What is a LIFO Reserve? A LIFO reserve acts as a contra account, meaning it’s a ledger account used for inventory purposes that shows the differences between the two primary ways inventory is valued: LIFO (last in, first out) and FIFO (first in, first out). A contra account shows the opposite balance of other ledger…
What is the Periodic Inventory System? The periodic inventory system refers to conducting a physical inventory count of goods/products on a scheduled basis. Maintaining physical inventories can be costly because the process eats up time and manpower. Thus, many companies only conduct physical inventory counts periodically. A periodic inventory system is a commonly used alternative…
How to Record Payments in Accounting? Recording payments in accounting can otherwise be referred to as “accounts payable,” which means the total amount a given company owes to companies or suppliers for products or services. Furthermore, the accounts payable balance is reflected in the balance sheet, specifically in the current liabilities section, and includes all…
What are the Questions to Ask a Hiring Manager? A good idea when preparing for an interview is to come up with a list of questions to ask the hiring manager. When applying for a new position, each prospective employee will sit down for an interview. It is typically done by a hiring manager, although…
What is Smart Beta? Smart beta refers to investment in portfolios, being a combination of both passive and active investing. The smart beta approach is an arguably perfect intersection between traditional value investing and the efficient market hypothesis. A smart beta portfolio is efficient because it tracks with an underlying index and is optimized using…
What is a Credit Research Analyst? A credit research analyst is responsible for researching an individual’s (or company’s) credit history and financial information to help determine how creditworthy they are. The analyst must look deeply into the personal and financial background of every credit applicant to help the lender determine if the applicant is worth…
What is a Bank Teller? Most understand what a bank teller is and the job that the person does. A bank teller handles the day-to-day financial transactions for customers. They may include money transfers, money orders, deposits and withdrawals, and checking transactions. A bank teller must demonstrate a well-rounded understanding of the bank he or…
What is a Balance Sheet? A balance sheet provides a snapshot of what a company owns (assets), what it owes (liabilities), and the value left for the owners (shareholders’ equity). Also called a statement of financial position, the balance sheet is structured around the accounting equation: Assets = Liabilities + Equity Assets: What the business…
What are Retained Earnings? Retained Earnings (RE) are the accumulated portion of a business’s profits that are not distributed as dividends to shareholders but instead are reserved for reinvestment back into the business. Normally, these funds are used for working capital and fixed asset purchases (capital expenditures) or allotted for paying off debt obligations. Retained…
What is the Income Statement? The Income Statement is one of a company’s core financial statements that shows their profit and loss over a period of time. It summarizes all revenues and expenses from both operating and non-operating activities to show the company’s profit or loss for the period. In both corporate finance (including financial…
