The basic general rules upon which more detailed accounting standards are built. To learn more, see Explanation of Accounting Principles.
The basic general rules upon which more detailed accounting standards are built. To learn more, see Explanation of Accounting Principles.
See accrued rent expense. Also see accrued rent income.
Under the accrual method of accounting, the account Unemployment Tax Expense on Warehouse reports the unemployment tax expense the company has incurred for the employees in the warehouse during the period indicated in...
The revenue classification used by nonprofit organizations to account for the amounts received as donations. It is also an expense classification for the donations made to another nonprofit organization. Contributions...
A loss from holding an asset and the loss has not yet been reported in the financial statements.
The time required to set up a piece of production equipment.
See inventory: work-in-process (WIP).
Receivables due from customers. See accounts receivable.
In accounting the qualitative characteristics include relevance, reliability, comparability, and consistency. Qualitative characteristics are discussed in the Financial Accounting Standards Board’s Statement of...
A listing of the general ledger accounts and their account balances at a point in time after the adjusting entries have been posted. The grand total of the accounts with debit balances should equal the grand total of the...
This ratio indicates the percentage of each sales dollar that is available to cover a company’s fixed expenses and profit. The ratio is calculated by dividing the contribution margin (sales minus all variable...
Refers to the accounting associated with the preparation of the main financial statements: income statement, balance sheet, statement of cash flows, statement of retained earnings, statement of stockholders’...
See limited liability company.
This preferred stock feature assures the owner that any omitted dividends on this stock will be made up before the common stockholders will receive a dividend. Any omitted dividends on cumulative preferred stock are...
The actual cost of direct materials, the actual cost of direct labor, and manufacturing overhead applied by using a predetermined annual overhead rate.
A long-term asset account that reports a company’s cost of automobiles, trucks, etc. The account is reported under the balance sheet classification property, plant, and equipment. Vehicles are depreciated over...
The result of dividing a corporation’s net income by the average amount of common stockholders’ equity during the time interval when the net income was earned. To learn more about this ratio, see Explanation...
See prepaid expense.
The cumulative amount of depletion expense pertaining to the natural resources shown on the balance sheet. The account has a credit balance and will be reported on the balance sheet as a contra asset.
Financial statements prepared by an accountant based on the amounts provided by a client. The accountant does not review or audit the amounts provided and therefore does not provide any assurances regarding the validity...
This account is a non-operating or “other” expense for the cost of borrowed money or other credit. The amount of interest expense appearing on the income statement is the cost of the money that was used...
The repeated elimination of products without a corresponding decrease in overhead costs. As a result the amount of overhead allocated to each unit of product increases. If selling prices are increased to cover the higher...
See long-term liabilities.
The stated interest rate appearing on the face of the bond. Also referred to as the nominal rate or the stated interest rate.
Generally a long term liability account containing the face amount, par amount, or maturity amount of the bonds issued by a company that are outstanding as of the balance sheet date. To learn more about bonds payable,...
Assigning manufacturing overhead costs to products being manufactured by using a manufacturing overhead rate.
A request by the petty cash custodian for a company check in order to return the amount of currency and coins in the petty cash box to the amount shown in the general ledger account.
A revenue account that reports the sales of merchandise. Sales are reported in the accounting period in which title to the merchandise was transferred from the seller to the buyer.
A method used by retailers for estimating the cost of ending inventory without tracking the individual units of product.
A legal entity organized under state laws that is considered separate from its owners. Ownership is evidenced by shares of stock.
This indicates (on average) how many days it takes to sell the merchandise held in inventory. To learn more, see Explanation of Financial Ratios.
The total of interest and principal payments required to be paid on loans payable.
An income statement account for expense items that are too insignificant to have their own separate general ledger accounts.
See American Institute of Certified Public Accountants.
To report a revenue or expense that has occurred, but has not yet been entered in the accounting records as of the end of the accounting period. To learn more, see Explanation of Adjusting Entries.
See unrelated business income tax.
A stakeholder is anyone that has an interest or is affected by a decision. For example, some of the stakeholders of a state university include the students, students’ families, alumni, professors, custodians,...
Obligations that a company has incurred, but have not yet been routinely recorded in Accounts Payable. For example, if the interest on a bank loan is paid on the 10th of each month, then on the last day of each month...
A diagram depicting a company’s hierarchy or chain of command, its business segments, functions, and departments.
Featured Review
"I retired a few months ago from a law enforcement career in order to spend more time with my family. Leading up to my retirement, I explored different secondary career options that would be stimulating and rewarding, but also give me the flexibility I wanted. I learned about bookkeeping and really developed an interest for it. From the beginning, I saw AccountingCoach and Mr. Averkamp being highly and widely praised. After taking a few courses, I made the decision to become a bookkeeper. I became a PRO user because I believed it was important to keep track of my studies and use as many resources as possible to absorb the information. I like how the material is presented in a variety of ways (reading, video, flashcards) that reinforce my learning. I also feel it is presented at a good level, in a way that makes it fairly easy to understand without oversimplifying it. AccountingCoach has helped me understand proper accounting skills that can be applied regardless of the accounting system or software I use. I think this is great because although there is a lot of software out there that simplifies bookkeeping, I don't think it should be used without having a thorough understanding of the processes and knowing whether it's working properly. I definitely believe AccountingCoach has helped me become a better, more reliable, and more intelligent bookkeeper." - Mark P.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviews
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: