Pooling or interest method definition

What is the pooling or interest method? Pooling or interest method is a method of accounting for a business combination in which the combining companies are treated as if their net assets were pooled instead of one company having purchased outright the other. Assets and liabilities are combined at their net book value.

Present value of a single amount

What is the present value of a single amount? – Definition The value of a future promise to pay or receive a single amount at a specified interest rate is called the present value of a single amount. Explanation In many business and personal situations, we are interested in determining the value today of receiving …

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Percentage of Net sales method

What is the percentage of the net sales Method? – Definition Percentage of Net Sales is a method of estimating uncollectible accounts expense under which the amount of uncollectible accounts expense is determined by the analysis of the relationship between net credit sales and the prior year’s uncollectible accounts expense. Explanation The percentage-of-net-sales method determines …

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Publicly Owned term Meanings

What is meant by the term Publicly Owned? Publicly owned is a term indicating that a corporation’s stock is traded on an organized exchange (such as the New York or American Stock Exchange), easily enabling individuals to buy or sell shares of stock in these corporations.

Purchases Allownace

Definition If the purchaser informs the supplier that some goods are defective or damaged or not according to specification, the supplier may agree to reduce the price of such goods. This reduction in price is known as purchases allowance.

Purchases Return or Return Outwards

Definition If goods purchased are found defective, unsatisfactory or excess in quantity, they are returned to the supplier, these are called purchases returns or returns outwards. Example: Goods of $500 returned to Marry. Generally, goods are returned due to the following reasons: When goods are defective When goods are not according to specification. When goods …

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Purchases

Definition In Accounting, purchases do not mean buying anything but it has special meaning. When saleable goods or merchandise are bought in a business these are called purchases. Example Stationery is purchased by a stationer is called “Purchases” Cloth purchased by a cloth merchant is called “Purchases” Cement purchased by a cement dealer is called …

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Proprietor

Definition We can define Proprietor as: “He is the owner of the business. He invests his capital, gives his time and attention to the business. He enjoys profit and bear loss of the business.”