Relevant or meaningful data.
Relevant or meaningful data.
What is the difference between information and data? Author: Harold Averkamp, CPA, MBA I was taught that information is useful data. The point is there are lots of data (plural of datum) everywhere, and most of the data...
Where can I get official information for federal payroll taxes? Author: Harold Averkamp, CPA, MBA For official information on federal payroll taxes we recommend the Internal Revenue Service Publication 15 which is known...
Why does a cost system developed for inventory valuation distort product cost information? Author: Harold Averkamp, CPA, MBA The cost system for inventory valuation may have been developed to provide a reasonable total...
the customer and would then inform the customer. If the check was sent in error, I would photocopy the check, document on the photocopy what had occurred, and then return it to the customer. If you did not notice...
What is the purpose of subsidiary ledgers? Author: Harold Averkamp, CPA, MBA Definition of Subsidiary Ledger A subsidiary ledger contains the details to support a general ledger control account. For instance, the...
some helpful partial information, but they will not report the value of the business. Two reasons why the value of a business is not included in the financial statements are: The financial statements are generally based...
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
Comprehensive income consists of the following two components (which are reported on the statement of comprehensive income): Net income (or loss) from the income statement, and Other comprehensive income (some...
See American Institute of Certified Public Accountants.
The average amount of inventory during a period of time. Since the amount reported in the Inventory account is the ending balance on one specific day, it is necessary to compute an average balance when relating this...
of a successful company contacts an accounting firm for tax advice. Two tax experts have lunch with the owner and inform her how to process transactions so that she will enjoy tax savings of $40,000. The owner was...
Usually involves a company’s customers remitting amounts to a bank account close to the customers in order for the company to have collected funds sooner. For example, a company with its headquarters in the...
Generally, securities that can be sold quickly in the stock or bond market and where the investor’s intention is to sell them within one year of the balance sheet date.
dedicated to carrying out those tasks. Examples of Financial Accounting One part of accounting focuses on presenting the financial information in the form of general-purpose financial statements (balance sheet, income...
. As a college professor at two (2) colleges and a full-time accounting professional at Toyota, I refer my students to the AccountingCoach website for source data, concept explanations and resources. AccountingCoach is...
and products to be accounted for. The weekly payroll would have to be divided between months.) The cost of cattle was the largest cost, but that cost was available for each day, since cattle had to be paid for within 24...
What is financial reporting? Author: Harold Averkamp, CPA, MBA Definition of Financial Reporting Financial reporting includes all of a company’s communication of financial information to people outside of the company....
Recording an entry in an account in the general ledger or in a subsidiary ledger.
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...
The third section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
Under the accrual method of accounting, this account reports the employer’s expense for the company’s pension plan during the period indicated in the heading on the income statement. Information on pensions...
An income statement account showing the amount of vacation expense earned by employees (by working) during the specified accounting period.
See return on investment (ROI).
The average time for a company’s accounts receivable to be collected. See days sales in accounts receivable.
A method for recognizing bad debts expense arising from credit sales. Under this method there is no allowance account. Rather, an account receivable is written-off directly to expense only after the account is determined...
Usually financial statements refer to the balance sheet, income statement, statement of cash flows, statement of retained earnings, and statement of stockholders’ equity. The balance sheet reports information as of...
online. AccountingCoach PRO has truly helped me get through the past two years of accounting classes (prerequisites and now graduate school). The information is written in an easy-to-understand way; I am so grateful! I...
In the 1970’s the Financial Accounting Standards Board (FASB) articulated three objectives of financial reporting. In summary, financial information should (1) be useful to investors and lenders, (2) be helpful in...
See variable manufacturing overhead spending variance.
A journal entry that adjusts an amount already recorded on the books of a company because part of the amount pertains to a future accounting period. To learn more, see Explanation of Adjusting Entries.
Investments in common stock, preferred stock, corporate bonds, or government bonds that can be readily sold on a stock or bond exchange. These investments are reported as a current asset if the investor’s intention...
A type of financial analysis involving income statements and balance sheets. All income statement amounts are divided by the amount of net sales so that the income statement figures will become percentages of net sales....
See death spiral.
See units of production method of depreciation.
Gains result from the sale of an asset (other than inventory). A gain is measured by the proceeds from the sale minus the amount shown on the company’s books. Since the gain is outside of the main activity of a...
of $24,510.60 ($160,200 X 15.3%). There is also an Additional Medicare Tax that applies to higher income taxpayers. Information on the Medicare surtax and other income tax information can be found at www.irs.gov. Join...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
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