How can a company have a profit but not have cash? Definition of Profit Under the accrual basis of accounting, profit is the amount of revenues earned minus the amount of expenses incurred. Note that revenues are not...
How can a company have a profit but not have cash? Definition of Profit Under the accrual basis of accounting, profit is the amount of revenues earned minus the amount of expenses incurred. Note that revenues are not...
The party owning an asset and receiving rent from another party (the lessee).
A potential gain that is not recognized by accountants in the financial statements until it actually occurs. For example, Company P is suing Company D over a patent infringement. Company P has a contingent gain. Because...
See uncleared check.
See accelerated depreciation.
See phantom profits.
In accounting the qualitative characteristics include relevance, reliability, comparability, and consistency. Qualitative characteristics are discussed in the Financial Accounting Standards Board’s Statement of...
National Association of Accountants. This organization’s name was changed to Institute of Management Accountants and currently is referred to as IMA.
A mathematical tool to optimize profits (contribution margin) given a limited amount of inputs and other constraints.
A word that means to add a column of numbers as in “Foot the amounts listed in column A.” Also see crossfoot.
Amounts spent for property, plant and equipment.
To record accounting entries into a journal.
See budgetary slack.
A report prepared by a professional appraiser with detailed information on the calculation of an asset’s current market value.
Actual changes in cash as opposed to accounting revenues and expenses.
A lien on real estate to protect a lender. The loan made with such security is referred to as a mortgage loan.
A “clean” auditor’s report. That is, the auditor has concluded that the financial statements present fairly the results of the company’s operations and its financial position according to...
liability account Customers’ Security Deposits and will debit its Cash account for $500. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping...
The situation where the number of units sold is not influenced by a change in selling price. In other words, a price increase does not have a corresponding decrease in the number of units sold.
The process of comparing the amounts in the Cash account in the general ledger to the amounts appearing on the bank statement. The objective is to be certain that there is consistency between the amounts and that the...
A factory or manufacturing overhead rate used to allocate, apply, assign, or spread indirect product costs to items manufactured. Under traditional cost accounting, the burden rate might be a percentage of direct labor...
The Roman numerals that indicate 1,000,000.
Market interest rate, current return, effective interest rate. Also see yield to maturity.
See donor-imposed restriction.
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....
of the year has a cost of $70,000 compared to the inventory cost of $67,000 at the end of the previous accounting year. An adjustment will be entered to debit the Inventory account for $3,000 which will increase the...
resources. The segregation of duties (or separation of duties) is part of a company’s internal controls for safeguarding its assets. Example of Segregation of Duties An example of the segregation of duties is a...
’ equity section of the balance sheet, the cash that was generated from those retained earnings is not likely be in the company’s checking account. Instead, the corporation likely used the cash to acquire additional...
quantities of inventory items) the balance in the LIFO reserve account will be an ever-increasing credit balance that reduces the company’s FIFO inventory cost. Join PRO to Track Progress Mark the Question as Read...
are depreciated using the straight-line method. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping Career Perform better at your current job...
A decentralized division of a corporation which is responsible for and has control over its costs, revenues, and investments.
Net sales is the gross amount of Sales minus Sales Returns and Allowances, and Sales Discounts for the time interval indicated on the income statement.
Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and Bookkeeping Career Perform better at your current job Refresh your skills to re-enter the workforce Pass your accounting class...
See return on capital employed.
An Italian monk associated with debits, credits, and double-entry accounting approximately 500 years ago.
See last in, first out (LIFO).
The sum of future amounts multiplied by their respective probabilities of occurrence.
Also referred to as shareholders’ equity. At a corporation it is the residual or difference of assets minus liabilities. To learn more about stockholders’ equity, see our Stockholders’ Equity Outline.
Bonds with one maturity date (as opposed to serial bond).
Temporary differences between the reporting of a revenue or expense for financial statements (books) and the reporting of the item for income tax purposes. For example, it is common for companies to depreciate equipment...
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