What is the book value? The book value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset minus any costs or depreciation. A company’s book value is its total assets minus intangible assets and liabilities. In practice, the… Read More

What is the matching principle? The matching principle simply means matching revenues with expenses. The matching principle is the most obvious difference between cash and accrual based accounting. In cash based accounting, revenues and expenses are recognized when cash is received or paid out. Accrual based accounting determines that revenues and expenses should be recognized… Read More

Under the Average Cost Method, it is assumed that the cost of inventory is based on the average cost of goods that are available for sale during the period. The average cost is calculated by dividing the total cost of goods available for sale by the total units available for sale. This gives you a… Read More