What is an Adjusting Journal Entry? An adjusting journal entry is usually made at the end of an accounting period to recognize an income or expense in the period that it is incurred. It is a result of accrual accounting and follows the matching and revenue recognition principles. Generally, adjusting journal entries are made for…
What is Macaulay Duration? Macaulay duration is the weighted average of the time to receive the cash flows from a bond. It is measured in units of years. Macaulay duration tells the weighted average time that a bond needs to be held so that the total present value of the cash flows received is equal…
What is Cross-Sectional Data Analysis? Cross-sectional data analysis is when you analyze a data set at a fixed point in time. Surveys and government records are some common sources of cross-sectional data. The datasets record observations of multiple variables at a particular point in time. Understanding Cross-Sectional Data Analysis in Finance Financial analysts may, for example,…
What is an Amortization Schedule? An amortization schedule is a table that provides both loan and payment details for a reducing term loan. Details typically include the original loan amount, the loan balance at each payment, the interest rate, the amortization period, the total payment amount, and the proportion of each payment that is made…
What is the Fair Credit Billing Act? The Fair Credit Billing Act (FCBA) is a federal law that mandates the protection of consumers from exploitation by creditors through billing errors. Enacted in 1974, the FCBA was introduced as an amendment to the Truth in Lending Act (1968). The Fair Credit Billing Act provides a mechanism…
What is the Arithmetic Mean? The arithmetic mean is the average of a sum of numbers, which reflects the central tendency of the position of the numbers. It is often used as a parameter in statistical distributions or as a result to summarize the observations of an experiment or a survey. There are several types…
What is Promissory Estoppel? Promissory estoppel is a doctrine in contract law that stops a person from going back on a promise even if a legal contract does not exist. It states that an aggrieved party can recover damages from a promisor if the damages incurred were the result of a promise made by the…
What is a White Paper? A white paper is an authoritative guide that discusses issues on a certain subject, along with a proposed solution for handling them. The term, “white paper”, came about after the government color-coded reports to indicate who could access them, with the color white referring to public access. White…
What is External Growth? External growth (also known as inorganic growth) refers to growth of a company that results from using external resources and capabilities rather than from internal business activities. External growth is an alternative to internal (organic) growth. However, internal and external growth should not be considered opposites. The main advantage…
What is Net Export? Net export is the difference between a country’s value of imports and its value of exports. It can be either positive or negative. Positive vs. Negative Net Export A positive net export figure shows a country’s trade surplus. It means that the value of the nation’s imports is lower than the…
