Equity method definition

What is meant by the equity method? Equity method is a method of accounting for long-term investments by which the investment is first recorded at its acquisition cost. However, the investment account is adjusted to reflect the proportionate increase or decrease in the investee’s net income or loss for the period, and the declaration of …

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Extraordinary Items Definition

What is meant by extraordinary items? Extraordinary items are the gains and losses that result from transactions that are both unusual in nature and infrequent in occurrence, depending on the environment in which the firm operates.

Early Extinguishment of Debt

What is meant by the Early Extinguishment of Debt? – Definition The retirement of debt before maturity is called the early extinguishment of debt. Early extinguishment of debt occurs whenever a firm’s long-term debt is retired before maturity. Management can accomplish this extinguishment by repurchasing the bonds in the market. Other bonds are callable and …

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Expense – Definition

Definition The cost required to run a business is called expense. These include the routine expenses like salaries, commission, utility bills, etc. OR An expenditure, whose benefit is finished or enjoyed immediately or within the period of one accounting year, is called expense. OR The dollar amount of the resources used up by the firm …

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Definition When a business spends some amount to acquire an asset, that benefited that business for a long period of time, it is called expenditure. Example Amount spent to purchase Building, Furniture, Plant etc.


Definition The right on the business is called equity or a claim which can be enforced against the assets of the firm is called equity. Types of Equity It is of two types: Internal or owner’s equity: Claim of owner External or outsiders equity: Claim of outsiders.

Executive compensation plan

Executive compensation plan can be defined as one component of the reward system of a management control system. Includes the diverse set of short-run and long-run plans that detail the conditions under which, and the forms in which, compensation is to be made to executives of the organization.

Equivalent units

Equivalent units can be defined as a measure of the output in terms of the quantities of each of the factors of production that have been applied.