Strap In for a Bean Counting Adventure! 📈🎢
First off, let’s set the scene: you’ve got numbers flying around, ledgers leaping, and financial statements doing the cha-cha. Welcome to the mystical world of accounting cushions! Today, we’ll explore this financial tactic that allows accountants to create a comfortable “cushion” for future unpredictabilities. So grab your calculators and let’s dive in!
What’s an Accounting Cushion? 🛋️
Imagine you had a magic beanbag chair that you could stuff with extra beans today, so that it’s a little flatter tomorrow. That’s essentially what an accounting cushion is, but with money! Specifically in the USA, this technique involves making larger provisions for expenses in one year. That way, you can minimize them in future years. It’s like having a financial back-up plan, but more squishy and comfortable!
What’s the upside? Your current year’s earnings might take a dip (known in the trade as being
