What are Headline Earnings? Explained

Headline earnings are a restatement of a company’s profit that removes the effect of one-time charges, write-downs, cost-cutting, and other extraordinary items like tax liabilities. Another way of looking at headline earnings is that it is the part of a company’s earnings that pertains to its core business activities. What are Headline Earnings? Headline Earnings … Read more

What is Gross vs Net? An Explanation

Gross refers to the whole of something, while net refers to a part of a whole following some sort of deduction. For example, net income for a business is the income made after all expenses, overheads, taxes, and interest payments are deducted from the gross income. Similarly, gross weight refers to the total weight of goods and their packaging, with net weight referring only to the weight … Read more

What is the Half-Year Convention for Depreciation?

The half-year convention is used to calculate depreciation for tax purposes and states that a fixed asset is assumed to have been in service for one-half of its first year, irrespective of the actual purchase date. The remaining half-year of depreciation is deducted from earnings in the final year of depreciation. What is Half-Year Convention … Read more

Gross Income – Calculation and Explanation

Your gross income is used as the starting point for determining your taxable income, as well as your ability to pay rent and pay back loans.  It’s calculated by adding together all of your income sources.  Gross income is used to calculate net income, adjusted gross income, and modified adjusted gross income. What Is Gross … Read more

GAAP Hierarchy – What Is the Hierarchy of GAAP?

The GAAP hierarchy specifies the relative level of authority of accounting principles and guidelines under the Generally Accepted Accounting Principles that govern accounting standards in the United States. What is the GAAP Hierarchy? The GAAP hierarchy defines the level of authority of different accounting pronouncements. When researching an accounting issue, the individual should first look … Read more

What is Goodwill? Explained with Examples

Goodwill arises when a company acquires another entire business. The amount of goodwill is the cost to purchase the business minus the fair market value of the tangible assets, the intangible assets that can be identified, and the liabilities obtained in the purchase. What is Goodwill? Goodwill is the excess of the purchase price paid … Read more

What is a Fully Depreciated Asset?

A fully depreciated asset is a plant asset or fixed asset where the asset’s book value is equal to its estimated salvage value. In other words, all of the depreciation that was intended (cost minus estimated salvage value) has been recorded. Definition of Fully Depreciated Assets Fully depreciated assets can be defined as any long-term … Read more

What is a flat tax? Categories and Criticism

A flat tax, is a tax system that applies a single tax rate to all levels of income. It has been proposed as a replacement for the federal income tax in the United States, which was based on a system of progressive tax rates in which the percentage of tax taken increases as income rises. … Read more

Best Free Accounting Software 2022

Free accounting software provides businesses from sole proprietors to small- and medium-sized enterprises (SMEs) with a cost-effective solution for their accounting needs. The accounting process tells how well the operation is doing, how much money is coming in, and where the money goes. In this article, we compile a list of 6 Free Accounting Software Programs. Free … Read more

Freight Expense – Accounting explained

Freight expenses are also known as freight charges or freight rates. It is the amount paid to a carrier company for the transportation of goods from the point of origin to an agreed location. An income statement contains many aspects of financial information, including specific costs that are sometimes hard to categorize. Freight charges are … Read more