A major classification on the balance sheet. It is the second long term asset section after current assets. Included are land, buildings, leasehold improvements, equipment, furniture, fixtures, delivery trucks,...
A major classification on the balance sheet. It is the second long term asset section after current assets. Included are land, buildings, leasehold improvements, equipment, furniture, fixtures, delivery trucks,...
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...
A series of equal amounts at equal time intervals. Also see annuity due, annuity in advance, annuity in arrears, and ordinary annuity.
This loss is not an extraordinary item, since it is not unusual in nature. However, it can appear as a separate line item in the main portion of the income statement. It will be reported at its gross amount (not net of...
The difference between assets and liabilities, such as stockholders’ equity, owner’s equity, or a nonprofit organization’s net assets. Also used to indicate an owner’s interest in a personal...
See internal rate of return.
The British term for controller.
This phrase has two connotations. One is the cost of holding inventory. In this case the carrying cost is the cost of capital tied up in inventory, the cost of storage, insurance, and obsolescence. Often this is...
See Public Company Accounting Oversight Board (PCAOB).
The cost accounting system where similar units are mass produced. Costs are collected by department and are then assigned to the units produced.
Receivables other than Accounts Receivable. Examples include amounts due from employees and income tax refunds receivable.
Goods or services provided instead of money.
A general ledger account containing the correct total amount without containing the details. For example, Accounts Receivable could be a control account in the general ledger. Each day the total of the day’s credit...
An asset account in a bank’s general ledger that indicates the amount at which the bank is reporting or carrying its investments.
An intangible asset that is reported at cost (or lower) on the balance sheet. It might consist of a name or a logo. Trademarks should be registered with the U.S. Patent and Trademark Office. Also see trade names.
A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.
That part of the accounting system which contains the balance sheet and income statement accounts used for recording transactions.
Usually means to scrap a long-term plant asset and receive no proceeds from its disposal.
Usually an annual manufacturing overhead rate established just prior to an accounting year and based on budgeted amounts.
Also referred to as operating expenses. These expenses are reported in the period in which they were incurred, not the period in which they were paid.
An interest rate that is not explicit. For example, if a business lends its majority owner $100,000 at 0% interest, the IRS might determine that a fair interest rate would be 6% and not 0%. The IRS will impute interest...
See chief financial officer.
Long-term assets including property, plant, equipment and intangible assets. Buildings, furnishings, fixtures, office equipment, and vehicles are common examples of long-lived assets which are depreciated by nonprofit...
See outstanding checks.
An accounting guideline which allows the readers of financial statements to assume that the company will continue on long enough to carry out its objectives and commitments. In other words, the accountants believe that...
See dividends in arrears.
Preferred stock that is callable by the issuer at a certain price. The price and other conditions are disclosed in the preferred stock’s indenture.
An asset’s cost that has been assigned to Depreciation Expense.
Financial statements based upon various assumptions.
A lease where the lessee/tenant pays not only rent, but also the property taxes, insurance, and maintenance.
A loan from a bank or other lender for which the borrower is not required to pledge assets as collateral for the loan.
Another company that supplies goods or performs services. Also known as a vendor.
Under the accrual method of accounting, this account reports the employer’s portion of the health insurance cost incurred by the company during the period indicated in the heading of the income statement, whether...
See Explanation of Inventory and Cost of Goods Sold.
A business organization different from a sole proprietorship, partnership, and corporation. As the name implies it provides the limited liability protection usually associated with a corporation. To learn more about this...
An income statement that has more than one subtraction in arriving at net income. An income statement showing gross profit is an indication it is a multiple-step income statement.
Sending work to another organization instead of processing the work in-house. Often payroll is outsourced to a company that specializes in payroll processing.
See not sufficient funds (NSF) check.
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