accounting valuation is critical to the creation of accurate financial statements.Accounting valuation
What Is an Account Manager? An account manager is an entry- to mid-level employee who is responsible for the day-to-day management of a particular customer’s account within a business. An account manager is often more interested in the client satisfaction aspect of a business relationship instead of explicitly trying to generating sales. Key Takeaways An
What Is an Account Number? An account number is a unique string of numbers and, sometimes, letters and other characters that identify the owner of an account and grant access to it. In the U.S., the Social Security number was the primary identifier until its vulnerability to identity theft forced the practice to be abandoned.
What Are Accounts Payable (AP)? Accounts payable (AP), or “payables,” refer to a company’s short-term obligations owed to its creditors or suppliers, which have not yet been paid. Payables appear on a company’s balance sheet as a current liability. Another, less common usage of “AP,” refers to the business department or division that is responsible
What Is an Accounts Payable Subsidiary Ledger? An accounts payable subsidiary ledger is an accounting ledger that shows the transaction history and amounts owed to each supplier and vendor. An accounts payable (AP) is essentially an extension of credit from a supplier that gives a business (the buyer in the transaction) time to pay for the
