Statement of Cash Flows (Indirect Method): Step-by-Step With Full Example
Cash flow statement indirect method example: start from net income, adjust for non-cash items and working capital, and reconcile to cash.
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Effective Interest Method: Bond Premium & Discount
Tutorly · Financial Accounting Effective Interest Method: Bond Premium & Discount Under the effective interest method, each period’s interest expense = the bond’s carrying value × the market rate at issue. The cash coupon is fixed; the difference between expense and coupon is the premium or discount amortized, which moves the carrying value toward face….
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FIFO vs Weighted Average (and Why LIFO Is Banned in Canada)
Tutorly · Financial Accounting FIFO vs Weighted Average (and Why LIFO Is Banned in Canada) LIFO is not allowed in Canada because IFRS (and Canadian ASPE) prohibit it — it rarely matches how goods actually flow and can distort the balance sheet. That leaves two methods: FIFO (oldest costs go to COGS) and weighted average…
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Allowance for Doubtful Accounts: % of Sales vs Aging
Tutorly · Financial Accounting Allowance for Doubtful Accounts: % of Sales vs Aging There are two allowance for doubtful accounts methods. The percentage-of-sales method estimates bad debt expense directly (a % of credit sales) and ignores the existing allowance balance. The aging / percentage-of-receivables method estimates the ending allowance you need, then books the difference….
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Canadian Mortgage Math: Semi-Annual Compounding
Tutorly · Finance · TVM Canadian Mortgage Math: Semi-Annual Compounding Canadian mortgage semi-annual compounding is the rule that fixed-rate mortgages are compounded semi-annually, not in advance — so a “6%” mortgage is not 6% ÷ 12 a month. You first convert the posted rate to an effective monthly rate, then compute the payment. US formulas…
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Bank Reconciliation Example: Step-by-Step Worked Solution
Tutorly · Financial Accounting Bank Reconciliation Example: Step-by-Step Worked Solution To prepare a bank reconciliation you adjust two sides to the same number. On the bank side, add deposits in transit and subtract outstanding cheques. On the book side, add items the bank recorded that you didn’t (interest, collections) and subtract charges, NSF cheques, and…
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EAR vs APR Formula: Convert APR to EAR Step-by-Step
Tutorly · Finance · TVM EAR vs APR Formula: Convert APR to EAR Step-by-Step The EAR vs APR formula is one line: EAR = (1 + APR ÷ m)m − 1, where m is the number of compounding periods per year. APR is the quoted (nominal) rate that ignores compounding; EAR is what you actually…
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Adjusting Entries Examples: Accruals vs Deferrals
Tutorly · Financial Accounting Adjusting Entries Examples: Accruals vs Deferrals There are four types of adjusting entries, split into two families. Accruals record something that happened but hasn’t been entered yet — accrued revenue and accrued expenses. Deferrals fix something recorded too early — unearned (deferred) revenue and prepaid (deferred) expenses. Every one shifts an…
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How to Calculate CCA: Half-Year Rule + Worked Example
Tutorly · Canadian Tax How to Calculate CCA: Half-Year Rule + Worked Example To calculate CCA (capital cost allowance), you find the asset’s CCA class and rate, apply that rate to the balance on a declining-balance basis, and in year one claim on only half the addition (the half-year rule). CCA is Canada’s tax version…
