See Federal Insurance Contribution Act (FICA).
See Federal Insurance Contribution Act (FICA).
A term to mean the company’s general ledger or accounting records.
A stated legal amount often appearing on preferred stock, bonds, and some common stock.
To learn more, see our Financial Ratios Outline.
This is the period of time that it will be economically feasible to use an asset. Useful life is used in computing depreciation on an asset, instead of using the physical life. For example, a computer might physically...
What is straight line depreciation? Definition of Straight-Line Depreciation Straight-line depreciation is the most common method of allocating the cost of a plant asset to expense in the accounting periods during which...
A current asset representing amounts paid in advance for future expenses. As the expenses are used or expire, expense is increased and prepaid expense is decreased.
Equipment is a noncurrent or long-term asset account which reports the cost of the equipment. Equipment will be depreciated over its useful life by debiting the income statement account Depreciation Expense and crediting...
See Explanation of Financial Ratios.
Cash received. Receipts are different from revenues.
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...
A loan from a bank or other lender in which the borrower has pledged an asset as collateral in case the loan cannot be repaid in full.
See not sufficient funds (NSF) check.
The inability to pay liabilities as they become due. Some consider a company to be insolvent when its current liabilities exceed its current assets.
A current asset that reports the amount paid for dues that have not yet expired. As the prepaid dues expire, the account Prepaid Dues is reduced and dues expense is increased.
The cost of telephone service that was used during the period shown on the income statement.
See credit memo.
The acronym for original equipment manufacturer.
A term used to describe checks written by a company that have been received and paid by the bank on which they were drawn or written. The check number and amount will appear on the company’s checking account...
The amount in a bank account according to the bank’s records.
The activities provided by a nonprofit in carrying out one of its major programs.
The formal planning for significant expenditures, such as property, plant and equipment.
Revenue that has been earned but not yet invoiced to the customer.
A class of corporation stock that provides for preferential treatment over the holders of common stock in the case of liquidation and dividends. For example, the preferred stockholders will be paid dividends before the...
A formal written promise to pay interest every six months and the principal amount at maturity.
The estimated volume in a future period that will be used for allocating indirect manufacturing costs.
four months earlier and the check has not yet cleared the company’s bank account. Example of Writing Off an Old Outstanding Check On January 22, a company issued a check for $124 for a business expense. As of June 30,...
See full disclosure principle.
See limited liability company.
See program evaluation and review technique (PERT).
Used in conjunction with cost or expense behavior. Mixed expenses consist of a constant or fixed portion and a variable portion. For example, sales salaries would be a mixed expense if each sales person’s...
The direct method could refer to the method of preparing the statement of cash flows. The direct method could also refer to the method of allocating a manufacturing facility’s service departments to its production...
A symbol that represents 1000.
of warranty is referred to as an assurance-type warranty. In accounting jargon, the assurance-type warranty is an example of a contingent that is both probable and can be estimated. Therefore, a company must record in...
$0 salvage value at the end of its 10-year useful life. The company’s annual depreciation for a full accounting year will be $70,000 ($700,000 – $0 salvage value = $700,000/10 years = $70,000). The depreciation...
The amounts withheld for employees’ checks for Social Security tax, Medicare tax, federal income tax, state income tax, and voluntary deductions such as United Way, union dues, 401(k) contributions,...
The expenses directly incurred by a nonprofit organization in providing one of its programs.
The amount a company owes for expenses or losses incurred that have not yet been paid nor recorded through a routine transaction. To learn more, see Explanation of Adjusting Entries.
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In accounting and bookkeeping this term is used to describe paying a vendor more than once for the amount owed.
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