margin ratios vary between industries. Therefore, you should compare a company’s gross margin ratio to other companies in the same industry and to its own past ratios or its planned ratios. Join PRO to Track Progress...
margin ratios vary between industries. Therefore, you should compare a company’s gross margin ratio to other companies in the same industry and to its own past ratios or its planned ratios. Join PRO to Track Progress...
The income statement account which contains a portion of the cost of equipment that is being expensed during the time interval shown in the heading of the income statement.
Same as book value. For example, an asset’s net book value is equal to the asset’s cost minus its accumulated depreciation.
See bank reconciliation.
The depreciation method based on the number of units produced by the asset rather than on the passage of time. This method is also referred to as the units of activity method because depreciation is based on some...
U.S. social security system.
Also referred to as footnotes. These provide additional information pertaining to a company’s operations and financial position and are considered to be an integral part of the financial statements. The notes are...
Under this method, net income is determined by analyzing the change in owner’s equity. The alternative is the transaction approach in which each transaction is recorded, sorted and stored.
Financial statements based upon various assumptions.
See exchange of similar nonmonetary assets.
Under accrual accounting it is the rent earned during the period indicated in the heading of the income statement, regardless of when the money is received from the tenant.
Beginning in 2018, this is one of two classifications of net assets reported on the financial statements of a not-for-profit organization’s financial statements. This classification is to be used instead of the...
(a balance sheet account) for $500, and credits Interest Income (an income statement account) for $500. Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to Advance Your Accounting and...
The stated legal amount appearing on bonds.
Rather than the previous year’s budget being the starting point for the next budget, a zero-based budget assumes no activities: everything in the budget must be justified.
See inventory: work-in-process (WIP).
The net amount of revenues and gains minus expenses and losses for the current year for the sole proprietorship owned by R. Smith. After the financial statements are prepared for the year, this amount will be transferred...
The exchange or trade-in of a long-term asset for a completely different long-term asset. For example, exchanging an antique car for land.
of accounting (generally accepted accounting principles), while the employee payroll records for the Internal Revenue Service (IRS) requires the cash method of accounting. Example of the Corporation’s Wages Expense...
A subgroup of the supporting activities of a nonprofit organization. This functional expense classification is used to report the overall management of the nonprofit organization other than the direct expenses of...
See units of production method of depreciation.
A division’s operating income after deducting a charge for the cost of the corporation’s capital being used by the division.
A highly summarized balance sheet
A balance sheet line to report short-term assets that are too insignificant to be identified separately.
See vacation pay payable.
The accounting guideline requiring that revenues be shown on the income statement in the period in which they are earned, not in the period when the cash is collected. This is part of the accrual basis of accounting (as...
record the $9 cash discount with a debit to the account Sales Discounts. The buyer will record the $9 savings as a credit to Purchase Discounts or as a reduction to the cost recorded in inventory. My dentist offers a 5%...
An asset account which reports the carrying amount of a company’s investment in another enterprise.
Often a liability representing the differences between the income tax expense associated with the revenues and expenses reported on a corporation’s income statements and the actual income tax appearing on the...
Sorting and reporting expenses according to the type of activity for which the expense was incurred. The functional expense classifications for a nonprofit organization would be Program #1, Program #2, Management and...
The allocation of one year’s income tax expense to the various sections of the income statement. For example, extraordinary items must be reported after income tax on the income statement, while operating revenues...
A liability account used to record an amount received from a customer before a service has been provided or before goods have been shipped. This account is referred to as a deferred revenue account and could be entitled...
This is an administrative expense which reports the fees incurred by a company for the expenses associated with its checking account transactions.
R & D costs. These are costs incurred to develop new products or processes that may or may not result in commercially viable items. The general rule is that research and development costs are to be expensed...
An estimated income statement for a future period of time that is based on projected or budgeted transactions.
What is the aging method? Definition of Aging Method The aging method usually refers to the technique for estimating the amount of a company’s accounts receivable that will not be collected. The estimated amount that...
Federal government securities with a fixed interest rate and maturing in more than 10 years.
A top ranking corporation official usually reporting to the chief executive officer and responsible for the operations of the corporation.
See FOB destination and FOB shipping point.
See direct labor efficiency variance.
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