To learn more, see our Financial Ratios Outline.
To learn more, see our Financial Ratios Outline.
A report prepared by a professional appraiser with detailed information on the calculation of an asset’s current market value.
Savings accounts and certificates of deposits at a bank.
Often a 1% or 2% discount that a buyer may deduct from the amount owed to a supplier (if stated on the supplier’s invoice) for paying in 10 days instead of the customary 30 days. The purchase discount is also...
balance in the contributed capital account Common Stock. After several accounting periods, the amounts in the asset accounts will change from the depreciation of the building and from hundreds of other transactions....
The record of checks issued or written, deposits, bank charges, bank credits and the resulting balance. Also referred to as the check register.
This term refers to checking account balances. On a bank’s balance sheet, demand deposits are reported as current liabilities.
An actual count of the goods owned by the company. The actual counts are then compared to the quantities reported on the detailed inventory records. If a difference exists, the quantity shown on the inventory record...
The actual cost of direct materials, the actual cost of direct labor, and manufacturing overhead applied by using a predetermined annual overhead rate.
Verifiable, objective (not subjective), and you can depend on it.
To loan money for a limited time in exchange for the borrower’s promise of repayment and interest compensation.
The cumulative amount of depletion expense pertaining to the natural resources shown on the balance sheet. The account has a credit balance and will be reported on the balance sheet as a contra asset.
See contingent gain.
Receivables due from customers. See accounts receivable.
See separation of duties.
Usually a claim on an asset that is pledged as collateral. The lien is usually filed with a government office.
The phrase used by FASB Statement 117 that describes the required focus of a nonprofit’s external financial statements. Previously the external financial statements focused on individual funds.
See inventory: work-in-process (WIP).
Payables arising from the purchase of merchandise inventory and outside services. See accounts payable.
Usually means every two weeks. For example, if an employee is paid every other Thursday, the employee is paid biweekly. The person paid biweekly will receive 26 paychecks per year. (People paid two times per month...
The percentage resulting from dividing the dividends per share by the market price per share.
Suppliers. Companies that provide goods or services.
A lease that “in substance” is a purchase and financing arrangement. When a lease meets certain criteria, the asset being “rented” is recorded as an asset and a liability is also recorded. A lease...
A balance on the right side (credit side) of an account in the general ledger.
See cleared.
If an accrual adjusting entry increases an expense and a liability, how does the balance sheet remain in balance? An expense is a temporary account which reduces owner’s equity or stockholders’ equity. The decrease...
The par value of common and preferred stock.
A major repair such as an engine overhaul, which will extend the useful life of the asset. The amount should be recorded in the asset account and then depreciated over the remaining life of the asset.
A term used with standard costs to report a difference between actual costs and standard costs. To learn more, see Explanation of Standard Costing.
See International Accounting Standards Board (IASB).
Interest on interest. For example, if $1,000 is deposited in an account earning interest of 6% per year the account will earn $60 in the first year. In year two the account balance will earn $63.60 (not $60.00) because...
Sending merchandise to another party (an agent, consignee) in order to sell the merchandise. Also see consigned goods.
The compensation earned by employees who are paid on an hourly basis. It is common for production workers to earn wages, since they are usually paid via an hourly rate.
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A trademark associated with a service rather than a product.
See natural expense classification.
A loan from a bank or other lender for which the borrower is not required to pledge assets as collateral for the loan.
The shipping cost to be paid by the buyer of merchandise purchased when the terms are FOB shipping point. Freight-in is considered to be part of the cost of the merchandise and should be included in inventory if the...
A technique using simultaneous equations to allocate a manufacturer’s service departments’ costs to both other service departments and to production departments.
See long-term assets.
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