An actual count of the goods owned by the business.
An actual count of the goods owned by the business.
A person or business that has a checking account or savings account at a bank.
A department that is directly involved in manufacturing products. Examples are the machining, finishing, and assembling departments.
See Explanation of Financial Ratios.
Checks which have been written, but have not yet cleared the bank on which they were drawn. In the bank reconciliation, outstanding checks are deducted from the balance per bank. To learn more, see Explanation of Bank...
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.
A term used with standard costs to report a difference between actual costs and standard costs. To learn more, see Explanation of Standard Costing.
A right to buy a specific number of shares of stock at a specific price by a specific date.
See not sufficient funds (NSF) check.
See direct labor efficiency variance and direct labor rate variance.
A document that discloses important information on bonds or preferred stock. Included in the indenture would be the call price, the actions that can occur if the company fails to pay the interest or dividend, etc.
See inventory: work-in-process (WIP).
Reports too little. If an error understates the inventory and the company’s net income, the amount of inventory and the amount of net income being reported are less than the correct amounts.
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 loan from a bank or other lender in which the borrower has pledged an asset as collateral in case the loan cannot be repaid in full.
A business that sells goods from inventory. The business could be a retailer, wholesaler, distributor, manufacturer, etc.
A quality of accounting information that facilitates the comparison of financial reporting of one company to the financial reporting of another company.
Is an automobile loan payment an expense? Only the interest portion of an automobile loan payment is an expense. The principal portion of the loan payment is a reduction of the loan balance, which is reported as a Note...
On account. Goods purchased with terms of net 10 days, net 30 days, or 2/10, net 30 are goods purchased on credit. Goods sold with similar terms are sales on credit.
A special or specialized journal to record sales of merchandise to customers. In a manual system this saves a significant amount of recording time. In today’s computerized environment, sales are recorded...
A listing of the materials included in a product. A bill of material could be thought of as a bakery’s recipe for producing one of its products.
See line of credit.
Costs that have been divided up and assigned to periods, departments, products, etc. In depreciation it is the asset’s cost that is assigned to each of the years that the asset is in use. In cost accounting it is...
Federal Unemployment Tax Act. See federal unemployment tax.
Taking out a loan or issuing bonds in order to acquire an asset or another business.
See bill of materials.
See net present value.
See inventory: work-in-process (WIP).
The term associated with payroll deductions from an employee’s gross wages or gross salary.
A document filed when a corporation is formed. Among other things, it lists the number of shares of stock that the corporation is authorized to issue.
See contingent loss.
The activities provided by a nonprofit in carrying out one of its major programs.
See last in, first out (LIFO).
Net sales revenues minus the cost of goods sold.
Under the accrual basis of accounting this income statement account reports the amount of commissions expense that pertains to the revenues earned by the company during the accounting period shown in the heading of the...
The moving average cost of inventory items under the perpetual inventory system. A new average cost per unit is developed after each purchase of an inventory item. To learn more, see Explanation of Inventory and Cost of...
An average that changes with an additional purchase. See perpetual moving average in Explanation of Inventory and Cost of Goods Sold.
The amounts earned on money invested. Often this is interest and dividends earned on a company’s investment in stocks and bonds of other companies.
Free Alongside Ship. Terms indicating that the seller’s price includes delivery of goods at a ship’s pier. Title to the goods will transfer to the buyer alongside the ship.
An amount that should be charged to the current accounting period as an expense.
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