A parody of FIFO used to describe a very slow-moving item in inventory.
A parody of FIFO used to describe a very slow-moving item in inventory.
See first-in, still here (FISH).
What is the FISH inventory method? Author: Harold Averkamp, CPA, MBA FISH is the acronym for first-in, still-here. FISH is an attempt to bring humor to the fact that some items have been sitting in inventory for years....
A cost flow assumption where the first (oldest) costs are assumed to flow out first. This means the latest (recent) costs remain on hand. To learn more, see Explanation of Inventory and Cost of Goods Sold.
A cost flow assumption where the last (recent) costs are assumed to flow out of the asset account first. This means the first (oldest) costs remain on hand. To learn more, see Explanation of Inventory and Cost of Goods...
This is the expression for replacement cost, which is not an acceptable cost flow, since it violates the cost principle. However, an economist and decision makers would argue that the cost to replace the item is the...
Is the direct method still used in the statement of cash flows? Author: Harold Averkamp, CPA, MBA The direct method is one of two methods allowed for preparing the statement of cash flows (or cash flow statement). The...
How does one prepare a company's first bank statement reconciliation? Author: Harold Averkamp, CPA, MBA To prepare a bank reconciliation for a company that never prepared one previously, I would first make a list of...
Our Explanation of Accounts Receivable and Bad Debts Expense helps you understand the accounting for the losses associated with selling goods and providing services on credit. You will understand the impact on the...
Our Explanation of Bookkeeping provides you with a rich understanding of the recording of transactions. It then discusses the additional steps necessary for preparing accurate financial statements. This is great for...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
The interest rate of debt (bonds, loans) after deducting the income tax savings. For example, if a corporation has issued bonds with an interest rate of 8% and the corporation’s income tax rate is 25%, the...
An owner’s equity account that reports the amount the sole proprietor invested in the company plus earnings of the company not withdrawn by the owner.
An asset having accumulated depreciation equal to its depreciable cost (cost minus estimated salvage value). The use of an asset after it is fully depreciated will mean no depreciation expense for those accounting...
What is a depreciable asset? Author: Harold Averkamp, CPA, MBA Definition of Depreciable Asset A depreciable asset has the following characteristics: A tangible asset (other than land) Has a useful life of more than a...
The additional revenues from an additional quantity. It is similar to marginal revenue, except that marginal revenue refers to the revenue from the next unit. Incremental revenue might be the additional revenues from the...
The amount before deductions. For example, gross pay is the amount before withholding deductions. Gross sales is the amount before sales returns and allowances and sales discounts.
See internal rate of return.
What is meant by reconciling an account? Author: Harold Averkamp, CPA, MBA Definition of Reconciling an Account Reconciling an account is likely to mean proving or documenting that an account balance is correct....
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
Our Explanation of Stockholders' Equity covers the unique terminology for a corporation's paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income. Included are cash dividends, stock...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
In what order are liabilities listed in the chart of accounts? Author: Harold Averkamp, CPA, MBA Order for Listing Liabilities It is logical for a company’s liabilities to be organized in the chart of accounts in the...
What is the gross profit method? Author: Harold Averkamp, CPA, MBA The gross profit method is a technique used to estimate the amount of ending inventory. The technique could be used for monthly financial statements when...
What is accounting for price level changes? Author: Harold Averkamp, CPA, MBA In 1979 the Financial Accounting Standards Board (FASB) issued its Statement of Financial Accounting Standards No. 33 entitled Financial...
Our Explanation of Present Value of an Ordinary Annuity uses the appropriate present value factors for discounting a stream of equal cash amounts occurring at equal time intervals. An important feature is the use of loan...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
Inventory and Cost of Goods Sold Author: Harold Averkamp, CPA, MBA 142 Q&A Popular Recent What is the cost of goods sold? What is the significance of FOB Shipping Point and FOB Destination? What is the difference between...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
A statistical tool used to determine the coefficients of the two or more independent variables involved in estimating the amount of the dependent variable. It utilizes the least-squares method for determining the...
See chief financial officer.
Used in the periodic inventory method to compute the value of inventory and the cost of goods sold. This average cost is based on the total cost of goods available for sale for the entire year (after all purchases for...
See accrued payroll.
What is the difference between assets and fixed assets? Author: Harold Averkamp, CPA, MBA Assets are resources owned by a company as the result of transactions. Examples of assets are cash, accounts receivable,...
Under this method of recognizing losses on credit sales, a contra asset account Allowance for Doubtful Accounts is reported on the balance sheet. Prior to specifically identifying an account receivable as uncollectible,...
The part of a balance sheet with the heading stockholders’ equity or owner’s equity. The total amount of this section is the amount of reported assets minus the amount of reported liabilities.
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