2/10 N 30

What is 2/10 N 30? Definition: 2/10 N 30 or 2/10 net 30 is a term that is used in business to business credit sales. It signifies the discount of 2% that a buyer is entitled to if payment is made within 10 days of the invoice being raised. In the event that the amount...

Ability to Pay Principle

What is the Ability to Pay Principle? Definition: The ability to pay principle is a method of taxation that seeks to tax those with greater incomes at higher rates. This form of progressive taxation is viewed as being fair and equitable as it imposes additional taxes on those who can afford...

Accounting Worksheet

What is an Accounting Worksheet? Definition: An accounting worksheet is a tool used to ensure that the financial statements prepared by a business at the end of an accounting period are accurate and do not contain any errors. It is an intermediate step in the preparation of a firm’s financial statements....

Accumulated Amortization

What is Accumulated Amortization? Definition: Accumulated amortization refers to the total of the expense that has been charged over the years to reduce the value of an intangible asset like a patent or a copyright. What Does Accumulated Amortization Mean? When an organization acquires an intangible asset that depletes in value...

Additional Paid In Capital (APIC)

What is Additional Paid In Capital (APIC)? Definition: Additional paid in capital (APIC) is received from investors when a company issues share capital. The amount that is collected for each share is equal to the sum of the share’s par value and an additional amount. This extra amount is called APIC....

Allocative Efficiency

What is Allocative Efficiency? Definition: Allocative efficiency is a term used in economics that refers to a situation where the available resources are used in a manner that produces the greatest level of benefit. What does Allocative Efficiency mean? To understand the term “allocative efficiency,” it is important to first get...

Audit Risk

What is Audit Risk? Definition: Whenever an auditor provides a report about a company’s financial statements, there is a risk that the auditor’s opinion is erroneous. This is referred to as audit risk. An incorrect or faulty opinion could mislead investors and regulatory authorities. The auditor must eliminate, or at least,...

Average Fixed Cost

What are Preferred Dividends? Definition: Average fixed costs can be calculated by dividing total fixed costs by the number of units produced. As production volumes rise, average fixed costs fall. What does Average Fixed Cost mean? The total cost of production can be calculated by adding fixed costs and variable costs....

Average Variable Cost

What is Average Variable Cost? Definition: Average variable cost refers to the total variable cost divided by the number of units that are produced. Variable costs rise with the level of output. The average variable cost of a production batch tells you the per unit variable cost. What does Average Variable...