Period Costs Definition, Example, vs Product Costs

Managers are always on the lookout for ways to reduce costs while trying to improve the overall effectiveness of their operations. These costs should be monitored closely so managers can find ways to reduce the amount paid when possible. During the fourth quarter of 2016, Company XYZ expected to pay $150,000 in rent and utilities […]

Lower of Cost versus Net Realizable Value Financial Accounting

If the replacement cost had been $20, the most we could write the inventory down to would be the floor of $30. By providing a more realistic view of a company’s financial health, NRV aids investors, creditors, and internal decision-makers in making more informed strategic decisions. For some companies, NRV is done annually or quarterly, […]

OPERATING CYCLE: Definition, Formula, Calculations & Examples

Continuing with our example of the manufacturing company, let’s say they have identified that their inventory conversion period is longer than desired. They can then focus on streamlining their procurement process, negotiating better terms with suppliers, and implementing lean manufacturing techniques to reduce production lead times. These efforts will help them shorten the inventory conversion […]

Using a cleanup checklist for successful QBO cleanups

First, it ensures the inventory balance on the balance sheet is accurate. Second, it allows the company to adjust its inventory levels based on changes in demand. Third, it provides useful information for negotiating better terms with suppliers. Form 1099 is a tax document used to report income not subject to withholding. A Unified Financial […]