Accounting

Account in Trust

Account in Trust

An account in trust, also known as a trust or ITF “in trust for” account, is a bank account formed and managed by the trustee to oversee and manage the beneficiary’s assets or finances according to a legally enforceable agreement. The reason for this record must be set up when t.....

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Royalty Trust

Royalty Trust

A royalty trust is a form of corporation that was established to operate as the owner of mineral rights to wells, mines, and other similar properties. It mainly works in the energy or resource mining industries and has mineral deposits, wells, or reservoirs under its control. The primary objectiv.....

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Voluntary Compliance

Voluntary Compliance

Voluntary compliance is one of the options for demonstrating corporate social responsibility, and it is a presumption that the US tax system functions under. It refers to the idea that citizens will help their government by filing accurate and honest annual returns. Voluntary compliance does not .....

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Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The allowance for doubtful accounts, also known as the allowance for uncollectible accounts, is a contra-asset account linked to accounts receivable that serve to reflect the true worth of those accounts. It calculates the percentage of receivables that are likely to be uncollectible. Notwithstan.....

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Bad Debt Expense

Bad Debt Expense

Businesses account for bad debt expense when they have a receivable account that will not be paid. It is recognized when a receivable is no longer recoverable due to a customer’s inability to pay an existing debt due to bankruptcy or other financial difficulties. Bad debt emerges when a cli.....

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Bad Debt Reserve

Bad Debt Reserve

A bad debt reserve, also known as an allowance for doubtful accounts (ADA), is a provision for the amount of bad debt that is expected to accrue from current accounts receivable. This includes any outstanding business payments as well as loan obligations. The bad debt reserve is the measure of re.....

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Accounts Receivable Aging

Accounts Receivable Aging

A report that includes outstanding customer bills and unused credit memos by date ranges is an accounts receivable aging (tabulated via an aged receivable report). It’s a monthly report that divides a company’s accounts receivable into categories based on how long an invoice has been .....

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Gross Working Capital

Gross Working Capital

Gross working capital is the entire amount of current assets held by a corporation at any particular time within an accounting year. Cash, accounts receivable, inventories, short-term investments, and marketable securities are all part of this capital. Gross working capital is a tough metric to u.....

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Working Capital Cycle (WCC)

Working Capital Cycle (WCC)

The length of time it takes for a company’s total net working capital (current assets minus current liabilities) to be converted into cash is referred to as the working capital cycle (WCC). It demonstrates the organization’s capacity and efficiency in managing its short-term liquidity.....

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Advantages and Disadvantages of Working Capital Turnover (WCT)

Advantages and Disadvantages of Working Capital Turnover (WCT)

Working capital turnover is a ratio that evaluates the extent of net deals to working capital, and it estimates how effectively a business transforms its functioning capital into expanded marketing projections. Also known as net sales to working capital, it analyzes the link between the funds nec.....

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Working Capital Turnover (WCT)

Working Capital Turnover (WCT)

Working capital turnover (WCT), also known as net sales to working capital, is a ratio that indicates how well a firm uses its working capital to support sales and growth. This figure depicts the relationship between the funds used to fund a company’s operations and the revenues it earns. A.....

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Accounts Payable Turnover Ratio

Accounts Payable Turnover Ratio

The accounts payables turnover ratio, also known as the creditor’s turnover ratio, is a short-term liquidity metric that quantifies how quickly a company pays off its suppliers. A larger payable turnover ratio is more advantageous, as it is an indicator of short-term liquidity. Accounts pa.....

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