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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.

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.

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.

In theory, bonds are easy to account for. A long-term liability is established on the balance sheet, and periodic interest expense is applied to the calculation of net income. When the bond is repaid, the liability is cleared from the balance sheet. Not all bonds, however, are that simple to handle.

There are three main forms of financing available to a corporation. In this article, we discuss preferred stock, the middle-of-the-road option that sits between debt and common equity.

Long gone are the days where large companies only sell products in one country. The growth of the global economy has provided many opportunities for growth, but that growth has brought with it unique accounting challenges. In this article, we’ll describe several common issues associated with accounting for transactions in foreign currencies.

Most articles on this site deal with companies that operate for profit. In this article, we discuss a few differences encountered when accounting for companies that have non-for-profit purposes.

In the last article, we discussed partner capital accounts, contributions, and withdrawals, as well as the allocation of periodic income. Now we’ll look at how to account for the termination of a partnership.

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Accounting categories represent a collection of accounting guides and answers related to one accounting area.