What Are Debt Covenants? - Accounting Question & Answer (Q

Learn about debt covenants and their classification (positive and negative, capital and performance). Understand actions when debt covenants are violated, including financial reporting implications. Review an example of debt covenants involving interest coverage ratio and fixed charge coverage ratio.

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Accounting for deferred financing costs - Accounting Guide

External financing often represents a significant or important part of a company’s capital structure. Companies obtain such financing to fund working capital, acquire a business, etc. The process of obtaining a loan or issuing debt securities involves costs. In this article, we will look at accounting requirements for debt issuance costs under US GAAP and an example of accounting for such

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What are discretionary costs? - Accounting Question

Discretionary costs are expenses that are important for the business but are subject to management’s judgment (discretion).. Discretionary costs are essentially voluntary costs incurred by an entity to meet customer expectations or create goodwill.. Discretionary costs are opposite to committed costs – i.e., expenses that an entity must incur to operate.

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Accounting for delinquency fees and prepayment fees

3. Example of accounting for prepayment fees Friends University (i.e., a fictitious entity), a private higher education institution, offers university loans to its faculty, staff, and students.

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