Debt-to-income (DTI) ratio is a measure of your monthly debt obligations in relation to your monthly income. It’s calculated by taking the total dollar amount of your monthly debt payments, and then dividing it by your gross monthly income. Lenders often evaluate your DTI ratio to determine your eligibility for a loan and how much…
What is
A Simple Explanation of Section 1245 Property With Examples
Section 1245 property is the depreciable personal property—like machinery, equipment, and furniture—that you have used in your business for over one year. It’s a subclass of section 1231 property, but unlike other 1231 property, gain on the sale of 1245 property must be recaptured as ordinary income to the extent that depreciation was claimed on…
State & Federal Labor Laws Employers Need to Know in 2024
Federal labor laws and related state labor laws affect all businesses with employees—even more so for companies with at least 50 workers. They govern workforce practices and areas such as overtime, minimum wage, on-call pay, employee breaks, sick leave, hiring minors, and employment discrimination. Labor laws provide workers with protections and contain enforcement and reporting…
Pre-employment Assessment: Types & How to Conduct One
A pre-employment assessment is a tool that companies use to determine a candidate’s ability to perform the core duties of the role they’re hiring for. Many organizations have shifted to this hiring approach, moving away from or in addition to degree requirements. Besides looking into both hard and soft skills, these assessment tests allow you…
What Is Business Ethics?
Ethics is a philosophical term that refers to the study of goodness and right action. Business ethics is the practice of applying ethics to business operations. Business ethics typically involve businesses holding themselves accountable to make business and operational decisions that support fair, transparent, and honest business practices. But business ethics is not one-size-fits-all; read…
What Is a Lapping Scheme? How It Works & Prevention
A lapping scheme is a type of employee fraud wherein the fraudster pockets the payment of one customer and applies the payment of the next customer to the first customer’s invoice.
A lapping scheme is usually caused by poor segregation of duties, nonexistent or inefficient internal controls, and inadequate supervision. Understanding how it is perpetrated in the business can help you detect it before your losses eat up your profits. We’ll teach you what preventive measures you can take against this fraudulent act, such as rotating…
How Does Depreciation Affect Cash Flow?
Depreciation doesn’t impact cash flow because it is a noncash expense. However, depreciation has an effect on the cash flow statement when the indirect method is used in computing cash flows from operating activities. Understanding the impact of depreciation on cash flow in the operating activities section can help you plan out future cash flows…
What Is Vendor Fraud? Types & Prevention Tips
Vendor fraud is committed by vendors who scam a business by asking it to pay more than originally owed, delivering counterfeit goods, or charging for items or services that weren’t delivered or performed.
The main challenge is finding a way to uncover vendor fraud since fraudulent acts are performed with the intent to conceal them. Businesses with weak or missing internal controls are at a high risk of this type of fraud. In this article, we’ll talk about the different kinds of vendor fraud and give you some…