Fair, unbiased, and objective; not subjective.
Fair, unbiased, and objective; not subjective.
The symbol for the number of units of product, number of machine hours, or other indicator of activity or volume as shown in the equation of the cost line y = a + bx.
An example is the major overhaul of a truck’s engine that will extend the useful life of the truck. This expenditure is recorded on the balance sheet in an asset (or in a contra asset) account and then depreciated...
The four largest public accounting firms in the U.S.: Deloitte, Ernst & Young, KPMG, PricewaterhouseCoopers. Typically, these four firms perform the audits of the largest publicly-traded corporations.
How can I determine the difference in earnings from using LIFO instead of FIFO? The difference in a corporation’s earnings from using LIFO instead of FIFO can be determined by the amounts reported in the balance sheet...
See accrual-type adjusting entry.
The amount needed to replace an asset such as inventory, equipment, buildings, etc. If an asset’s replacement cost is greater than the asset’s carrying amount, the cost principle prohibits the use of the...
To receive money in exchange for a promise to repay the amount to the lender.
The term used in place of retained earnings when a corporation has a negative (debit) balance in its account Retained Earnings.
Point of sale.
Another company that supplies goods or performs services. Also known as a vendor.
The provider of goods or services. Also known as the vendor.
See goods in transit.
See inventory: finished goods.
A reference to stockholders’ equity. See paid-in capital. Also an adjective that references property, plant and equipment used in a business; for example, capital expenditures and capital budgeting.
What is petty cash? Definition of Petty Cash Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check. Petty Cash is also the title of the general ledger...
A cost and/or volume of activity that is outside of an expected range.
A heading that includes common stock and preferred stock.
Repairs that do not improve an asset or extend the asset’s life. These repairs are charged to Repairs Expense or Maintenance Expense when incurred. Major repairs such as a complete engine overhaul that extends the...
A subgroup of a nonprofit’s supporting activities expenses. This functional expense classification is used for the fundraising activities including fundraising campaigns, mailings for funds from supporters, and...
Also known as the acid test ratio. This ratio compares the amount of cash + marketable securities + accounts receivable to the amount of current liabilities. To learn more, see Explanation of Financial Ratios.
Usually a claim on an asset that is pledged as collateral. The lien is usually filed with a government office.
See cost of goods sold.
See direct labor efficiency variance and direct labor rate variance.
See Explanation of Standard Costing.
Another name for check.
A Latin term that means in proportion. See prorate.
Verifiable, objective (not subjective), and you can depend on it.
See donor-imposed restriction.
costs must be reported as Advertising Expense at the time the ads are run. A prepayment of the cost of ads that will air in the future should be recorded in a current asset account such as Prepaid Advertising. When the...
An unsecured bond. For example, a bond not secured by a lien on the issuer’s property.
Usually a department within a company that is responsible for its costs but not revenues or profit.
Things that are resources owned by a company and which have future economic value that can be measured and can be expressed in dollars. Examples include cash, investments, accounts receivable, inventory, supplies, land,...
Expenses which do not change in response to reasonable changes in sales or other activity.
No insurance. If a company chooses to self insure for fire damage, it does not have insurance for fire damage. Companies with a chain of stores in various cities may decide not to have insurance, since their risk is...
A certified public accountant (CPA) who practices accounting in his or her own firm without another CPA as a partner or shareholder.
See Securities and Exchange Commission.
A word to describe whether a company is able to earn more revenues than expenses.
The products with significant value that emerge at a split-off point in a process. When a joint product has little value it is referred to as a by-product.
A term used to describe checks written by a company that have been received and paid by the bank on which they were drawn or written. The check number and amount will appear on the company’s checking account...
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