See inventory shrinkage.
See inventory shrinkage.
To assign costs to a product, department, customer, etc. on an arbitrary basis. For example, the heating cost might be allocated to the five departments located in the area that is heated. The allocation is often based...
less cash than the amount of expenses shown on the income statement. The total of the above amounts, (75,000) + 100,000 + 10,000 + 7,000 is a positive net cash flow from operating activities of $42,000. Join PRO to...
The amount of office supplies used during a specified time interval.
Preferred stock that can be exchanged by the holder for a specified number of shares of common stock of the same company.
The second section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
Bookkeeping Video Training Part 12 Bank reconciliation: process to determine the true or adjusted amount of cash, journal entries needed for adjustments to book balance Must-Watch Video Learn How to Advance Your...
A balance sheet which is a projection of the amounts at a future date. It should be based on the projected, budgeted transactions.
See direct labor efficiency variance.
Assets associated with depreciation. Examples include buildings, equipment, furniture, fixtures, trucks, automobiles, etc.
This is the sum of the beginning inventory of merchandise plus the net cost of the merchandise purchased including freight-in.
A non-operating item resulting from the sale of this long-term asset for less than its carrying amount (or book value).
A variance arising in a standard costing system that indicates the difference between the standard amount of variable manufacturing overhead for the good units produced (standard hours times standard rate) and the...
Same as the Days Sales in Accounts Receivable
The combined amount of the debit balance in the current asset account Accounts Receivable and the credit balance in the contra asset account Allowance for Doubtful Accounts. The difference between the balances in these...
A method used by retailers for estimating the cost of ending inventory without tracking the individual units of product.
Financial statements (such as the income statement and balance sheet) that summarize much of the detail into a few major lines of information.
The technique of recording accounts payable at the amount that will be paid after deducting any discount that is available for paying within the discount period. This has a theoretical advantage over the gross method...
The contra owner’s equity account used to record the current year’s withdrawals of business assets by the sole proprietor for personal use. This is a temporary account with a debit balance. It will be closed...
The net result of combining the discounted cash inflows and the discounted cash outflows of an investment, project, company, etc.
The interest rate of debt (bonds, loans) after deducting the income tax savings. For example, if a corporation has issued bonds with an interest rate of 8% and the corporation’s income tax rate is 25%, the...
The part of a balance sheet with the heading stockholders’ equity or owner’s equity. The total amount of this section is the amount of reported assets minus the amount of reported liabilities.
The balance of the owner’s capital account excluding the current year’s net income and current year’s draws by the owner.
A single overhead rate for assigning all of the manufacturing production and service department costs to products. This rate is less accurate than departmental rates if a company manufactures a diverse group of...
A variance arising in a standard costing system that indicates the difference between the actual cost of direct materials and the standard cost of direct materials. Recognizing this variance at the time the direct...
Financial statement and other financial information distributed to people outside of a company.
Within a reasonable range of activity, the slope of the cost line is the variable rate, which is often denoted as ‘b’ in the straight line y = a + bx.
The allocation of common costs based on the sales value of the products that emerge. For example, a company develops a large parcel of land at a cost of $5 million dollars. Individual lots will be sold for $100,000 to...
Total liabilities divided by total assets. This indicates how much of a corporation’s assets are financed by lenders/creditors as opposed to purchased with owners’ or stockholders’ funds. If a high...
A liability account whose balance is the unpaid principal balance as of the balance sheet date. The amount of principal required to be paid within 12 months of the balance sheet date is reported as a current liability....
A phrase that indicates a transaction was between two independent parties and that the resulting amount is a fair representation of the value.
The amount of principal owed on a loan. On the typical mortgage loan, a portion of the monthly payment is applied to interest and principal. The amount of principal that remains after the principal payment is the unpaid...
The amount of free cash flow divided by the weighted average number of common shares of stock outstanding during the year.
An employee fringe benefit provided by an employer that allows employees to be paid for a limited number of days per year when the employees are ill.
This contra owner’s equity account has a debit balance that represents the current year draws made by the sole proprietor, R. Smith. After the year’s financial statements have been prepared, the balance in...
The top ranking financial person in the corporation.
An organization established by the U.S.’s Sarbanes-Oxley Act to oversee the auditors of corporations whose stock is publicly-traded. The PCAOB’s board members are appointed by the Securities and Exchange...
The debit or credit balance that would be expected in a specific account in the general ledger. For example, asset accounts and expense accounts normally have debit balances. Revenues, liabilities, and...
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