A business that sells goods from inventory. The business could be a retailer, wholesaler, distributor, manufacturer, etc.
A business that sells goods from inventory. The business could be a retailer, wholesaler, distributor, manufacturer, etc.
Long-term assets that are reported under the classification of property, plant, and equipment on a company’s balance sheet. These assets are depreciated over their useful life.
To learn more, see our Financial Ratios Outline.
A listing of the accounts available in the accounting system in which to record entries. The chart of accounts consists of balance sheet accounts (assets, liabilities, stockholders’ equity) and income statement...
A lien on real estate to protect a lender. The loan made with such security is referred to as a mortgage loan.
See mixed expenses.
Expenses that vary with some activity. For example, sales commissions expense and cost of goods sold will be greater when sales are greater; electricity expense will decrease when machine hours are reduced.
See sales discounts.
To record accounting entries into a journal.
Net income divided by net sales.
Amounts spent for property, plant and equipment.
See budgetary slack.
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...
Actual changes in cash as opposed to accounting revenues and expenses.
A report prepared by a professional appraiser with detailed information on the calculation of an asset’s current market value.
A check bearing a date in the future. The company receiving such a check should not report the check as cash until the date of the check.
A visual aid used by accountants to illustrate a journal entry’s effect on the general ledger accounts. Debit amounts are entered on the left side of the “T” and credit amounts are entered on the right...
Under the accrual basis of accounting, the account Rent Expense will report the cost of occupying space during the time interval indicated in the heading of the income statement, whether or not the rent was paid within...
The products with significant value that emerge at a split-off point in a process. When a joint product has little value it is referred to as a by-product.
Suppliers. Companies that provide goods or services.
A lease that “in substance” is a purchase and financing arrangement. When a lease meets certain criteria, the asset being “rented” is recorded as an asset and a liability is also recorded. A lease...
A balance on the right side (credit side) of an account in the general ledger.
See cleared.
In accounting this is the rate used to discount future cash flows in order to determine their present value.
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.
See inventory: work-in-process (WIP).
Payables arising from the purchase of merchandise inventory and outside services. See accounts payable.
Usually means every two weeks. For example, if an employee is paid every other Thursday, the employee is paid biweekly. The person paid biweekly will receive 26 paychecks per year. (People paid two times per month...
See contingent gain.
Receivables due from customers. See accounts receivable.
See separation of duties.
The percentage resulting from dividing the dividends per share by the market price per share.
The par value of common and preferred stock.
A major repair such as an engine overhaul, which will extend the useful life of the asset. The amount should be recorded in the asset account and then depreciated over the remaining life of the asset.
See natural expense classification.
A loan from a bank or other lender for which the borrower is not required to pledge assets as collateral for the loan.
A trademark associated with a service rather than a product.
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.
Sending merchandise to another party (an agent, consignee) in order to sell the merchandise. Also see consigned goods.
The compensation earned by employees who are paid on an hourly basis. It is common for production workers to earn wages, since they are usually paid via an hourly rate.
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