Commitments are items that are not reported as liabilities as of the balance sheet date. Some of these items are reported in the notes to the financial statements. Examples include noncancelable contracts to rent space...
Commitments are items that are not reported as liabilities as of the balance sheet date. Some of these items are reported in the notes to the financial statements. Examples include noncancelable contracts to rent space...
See deferred expense.
A word to describe whether a company is able to earn more revenues than expenses.
Includes the main financial statements (income statement, balance sheet, statement of cash flows, statement of retained earnings, statement of stockholders’ equity) plus other financial information such as annual...
See our Standard Costing Outline.
The estimated volume in a future period that will be used for allocating indirect manufacturing costs.
Usually a bank, finance company, or person that makes a loan to another party, who is referred to as the borrower.
The situation where manufacturing service departments provide service to each other. For example, the factory maintenance department provides services to the factory administrative department and the factory...
End of month.
A cost that has been recorded in the accounting records and reported on the balance sheet as an asset until matched with revenues on the income statement in a later accounting period.
The formal planning for significant expenditures, such as property, plant and equipment.
Obligations of a company or organization. Amounts owed to lenders and suppliers. Liabilities often have the word “payable” in the account title. Liabilities also include amounts received in advance for a...
Goods sold by a retailer, wholesaler, distributor, manufacturer, etc.
Assets such as Cash, Temporary Investments, and Accounts Receivable.
The leading accounting and bookkeeping software for small businesses in the United States. QuickBooks is the registered trademark of Intuit Inc.
The term used in place of retained earnings when a corporation has a negative (debit) balance in its account Retained Earnings.
Advertising Expense is the income statement account which reports the dollar amount of ads run during the period shown in the income statement. Advertising Expense will be reported under selling expenses on the income...
A document that indicates the quantity of goods received. This report is often matched in the accounts payable department with the purchase order and the vendor’s invoice prior to paying the vendor.
Point of sale.
The depreciation used on a company’s income tax return. Usually this is different from the depreciation used on the financial statements.
Point of purchase.
See contingent loss.
Assigning manufacturing overhead costs to products being manufactured by using a manufacturing overhead rate.
One component of the FICA tax (the other component is Social Security). This payroll tax is withheld from employees’ payroll checks and is also matched by the employer. The employee and the employer each pay the...
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...
The person or organization to whom a check is written.
The indirect manufacturing costs actually incurred during an accounting period.
A right to buy a specific number of shares of stock at a specific price by a specific date.
The price at which one division or subsidiary of a company transfers products to another division or subsidiary of the company.
Also referred to as a shareholder. The owner of shares of stock in a corporation. Every corporation has common stock and those owners are known as common stockholders. Some corporations also issued preferred stock and...
A method where only the variable manufacturing costs are assigned to inventory and the cost of goods sold. Fixed manufacturing costs are viewed as expenses of the period in which they are incurred. This method is not...
Fair, unbiased, and objective; not subjective.
The reduction or removal of an asset amount. For example, an account receivable will be removed or written off if the customer is not able to pay the amount owed to the company.
A budget that flexes with volume. Under a flexible budget the budgeted amount of manufacturing overhead will increase if the company produces more units than planned. The flexible budget will decrease if the company...
The total annual return on a bond investment if held to maturity. For example, if a bond is purchased at less than its maturity value, the yield to maturity includes the annual interest plus the gain as the bond...
A stockholders’ equity account that generally reports the net income of a corporation from its inception until the balance sheet date less the dividends declared from its inception to the date of the balance...
See cost-volume-profit (CVP).
A reduction in the cost of goods purchased that is granted by a supplier without the physical return of the goods. Also a general ledger account in which the purchase allowances are recorded under the periodic inventory...
A company might construct a building and then sell the building to an investor who in turn leases the building back to the company.
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