Cash that can be used only for the purpose intended.
Cash that can be used only for the purpose intended.
The additional amount given to employees for the overtime hours. Usually this is the “half-time” in time and one-half. For example, if an employee’s hourly pay rate is $10 per hour and the employee...
An asset account in a bank’s general ledger that indicates the amount at which the bank is reporting or carrying its investments.
Accounting reports that identify the differences between standard costs and actual costs, between budget amounts and actual amounts, etc.
is deferred to the balance sheet account Prepaid Rent (or Prepaid Expenses,) which is a current asset. During the three months of January 1 through March 31 (when the prepaid rent is expiring) the $3,000 prepayment must...
Direct materials, direct labor and manufacturing overhead costs. Also referred to as product costs, production costs, and inventoriable costs.
Administrative expenses are part of the operating expenses (along with selling expenses). Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries...
ledger account Sales Discounts is a contra revenue account. Sales discounts are not reported as an expense. Example of Sales Discounts A company offers its business customer sales discounts of 1/10, net 30. For the...
The actual cost of direct materials, the actual cost of direct labor, and manufacturing overhead applied by using a predetermined annual overhead rate.
The term used in place of retained earnings when a corporation has a negative (debit) balance in its account Retained Earnings.
The acronym for cost of sales or for the cost of services.
The gross amount of purchases minus the amount of purchase returns, purchase allowances, and purchase discounts.
A right to buy a specific number of shares of stock at a specific price by a specific date.
. The retailer can record the delivery surcharges in a separate operating revenue account. In other words the sales revenues account could be used to record the revenues excluding the surcharges and then another sales...
The party owning an asset and receiving rent from another party (the lessee).
See Federal Insurance Contribution Act (FICA).
A formal, written promise to pay interest and to repay the principal amount.
The date on which the board of directors of a corporation declares a dividend on the corporation’s stock. On this date an accounting entry is made to debit Retained Earnings and to credit Dividends Payable.
See net present value.
An asset such as cash, accounts receivable, or a note receivable where the amount is a fixed, stated amount. Holding these assets during periods of inflation will result in a loss of purchasing power.
What is the difference between liability and debt? Definition of Liability In accounting and bookkeeping, the term liability refers to a company’s obligation arising from a past transaction. Examples of Liabilities A...
Past omitted dividends on cumulative preferred stock. Generally these omitted dividends were not declared and, therefore, do not appear on the corporation’s balance sheet as a liability. However, they must be...
Pushing authority and decision making down to the managers and employees who are closer to the work.
The present fair market value.
A record of the details to support a general ledger account. The general ledger account is often referred to as the control account. For example, the accounts receivable subsidiary ledger provides the details to support...
The day after the record date for a cash dividend on shares of stock. Theoretically, the market price of the stock should drop on this day by the amount of the dividend.
See manufacturing costs.
This is the period of time that it will be economically feasible to use an asset. Useful life is used in computing depreciation on an asset, instead of using the physical life. For example, a computer might physically...
The name used by a buyer of goods or services for the sales invoice or bill received from the supplier of the goods or services.
A contra revenue account that reports the discounts allowed by the seller if the customer pays the amount owed within a specified time period. For example, terms of “1/10, n/30” indicates that the buyer can...
A common cost. Often refers to the costs prior to the point where several products emerge from a common process.
The acronym for original equipment manufacturer.
See internal rate of return.
The allocation of manufacturing overhead (indirect manufacturing costs) to products on the basis of a volume metric such as direct labor hours or production machine hours. As manufacturing becomes more sophisticated the...
The amount of wages and related expenses that have been incurred by the employer (and earned by the employees) but have not yet been paid.
Goods sold by a retailer, wholesaler, distributor, manufacturer, etc.
The process of becoming outdated or no longer being economically feasible (often caused by technology advances). For example, personal computers and computer chips from 2010 are obsolete even though they can be operated....
See bill of materials.
What is a bill payable? 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 the goods or services were...
Costs that have been used up or consumed. Expired costs are reported as expenses. (Costs that have not yet expired are reported as assets.)
Featured Review
"I was employed to do basic bookkeeping at my current company. I knew practically nothing about it. I began to research bookkeeping and I came across AccountingCoach. Their materials were so clear, and contained all the information I needed to get up to speed. The website had stopped my random search on the internet, as AccountingCoach’s materials contained everything I needed for my job. I could also work on it at my own pace. It helped me to perform well at my job. The practice questions really help me understand and retain the knowledge I got from their materials. I also loved the videos, as they were very easy to digest. I still refer to their materials regularly." - Rafe J.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviews
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: