In estimating the ending inventory under the retail method the cost ratio is the cost of goods available divided by the retail value of the goods available.
In estimating the ending inventory under the retail method the cost ratio is the cost of goods available divided by the retail value of the goods available.
The additional revenues from an additional quantity. It is similar to marginal revenue, except that marginal revenue refers to the revenue from the next unit. Incremental revenue might be the additional revenues from the...
Magnetic ink character recognition.
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 dollar adjusted for inflation. If an asset such as land was purchased for $10,000 many years ago when the consumer price index (CPI) was 100 and today the CPI is 400, today’s constant-dollar amount would be...
The process of becoming outdated or no longer being economically feasible (often caused by technology advances).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....
A person or business that has a checking account or savings account at a bank.
The depreciation used on a company’s income tax return. Usually this is different from the depreciation used on the financial statements.
Life insurance without a cash value.
The cost transferred from one department to the next department in a process costing system.
An asset’s cost that has been assigned to Depreciation Expense.
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 certified public accountant.
Costs that have been used up or consumed. Expired costs are reported as expenses. (Costs that have not yet expired are reported as assets.)
A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.
See natural expense classification.
A corporation’s own stock that has been repurchased from stockholders. Also a stockholders’ equity account that usually reports the cost of the stock that has been repurchased.
See Explanation of Inventory and Cost of Goods Sold.
A shortened version of the term bank reconciliation or bank statement reconciliation.
See outstanding checks.
Also referred to as the useful life. This differs from the physical life of an asset. For example, a computer may have a physical life of 50 years, but its economic or useful life might be five years.
The dollar amount associated with the goods in a company’s inventory. Initially the cost per unit is the cost to get the inventory items in place and ready for use. However, under certain circumstances the cost may...
The leading accounting and bookkeeping software for small businesses in the United States. QuickBooks is the registered trademark of Intuit Inc.
A quality of accounting information that facilitates the comparison of financial reporting of one company to the financial reporting of another company.
To learn more, see Explanation of Depreciation.
See discounted cash flow model.
What are the required financial statements? The required financial statements for U.S. business corporations are: Statement of income. This financial statement is also known as the statement of operations, statement of...
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...
An amount that should be charged to the current accounting period as an expense.
To receive money in exchange for a promise to repay the amount to the lender.
A mathematical tool to optimize profits (contribution margin) given a limited amount of inputs and other constraints.
See phantom profits.
The party owning an asset and receiving rent from another party (the lessee).
A word that means to add a column of numbers as in “Foot the amounts listed in column A.” Also see crossfoot.
A current asset representing the cost of supplies on hand at a point in time. The account is usually listed on the balance sheet after the Inventory account. A related account is Supplies Expense, which appears on the...
See mixed expenses.
The par value of common and preferred stock.
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