Accounts Payable – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What are Accounts Payable?Accounts payable refers to the money owed for a good or service that a company has purchased on credit. It is a liability to the company. It represents a payment obligation and must count against any income.  Accounts payable are classified...

Accounting Conservatism – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is Accounting Conservatism?Accounting conservatism exhibits the potential worst scenarios in financial statements. This accounting method seeks to answer the volatility by selecting the situation with the most conservative income. Accountants practice this method...

Accounting Rate of Return – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is an Accounting Rate of Return (ARR)?The accounting rate of return represents the average net income which an asset is expected to generate divided by the average capital loss, expressed as an annual percentage or APR. This formula is used to make budgeting...

Activity-Based Budgeting – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is Activity-Based Budgeting (ABB)?Activity Based Budgeting, or ABB, is a system used to research, record and then analyze the activities leading to costs in a business. This method works by distributing costs according to the activities the company carries out...

Adjustable-Rate Mortgage – Explained

by TheBusinessProfessor | Feb 23, 2025 | Banking, Lending, and Credit Industry

What is an Adjustable-Rate Mortgage?This is a form of mortgage where the interest rate on the outstanding balance is not constant but varies throughout the life of the loan. The initial rate is first fixed for a period of time, and then it resets periodically after a...

Accumulation Period – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is an Accumulation Period (Investment)?Accumulation period refers to the period in which annuitants make contributions to their annuity accounts as an investment method in retirement savings. This is as per the context of insurance.How Does an Accumulation Period...

Quick Ratio (Acid-Test Ratio) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is the Acid Test?The Acid Test Ratio, also known as the Quick Ratio, is a liquidity ratio that measures whether a firm possesses enough short term assets to cover its current liabilities. It estimates how a firm can efficiently settle its short-term financial...

Accommodative Monetary Policy – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is Accommodative Monetary Policy?Accommodative monetary policy, also known as easy monetary policy or loose monetary policy, allows the fiscal reserve to increase in relation to national income and the positive function of money demand. This policy generally...

Accrued Interest Bond – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is an Accrued Interest Bond?The accrued interest of a bond is the amount of interest earned on the bond but awaiting payment. This interest is accumulated from when a bond coupon is issued. In bond trading, the buyer pays the seller the market price of the bond...

Accelerated Amortization – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Taxation

What is Accelerated Amortization?The recalculation of an amortization schedule after a borrower pays in advance is entitled accelerated amortization. Accelerated amortization often happens with mortgage payments. This amortizing method allows borrowers to pay off the...