A division or department of a business whose managers are responsible for both revenues and expenses.
A division or department of a business whose managers are responsible for both revenues and expenses.
One of the steps in effective internal control. An example of separation of duties is to have the money handling be performed by someone who does not update the records. This means that the money counters at a church...
What is a long-term liability? Definition of Long-term Liability A long-term liability is an obligation resulting from a previous event that is not due within one year of the date of the balance sheet (or not due within...
The amount at which the holder of preferred stock or bonds must sell the stock or bonds back to the issuing corporation. The call price is disclosed in the indenture. The call price might be the face or par amount plus...
See accrual-type adjusting entry.
Current assets minus current liabilities.
To learn more, see Explanation of Depreciation.
What is scrap value? Definition of Scrap Value In cost accounting, scrap value refers to a relatively insignificant amount that a manufacturer receives from the sale of production materials that remain after the...
A check drawn on a bank. A cashier’s check leaves no doubt that the funds represented by the check are real. A bank money order or a certified check would also assure the payee that the funds are in the bank.
See unrelated business income tax.
An income statement account that reports the amount of service revenues earned during the time interval indicated in the heading of the income statement. (Under the accrual basis of accounting, fees earned are reported...
Long term assets of a company such as minerals, oil reserves, timberland, stone quarries, etc. The term depletion is associated with natural resources.
The amount of insurance that was incurred/used up/expired during the period of time appearing in the heading of the income statement. The amount of insurance premiums that have not yet expired should be reported in the...
Operations of an entire division, subsidiary, or segment of a company where a formal plan exists to eliminate it from the company. (It involves more than pruning a product line of certain models of products.) The...
The sum of future amounts multiplied by their respective probabilities of occurrence.
The statements, standards, interpretations and other financial reporting guidelines issued by the Financial Accounting Standards Board. The FASB pronouncements are available at www.FASB.org.
The party receiving goods to be sold. See consigned goods.
The amount before deductions. For example, gross pay is the amount before withholding deductions. Gross sales is the amount before sales returns and allowances and sales discounts.
Magnetic ink character recognition.
The terms which indicate when payment is due for sales made on account (or credit). For example, the credit terms might be 2/10, net 30. This means the amount is due in 30 days; however, if the amount is paid in 10 days...
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...
A negative balance in the bank’s records for the company’s checking account.
Manufacturing costs other than direct materials and direct labor. To learn more about manufacturing overhead, see our Manufacturing Overhead Outline.
Gains result from the sale of an asset (other than inventory). A gain is measured by the proceeds from the sale minus the amount shown on the company’s books. Since the gain is outside of the main activity of a...
See deferred expense.
The estimated volume in a future period that will be used for allocating indirect manufacturing costs.
The date that determines which stockholders are entitled to receive a corporation’s declared dividend. No accounting entry is made on this date.
The owner of property that often receives rent from tenants.
See economic order quantity (EOQ) model.
The change in total costs in response to the change in some activity. For example, some of the costs of owning and operating a vehicle will increase in total with an increase in miles driven. These are referred to as...
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...
Taking out a loan or issuing bonds in order to acquire an asset or another business.
The current asset that represents the amount of interest revenue that was reported as earned, but has not yet been received.
Accounting reports that identify the differences between standard costs and actual costs, between budget amounts and actual amounts, etc.
A simple form of business where there is one owner. Legally the owner and the sole proprietorship are the same. However, for accounting purposes the economic entity assumption results in the sole proprietorship’s...
The person that owes money. If a bank lent you money, the bank is the creditor and you are the debtor.
Sales before deducting sales returns, sales allowances, and sales discounts.
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.
The amount received from the sale of an asset, from the issuance of bonds or stock, or from a bank loan.
The acronym for original equipment manufacturer.
Featured Review
"I work independently, as well as with an accounting company, doing bookkeeping for clients. I've been doing this now for almost 15 years. When I started working with my accounting firm, I realized I lacked knowledge on the accounting side of things, and so I signed up with AccountingCoach to help me bridge the gap. I chose this program because of its systematic approach to the learning process. Having the ability to test to see what I've retained, whether through the quizzes or flashcard features, has been invaluable. This program has given me the confidence to speak the language of CPAs—something I didn't have before I started with AccountingCoach. I highly recommend this program to anyone just getting started in the accounting profession or looking to enhance their knowledge." - Andy B.
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: