The depreciation used on a company’s income tax return. Usually this is different from the depreciation used on the financial statements.
The depreciation used on a company’s income tax return. Usually this is different from the depreciation used on the financial statements.
premium that is paid in advance for insurance coverage on a company’s vehicles. The amount paid is often recorded in the current asset account Prepaid Insurance. If the company issues monthly financial statements, its...
The Roman numeral that represents 1000. Other symbols that are sometimes used to represent 1000 include k and m. (Note: Sometimes M is also used to indicate million.)
What is the difference between an invoice and a statement? Definition of an Invoice An invoice received from a supplier shows the items purchased, the cost per unit, the total cost or extension of each item, the total of...
Expenses which do not change in response to reasonable changes in sales or other activity.
The elimination of part or all of a markdown.
A certified public accountant (CPA) who practices accounting in his or her own firm without another CPA as a partner or shareholder.
See cost of goods sold.
This is the bottom line of the income statement. It is the mathematical result of revenues and gains minus the cost of goods sold and all expenses and losses (including income tax expense if the company is a regular...
See long-term assets.
The owner of property that often receives rent from tenants.
An expectation that as a task is repeated there will be significant time reductions during the early repetitions. The time savings will dissipate after continuous performance. This is important to consider when setting...
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.
The price at which one division or subsidiary of a company transfers products to another division or subsidiary of the company.
This term refers to checking account balances. On a bank’s balance sheet, demand deposits are reported as current liabilities.
The expense associated with a commitment to repair or replace a product for a specified period of time. The expense should be reported on the income statement at the time that the sale of the product is reported in order...
See Public Company Accounting Oversight Board (PCAOB).
Gross wages or gross salaries minus withholdings for payroll taxes and other items such as insurance, union dues, United Way, etc. Also referred to as “take home pay” or the amount the employee...
A symbol that represents 1000.
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...
No insurance. If a company chooses to self insure for fire damage, it does not have insurance for fire damage. Companies with a chain of stores in various cities may decide not to have insurance, since their risk is...
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...
The provider of goods or services. Also known as the vendor.
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.
Actual changes in cash as opposed to accounting revenues and expenses.
In regression analysis this is a statistic designated as r and ranging from -1 to +1. It indicates the percentage of correlation between the dependent variable and the independent variable(s). When this statistic is...
See sales discounts.
Net income divided by net sales.
Cost that is considered to be part of the cost of merchandise. For a retailer, the inventoriable cost is the cost from the supplier plus all costs necessary to get the item into inventory and ready for sale, e.g....
The ratio of current assets to current liabilities. This ratio is an indicator of a company’s ability to meet its current obligations. To learn more, see Explanation of Financial Ratios.
The first-in, first-out cost flow assumumption under the perpetual inventory system. The first (oldest) costs are the first costs removed from inventory at the time that goods are sold. The most recent costs will remain...
Usually a plastic card that is used in place of writing a check. The amount of the transaction is immediately deducted from the user’s checking account.
An average that changes with an additional purchase. See perpetual moving average in Explanation of Inventory and Cost of Goods Sold.
A current asset whose ending balance should report the cost of a merchandiser’s products awaiting to be sold. The inventory of a manufacturer should report the cost of its raw materials, work-in-process, and...
Also referred to as peripheral activities. A company’s activities outside of its main activities of buying/producing and selling. Examples include a retailer’s financing function involving interest revenue...
To record accounting entries into a journal.
The Roman numerals that indicate 1,000,000.
See post balance sheet event.
Featured Review
"I currently work as a computer engineer. I became a PRO user on AccountingCoach to track my progress and enhance my experience on the platform. What I like most about the material is that it provides multiple mediums, including text explanations and videos to enhance the experience. This has all benefited me in providing me with a better foundational knowledge of financial and managerial accounting and has helped me to excel in my accounting and finance courses in my MBA program." - Jonathan J.
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: