Interest payable is a liability that represents the amount of interest a company owes on its borrowings as of a specific date. It’s the interest that has accrued or accumulated over time but hasn’t been paid yet. This accrual method is a key accounting principle ensuring financial statements accurately reflect a company’s financial obligations at…
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What Is Mark to Market in Accounting? [+ Example]
Mark-to-market (MTM) accounting, also known as fair value accounting, is the process of valuing assets and liabilities at their current fair value. Under US GAAP, MTM is applied primarily to financial instruments such as stocks, bonds, and derivatives, which are significantly influenced by fluctuations in market conditions. Moreover, it is not applicable in long-term fixed…
What Is Remote Deposit Capture & How Does It Work?
Remote deposit capture (RDC) is a treasury management tool and fully electronic method of banking that converts paper checks into digital images using a check scanner. Once the images are scanned, they are compiled into a batch and deposited to your business checking account. This service is offered by both traditional and online-only banks, saving…
What Is Stripe and How Does it Work? Small Businesses Guide
Stripe is a developer-centric payment processor that allows merchants to receive payments via debit or credit cards, mobile wallets, automated clearing house (ACH), and buy now, pay later services. It offers everything from payment buttons and hosted checkout pages to ecommerce store integrations. Stripe is well known for its open-source solutions and powerful API documentation….
What Is a Delinquent Loan & When Does It Go into Default?
A loan is considered to be delinquent when the borrower has missed one or more payments and is behind on their repayment schedule. Generally, a delinquent loan means that the borrower has broken the terms of their loan agreement and will likely be charged a late fee and have the delinquency reported. In this stage,…
Active Participation in Rental Property & the $25,000 Allowance
Active participation in rental property requires an individual to own at least 10% of the rental property and participate in management decisions regarding the property. By actively participating, the rental property owner receives a $25,000 rental loss allowance that permits the deduction of up to $25,000 in rental losses against nonpassive sources of income like…
What Is a Trial Balance? Example, Purposes & How to Prepare
A trial balance is an internal accounting tool used to verify the accuracy of the bookkeeping system. It’s not a financial statement; it’s a list of all general ledger accounts with their respective debit or credit balances at a specific point in time. The fundamental principle behind a trial balance is that the total debits…
What Is a Floating Holiday? [+ Free Policy Template]
A floating holiday is a paid day (or days) off for employees outside the traditional allotment of paid holidays. Unlike those traditional holidays, which are set by the company, floating holidays are more flexible and can be used to accommodate individual needs and preferences. Companies often offer it as a way for employees to take…