What is Aggregation? Aggregation refers to an act of grouping items or things as a whole. This term can be used in various contexts, disciplines, and industries.  Data Analysis - In data analysis, aggregation refers to the compilation of information which is used to create datasets for analysis purposes.  Futures Markets - In futures markets, aggreg...

What are Accounting Assumptions?  Just like the accounting principles, accounting also has assumptions that have to be made in order to create financial statements or to read into financial statements. What is the Going Concern Assumption? When we create financial statements or when we read into financial statements, we must assume that our company ...

What is the Flesch Reading Ease Formula? The Flesch Formula, also known as the Flesch Reading Ease Formula, is a formula used to gauge the difficulty or ease of reading and understanding a text. Two primary metrics in the formula are the number of sentences and syllables per 100 words in a passage. Based on historical results, it estimates the perce...

What is an Adjunct Account? An adjunct account refers to an account that leads to increase in the book value of a liability account. It is typically used to adjust the value of the liability account with a credit to match the total value of debits to asset accounts in a transaction.  Because it increases the liability account, it cannot be a contra ...

What is an Accounting Constraint? Accounting constraints are those that constrain us from reporting certain things on the financial statements. There are two main constraints that would allow us to not report information that we would otherwise report on the statements.  Materiality Constraint, and Benefit Constraint What is the Materiality Constrai...

What is an Accounting Valuation? Accounting valuation is the valuation of a company's assets and liabilities for the purpose of financial reporting. Assets owned by a company and the liabilities accrued over a certain period of time must be correctly valued and included in the company's balance sheet when compiling a financial report. There are many...

What is a Bad Debt? A bad debt refers to an account receivable that has been specifically identified as uncollectible and, therefore, it is written off.  Bad debt occurs when a borrower or debtor defaults - fails to repay his or her loan or debt.  Such accounts are removed from the accounts receivable. You then match it against the original invoice....

What is Subjective Probability? Subjective probability refers to a form of probability that is based on the opinion of perspectives of individuals about an occurrence. Subjective probability is formed from the experience of an individual and personal belief as to whether an outcome is likely to occur or otherwise. Subjective probability is not deriv...

What is Accrued Revenue? Accrued revenues are where I have earned cash that I have not received yet. These are revenues earned in a period that are both unrecorded and not yet received in cash or whatever other assets they may be received in. Example of How to Record Accrued Revenue?  So, I've earned accrued revenue,  I just haven't got it yet. I've...

Overview of Security Interests Security interests are a cornerstone of finance and lending. Secured lending relates directly to the amount of risk a lender faces when extending credit to a borrower. A secured transaction is one in which a lender or seller acquires an interest in the property sold or purchased with the funds provided to the borrower ...