Deferral
Investorline Deferred, in accrual accounting, is any account where the asset or liability is not realized until a future date (accounting period), e.g. annuities, charges,taxes, income, etc. The deferred item may…
Debits and credits
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system, in which every debit transaction must…
Cost of goods sold
Cost of goods sold (COGS) refers to the inventory costs of those goods a business has sold during a particular period. Costs are associated with particular goods using one of…
Contingent liability
Contingent liabilities are liabilities that may or may not be incurred by an entity depending on the outcome of a future event such as a court case. These liabilities are…
Overcapitalisation
Overcapitalisation refers to an economic phenomenon whereby the valuation/ price of an asset is superior to its ‘real’ value – however difficult to define – therefore putting a strain on…
Undercapitalization
Under-capitalization refers to any situation where a business cannot acquire the funds they need. An under-capitalized business may be one that cannot afford current operational expenses due to a lack…
Finance lease
A finance lease or capital lease is a type of lease. It is a commercial arrangement where: the lessee (customer or borrower) will select an asset (equipment, vehicle, software); the…
Capitalization rate
Capitalization rate (or "cap rate") is the ratio between the net operating income produced by an asset and its capital cost (the original price paid to buy the asset) or…
Market capitalization
Market capitalization (often market cap) is a measurement of the size of a business enterprise (corporation) equal to the share price times the number of shares outstanding (shares that have…
Capital expenditure
Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the…