Billing a client based on the value of the information or service provided rather than billing based on time spent.
Billing a client based on the value of the information or service provided rather than billing based on time spent.
receives a bill for $2,500 and is surprised at the amount. She concludes that the tax experts billed her based on the amount of money they had saved her. In other words, the tax experts had utilized the concept of value...
An invoice or other document received from a vendor, supplier, etc. usually for goods or services received. Also a verb to indicate that a customer’s sales invoice should be prepared for goods or services.
Federal government securities sold at a discount (because of no interest payments) with maturity dates of less than one year.
What is a bill payable? Author: Harold Averkamp, CPA, MBA Definition of Bill Payable A bill payable is a document which shows the amount owed for goods or services received on credit (meaning not paid at the time that...
A listing of the materials included in a product. A bill of material could be thought of as a bakery’s recipe for producing one of its products.
An amount owed on bill or invoice from a vendor or supplier of goods or services.
Multiplying the individual items contained in each bill of material times the number of units expected to be produced during a specified time period. The result is the total quantity of each input that will be needed for...
Is a utility bill an expense? Author: Harold Averkamp, CPA, MBA The utility bill for a retailer or for a service company is an expense. Under the accrual basis of accounting, the utility bill is an expense for the period...
See U.S. Treasury bills.
What is the difference between residual value, salvage value, and scrap value? Author: Harold Averkamp, CPA, MBA The terms residual value, salvage value, and scrap value are often used when referring to the estimated...
and the amount of each bill is generally based on the meters located on the company’s property. In other words, the utilities provide the gas, electricity, etc. in advance of being paid. Therefore, the company is...
Part of a company’s administration that is responsible for preparing the financial statements, maintaining the general ledger, paying bills, billing customers, payroll, cost accounting, financial analysis, and...
the products worthless, inconvenient, unattractive, etc. New technologies that disrupt the way things are done Decline in overall demand for the items Arrival of unique competitors Consequences of Obsolete Inventory...
for Revenues Over at Sales Rep Company, for its financial statements to comply with the accrual method of accounting it needs to record the following accrual adjusting entry as of December 31 (assuming its billing will...
. Examples of Reducing the Break-even Point A company’s break-even point will be reduced by the following: Decreasing the amount of fixed costs/expenses Reducing the variable costs/expenses per unit Improving...
What is par value? Author: Harold Averkamp, CPA, MBA Definition of Par Value Par value is a per share amount that will appear on some stock certificates and in the corporation’s articles of incorporation. (Some states...
The stated legal amount appearing on bonds.
See net realizable value.
See cash surrender value.
A stated legal amount often appearing on preferred stock, bonds, and some common stock.
The amount of owner’s equity or stockholders’ equity reported on a company’s balance sheet. This is not an indication of the company’s fair market value.
What is book value? Author: Harold Averkamp, CPA, MBA Definition of Book Value In accounting, book value refers to the amounts contained in the company’s general ledger accounts (or books). It is important to realize...
The book value of an asset is the asset’s cost minus the accumulated depreciation since the asset was acquired. This net amount is not an indication of the asset’s fair market value. The book value of an...
Stock without a par value.
Factors that are used to convert future cash flows to their present value.
What is scrap value? Author: Harold Averkamp, CPA, MBA Definition of Scrap Value In cost accounting, scrap value refers to a relatively insignificant amount that a manufacturer receives from the sale of production...
The present fair market value.
The book value of an asset is the amount of cost in its asset account less the accumulated depreciation applicable to the asset. The book value of a company is the amount of owner’s or stockholders’ equity....
Same as book value. For example, an asset’s net book value is equal to the asset’s cost minus its accumulated depreciation.
The amount that would be agreed upon by two independent persons. The amount to be received in the ordinary course of business in an arm’s length transaction.
A term used to describe the net present value method and the internal rate of return. The model discounts future cash flows back to the present time.
The remainder or difference. In depreciation the residual value is the estimated scrap or salvage value at the end of the asset’s useful life. In the accounting equation, owner’s equity is considered to be...
What is salvage value? Author: Harold Averkamp, CPA, MBA Definition of Salvage Value In accounting, salvage value is the amount that is expected to be received at the end of a plant asset‘s useful life. Salvage value...
See present value of an annuity due table, present value of an ordinary annuity table, and present value of 1 table.
The recognition that a dollar in the present is more valuable than a dollar in the future. Present-value calculators and present-value tables assist in converting future dollars to the present value in order to make a...
The sum of future amounts multiplied by their respective probabilities of occurrence.
The net result of combining the discounted cash inflows and the discounted cash outflows of an investment, project, company, etc.
The discounted value of a series of equal amounts occurring at future points with equal time intervals.
Future amounts that have been discounted to the present.
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