A “book” containing accounts. For example, there is the general ledger that contains the balance sheet and income statement accounts. There is a subsidiary ledger that contains the detailed, customer account...
A “book” containing accounts. For example, there is the general ledger that contains the balance sheet and income statement accounts. There is a subsidiary ledger that contains the detailed, customer account...
See first-in, still here (FISH).
in the retained earnings, which is part of stockholders’ equity. A net loss will cause a decrease in retained earnings and stockholders’ equity. A sole proprietorship’s net income will cause an increase in the...
variances and will be recorded in separate variance accounts. Any balance in a variance account indicates that the company is deviating from the amounts in its profit plan. While standard costs can be a useful...
What is not sufficient funds? Definition of Not Sufficient Funds Not sufficient funds or NSF or insufficient funds is a term to describe a check that has been returned by the bank because the balance in the checking...
The ratio of current assets to current liabilities. This ratio is an indicator of a company’s ability to meet its current obligations. To learn more, see Explanation of Financial Ratios.
The additional revenues from an additional quantity. It is similar to marginal revenue, except that marginal revenue refers to the revenue from the next unit. Incremental revenue might be the additional revenues from the...
Receivables other than Accounts Receivable. Examples include amounts due from employees and income tax refunds receivable.
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.
See earnings per share.
Sometimes referred to in the context of cost or expense behavior such as “variable expenses increase as volume increases.” In this context volume might be an activity such as the number of machine hours, the...
A budget that flexes with volume. Under a flexible budget the budgeted amount of manufacturing overhead will increase if the company produces more units than planned. The flexible budget will decrease if the company...
See chief financial officer.
A reduction of a markup. In the retail method of estimating inventory, it could mean the elimination of part or all of the additional markup. For example, if an item with a cost of $10 would normally be priced at $15,...
What is the cash flow statement? Definition of Cash Flow Statement The cash flow statement (officially known as the statement of cash flows) is one of the required financial statements issued by U.S. businesses (and by...
See generally accepted accounting principles (GAAP).
An asset account in a bank’s general ledger that indicates the amounts owed by borrowers to the bank as of a given date.
The underlying true cause of a cost occurring. In other words, the root cause is more than a mere correlation between an event and a cost. There is a real cause and effect relationship.
An organization without owners and with the main purpose of providing services needed by society. After application and approval by the U.S. Internal Revenue Service, a nonprofit organization may be granted tax exempt...
Relevant or meaningful data.
A series of equal amounts occurring at the end of each equal time interval. Also known as an ordinary annuity. An example would be the monthly payments on a loan. Another example is the semiannual interest on a bond.
A quality of accounting information that facilitates comparing a company’s reporting of one accounting period to another. For example, the reader of a company’s financial statements can assume that the...
The lender (bank) that receives an asset as collateral for a loan.
Another word for purchasing.
In accounting and bookkeeping this term is used to describe paying a vendor more than once for the amount owed.
See mixed expenses.
A document that discloses various conditions and terms of the company’s bonds. It would include the call price, collateral, ramifications if interest is not paid, etc.
Also referred to as a sunk cost. A past cost is not relevant to a decision.
Taking out a loan or issuing bonds in order to acquire an asset or another business.
A stockholders’ equity account that generally reports the net income of a corporation from its inception until the balance sheet date less the dividends declared from its inception to the date of the balance...
The quantity on hand that will trigger an order to buy more items. A company’s reorder point for Product X might be 80 units. When the quantity on hand gets down to 80, a purchase order is prepared to obtain more...
See direct labor efficiency variance and variable manufacturing overhead efficiency variance.
The amount paid or contributed by stockholders in exchange for shares of a corporation’s stock.
The record of journal entries appearing in order by date. Some refer to the journal as the book of original entry, since the entries are first recorded in a journal. From the journal the entries will be posted to the...
The increase in a carrying amount. Also see write-up work.
Using capital stock (common stock or preferred stock) instead of debt in order to finance an investment such as a plant asset.
Manufactured products that are often expressed in units, machine hours, etc.
Featured Review
"AccountingCoach PRO landed me a job I had been praying for. I have a background in Banking & Finance with basic accounting. However, over the years while working in the bank, I majored in customer service and branch management. When I left the bank, I was out of job for about a year but volunteering in an NGO. I sought a job as a Finance Officer in another NGO (where I am presently working) but I needed to brush up on my accounting skills. AccountingCoach PRO helped me get back on track and I landed the job! And with a lifetime membership, what more could I ask for?" - Marge E.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviewsWe now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: