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What are Accounts Expenses? An expense in accounting is the money spent, or costs incurred, by a business in their effort to generate revenues. Essentially, accounts expenses represent the cost of doing business; they are the sum of all the activities that hopefully generate a profit. It is important to understand the difference between “cost”…

What is Operating Cash Flow? Operating Cash Flow (OCF) is the amount of cash generated by the regular operating activities of a business within a specific time period. The formula for each company will be a little different, but the basic structure always consists of the same three elements: 1) OCF begins with net income, 2)…

What is an Expense? Businesses incur various types of expenses. An expense is a type of expenditure that flows through the income statement and is deducted from revenue to arrive at net income. Due to the accrual principle in accounting, expenses are recognized when they are incurred, not necessarily when they are paid for. Types…

What is IFRS vs US GAAP? The IFRS vs US GAAP refers to two accounting standards and principles adhered to by countries in the world in relation to financial reporting. More than 110 countries follow the International Financial Reporting Standards (IFRS), which encourages uniformity in preparing financial statements. On the other hand, the Generally Accepted Accounting…

What is Direct Labor? Direct labor refers to the salaries and wages paid to workers directly involved in the manufacture of a specific product or in performing a service. The work performed must be related to the specific task. For a business that provides services to its customers, direct labor is the work performed by…

What is Profit? Profit is the value remaining after a company’s expenses have been paid. It can be found on an income statement. If the value that remains after expenses have been deducted from revenue is positive, the company is said to have a profit, and if the value is negative, then it is said…