What Is Promissory Estoppel? Legal Definition and Examples
Promissory estoppel prevents a party from denying a promise when another party has reasonably relied on it and suffered harm. Courts may enforce such promises even without formal consideration to ensure fairness and prevent financial injustice.
What Is the Role of a Board of Directors and How Are They Elected?
A board of directors sets a company's strategic direction, oversees management, and protects shareholder interests. Elected by shareholders, board members ensure compliance, manage risks, and guide corporate policies for long-term success.
What Is the Cost of Goods Sold and How Does It Affect Gross Profit?
Cost of Goods Sold (COGS) represents direct expenses in producing goods, impacting gross profit by determining profitability. A higher COGS reduces gross profit, affecting overall financial performance and business competitiveness.
What Is Straight-Line Depreciation and How Is It Used in Accounting?
Straight-line depreciation allocates an asset’s cost evenly over its useful life, ensuring consistent expense recognition in financial statements. Businesses favor this method for its simplicity, accuracy, and alignment of expenses with revenue across accounting periods.
What Is Net Profit and How Is It Calculated in Business Accounting?
Net profit is the remaining revenue after deducting all expenses, taxes, and costs, indicating a company’s profitability. Calculating it accurately helps businesses optimize pricing, streamline operations, and improve financial health.
What Is Net Income and How Is It Calculated in Accounting?
Net income shows a company's profitability after subtracting expenses from revenue, making it a crucial financial health metric. Businesses and investors analyze net income to assess stability, guide decisions, and evaluate overall performance.
What Is a Non-Disclosure Agreement and Why Is It Important in Business?
A non-disclosure agreement (NDA) is a legal contract that protects confidential business information from unauthorized disclosure. Businesses use NDAs to safeguard trade secrets, maintain competitive advantages, and ensure trust in professional relationships.
What Is a Lien and How Does It Affect Property Ownership?
A lien is a legal claim on property that secures debt repayment, affecting ownership and financial flexibility. Unpaid liens can complicate sales, refinancing, and creditworthiness, requiring resolution before transferring property rights.
What Is a Hold Harmless Agreement and When Is It Used?
A hold harmless agreement shields one party from liability for damages caused by inherent risks in contracts. Common in high-risk industries, these clauses protect businesses, landlords, and contractors from legal claims.
What Are Retained Earnings, and How Are They Reported in Financial Statements?
Retained earnings represent a company’s net profits after dividends, influencing financial stability and growth. Businesses report them in the shareholders’ equity section of financial statements.