An accounting period, in bookkeeping, is the period with reference to which management accounts and financial statements are prepared.
In management accounting the accounting period varies widely and is determined by management. Monthly accounting periods are common.
In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, and taxes, and other expenses for an accounting period.
It is computed as the residual of all revenues and gains less all expenses and losses for the period, and has also been defined as the net increase in shareholders' equity that results from a company's operations. It is different from gross income, which only deducts the cost of goods sold from revenue.
Asset management is a systematic approach to the governance and realization of all value for which a group or entity is responsible. It may apply both to tangible assets (physical objects such as complex process or manufacturing plants, infrastructure, buildings or equipment) and to intangible assets (such as intellectual property, goodwill or financial assets). Asset management is a systematic process of developing, operating, maintaining, upgrading, and disposing of assets in the most cost-effective manner (including all costs, risks, and performance attributes).
Theory of asset management primarily deals with the periodic matter of improving, maintaining or in other circumstances assuring the economic and capital value of an asset over time. The term is commonly used in engineering, the business world, and public infrastructure sectors to ensure a coordinated approach to the optimization of costs, risks, service/performance, and sustainability. The term has traditionally been used in the financial sector to describe people and companies who manage investments on behalf of others. Those include, for example, investment managers who manage the assets of a pension fund.
A budget is a calculation plan, usually but not always financial, for a defined period, often one year or a month. A budget may include anticipated sales volumes and revenues, resource quantities including time, costs and expenses, environmental impacts such as greenhouse gas emissions, other impacts, assets, liabilities and cash flows. Companies, governments, families, and other organizations use budgets to express strategic plans of activities in measurable terms.
Preparing a budget allows companies, authorities, private entities or families to establish priorities and evaluate the achievement of their objectives. To achieve these goals it may be necessary to incur a deficit (expenses exceed income) or, on the contrary, it may be possible to save, in which case the budget will present a surplus (income exceed expenses).
In accounting, a deferral is any account where the income or expense is not recognised until a future date.
In accounting, deferral refers to the recognition of revenue or expenses at a later time than when the cash transaction occurs. This concept is used to align the reporting of financial transactions with the periods in which they are earned or incurred, according to the matching principle and revenue recognition principle. Deferrals are recorded as either assets or liabilities on the balance sheet until they are recognized in the appropriate accounting period.
In accrual basis accounting, the matching principle (or expense recognition principle) dictates that an expense should be reported in the same period as the corresponding revenue is earned. The revenue recognition principle states that revenues should be recorded in the period in which they are earned, regardless of when the cash is transferred. By recognising costs in the period they are incurred, a business can determine how much was spent to generate revenue, thereby reducing discrepancies between when costs are incurred and when revenue is realised. In contrast, cash basis accounting requires recognising an expense when the cash is paid, irrespective of when the expense was incurred.
If no cause-and-effect relationship exists (e.g., a sale is impossible), costs are recognised as expenses in the accounting period in which they expired, i.e., when the product or service has been used up or consumed (e.g., spoiled, dated, or substandard goods, or services no longer needed). Prepaid expenses are not recognised as expenses but as assets until one of the qualifying conditions is met, which then results in their recognition as expenses. If no connection with revenues can be established, costs are recognised immediately as expenses (e.g., general administrative and research and development costs).