Usually a bank, finance company, or person that makes a loan to another party, who is referred to as the borrower.
Usually a bank, finance company, or person that makes a loan to another party, who is referred to as the borrower.
A qualitative characteristic in accounting. Relevance is associated with information that is timely, useful, has predictive value, and is going to make a difference to a decision maker.
The result after subtracting the income tax associated with a given amount. For example, if a corporation has a gain of $100,000 before tax, and its income tax rate is 30%, its after-tax gain is $70,000. If a corporation...
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...
See separation of duties.
National Association of Accountants. This organization’s name was changed to Institute of Management Accountants and currently is referred to as IMA.
Under the accrual basis of accounting, this account reports the cost of the electricity, heat, sewer, and water used during the period indicated in the heading of the income statement. Because utility companies deliver...
Spreading the physical counting of inventory throughout the year. For example, a company may physically count a different 10% of its inventory each month instead of counting 100% of its inventory once per year.
See certified public accountant.
The depreciation used on a company’s income tax return. Usually this is different from the depreciation used on the financial statements.
See inventory: work-in-process (WIP).
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.
A balance sheet liability account that reports amounts received in advance of being earned. For example, if a company receives $10,000 today to perform services in the next accounting period, the $10,000 is unearned in...
A quality of accounting information that facilitates the comparison of financial reporting of one company to the financial reporting of another company.
A division or department of a business whose managers are responsible for both revenues and expenses.
See job order costing.
See notes to financial statements.
The systematic allocation of the discount, premium, or issue costs of a bond to expense over the life of the bond. The systematic allocation of an intangible asset to expense over a certain period of time. The systematic...
The leading accounting and bookkeeping software for small businesses in the United States. QuickBooks is the registered trademark of Intuit Inc.
A current asset account which contains the amount of investments that can and will be sold in the near future.
The term used in place of retained earnings when a corporation has a negative (debit) balance in its account Retained Earnings.
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...
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.
See accrual-type adjusting entry.
A mathematical tool to optimize profits (contribution margin) given a limited amount of inputs and other constraints.
An amount that is expensed immediately. For example, routine repair costs on equipment are revenue expenditures because they are charged directly to an income statement account such as Repairs and Maintenance Expense.
Costs that have been used up or consumed. Expired costs are reported as expenses. (Costs that have not yet expired are reported as assets.)
See Accounting Research Bulletin.
An employee that must be paid overtime pay when the employee’s weekly hours exceed 40 hours. Some states may have additional requirements. Nonexempt employees include both hourly-paid and salary-paid who are not...
Cash that can be used only for the purpose intended.
See natural expense classification.
A detailed plan with dollar amounts. Examples of budgets used in business include the cash budget, sales budget, production budget, department budgets, the master budget, and the capital expenditures budget. Some budgets...
In regression analysis this is a statistic (designated as r-squared) indicating the percentage of the change occurring in the dependent variable that is explained by the change in the independent variable(s). The percent...
To receive money in exchange for a promise to repay the amount to the lender.
One hundredth (1/100) of a percentage point. In other words, one percentage point is equal to 100 basis points. The difference between an interest rate of 6.5% and 6.75% is 25 basis points.
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...
A bond (long term note) that can be exchanged by the holder for a specified number of shares of stock in the company. The convertibility feature usually allows for the bond to have a lower interest rate when it is...
See economic order quantity (EOQ) model.
Featured Review
"I'm currently transitioning from a programming background into the world of accounting, and AccountingCoach has been an absolute game-changer. The PRO membership has provided me with an unparalleled learning experience with the videos, quick tests, cheat sheets, flashcards, and printable PDF files; and those are not even all of the features of the PRO membership! I'm so happy to have found this excellent learning platform, covering everything from accounting basics to the most complex topics. The depth and simplicity with which intricate accounting concepts are explained have been a revelation. And the greatest thing about it all is that I can master accounting at my own pace, without any time restrictions. The lifetime access ensures I can revisit and reinforce my knowledge whenever needed. Thank you, AccountingCoach, for being the comprehensive, accessible, and reliable platform that has immensely supported my transition into the captivating world of accounting!" - Ben P.
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: