SERVICE INVOICE Definition

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SERVICE INVOICE is an invoice associated with non-professional services, e.g. janitorial, consulting or architectural. See PROFESSIONAL INVOICE and PRODUCT INVOICE.

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DOOMSDAY RATIO is related to the quick (acid test) ratio in that it is a conservative approach to debt coverage. The doomsday ratio only considers the cash on hand when evaluating if an entity can cover their current liabilities. The approach is that if the business were to go bankrupt today, would the business have enough cash on hand to cover current debts. The ratio is considered a good indicator of the cash cushion of safety. It may spot cash shortages, thereby assisting in avoiding a credit crisis. It is calculated: Cash divided by Current Liabilities.

ENTITY ASSUMPTION is the assumption that financial statements are prepared for an entity that is separate and distinct from its owners.

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