AVOIDABLE COST Definition

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AVOIDABLE COST is the amount of expense that would not occur if a particular decision were to be implemented (e.g., if an employee is laid off at a company that is self-insured for unemployment compensation, the avoidable cost is total direct salary less payments for unemployment benefits plus savings in employee benefits).

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BUSINESS ENTITY is a selection of the legal form under which a business is to operate: sole proprietorship, general partnership, corporation, S corporation (in the U.S.), or, a limited liability company.

EQUITY-TO-ASSET RATIO expresses the proportion of total assets financed by the owner's equity capital. It is the reciprocal of the debt-to-asset ratio.

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