The matching principle tells us to expense costs in the same period that those costs provide some benefit to the company. Interpretation of the matching principle gets a bit fuzzy when dealing with research and development.

Estimates and uncertainty are both normal for companies, but sometimes an event occurs that might be considered unpredictable even by corporate standards. Should these improbable events be mixed in with the results of regular operations or should they be reported separately? U.S. GAAP and international accounting standards (IFRS) disagree on the answer to that question.

Corporations are capable of purchasing its own shares of stock on the open market, but these types of transactions are not accounted for like normal investments. In this article, we’ll go over basic accounting procedures to use when the company buys, sells, or retires treasury stock.

Some business plans just don’t seem to pan out. Perhaps a product line underperforms or a subsidiary posts major losses due to a shift in consumer demand. Special rules apply whenever a company decides to sell off or otherwise dispose of a business segment.

Accounting can be a rewarding, challenging career for those with a strong analytical background. In this article, we’ll go over the basic career choices available to new accountants.

Earnings per share (EPS) is a closely-watched business metric that tells analysts and investors how much a corporation is making on a per-share basis. In this article, we’ll describe basic EPS in detail, and then briefly describe the diluted EPS calculation.

As one of the most difficult standardized examinations in existence, the Certified Public Accountant exam poses a great challenge while offering abundant reward to those who can pass it.

In part 1 of this series, we learned how to calculate the cost of different forms of financing -- debt, preferred equity, and common equity. In this article, we’ll cover some ways that information can be used to make sound business decisions.

In this two-part article series, we will discuss how to calculate a firm’s cost of capital. This is an important measurement with several business applications. We’ll go over the basic concepts below - the second part will focus on the practical applications.

Many sales transactions are paid for immediately by the customer, and are relatively straightforward to account for. On the other hand, a sales contract might call for annual payments. The question then becomes, when should revenue be recognized? There are three general ways to account for the sale revenue, and the method used depends on the reliability of future cash payments.