Running a business
Maрго Овсієнко, 2014-05-29
Estimate is a financial statement approximation of the amount to be either credited or debited for items that cannot be clearly measured.
The purpose of accounting estimates is financial statement accuracy improvement. Analysts' decisions are based on those financial statements and accountants' duty is to generate these statement as precise as possible even if the monetary value is unknown.
In order for estimates to be effective, the basis, on which the accountant estimates numbers, needs to be reliable:
- Historical information's reliability is based on the fact that those numbers are not likely to change.
- Documentations are a good source of information when the accountant estimates numbers using a vendor contract.
- Own calculation have to be well documented for future reference.
Examples of estimates include:
- Warranty claims
- Bad debts
- Depreciation calculations
InvoiceOcean - news Running a business
Freight Industry in the US needs Better Invoicing Standards
Invoicing is a process that takes some effort and standardization in order for companies to function effectively for the long term. It is good to stick with one standard in terms of what is expected on an invoice, the payment to be delivered by the due date, and for companies to be able to follow their invoices (knowing which were paid and when for instance) for the long term with their clients.
Mike Lata (aka Maciej Duraj)
Start your 30-day free trial