A promise to repair, replace, refund, etc. a product during a specified period. The company making the promise has a contingent liability and a warranty expense that should be recorded at the time the product is sold.
A promise to repair, replace, refund, etc. a product during a specified period. The company making the promise has a contingent liability and a warranty expense that should be recorded at the time the product is sold.
A part of a manufacturer’s inventory that includes direct and indirect materials. Also referred to as stores.
See FASB Interpretation.
A cost or expense that is not directly traceable to a department, product, activity, customer, etc. As a result indirect costs and expenses are often allocated to the department, product, etc. For example, a...
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 temporary account that is debited when cash dividends have been declared (instead of debiting the Retained Earnings account. At the end of the accounting year, the balance in this account is transferred to the Retained...
A financial ratio that compares a company’s interest expense to the company’s income before interest expense and income taxes. It is an indicator of the likelihood that interest payments will be made in the...
The additional amount given to employees for the overtime hours. Usually this is the “half-time” in time and one-half. For example, if an employee’s hourly pay rate is $10 per hour and the employee...
One hundredth (1/100) of a percentage point. In other words, one percentage point is equal to 100 basis points. The difference between an interest rate of 6.5% and 6.75% is 25 basis points.
Receivables other than Accounts Receivable. Examples include amounts due from employees and income tax refunds receivable.
The date on which the board of directors of a corporation declares a dividend on the corporation’s stock. On this date an accounting entry is made to debit Retained Earnings and to credit Dividends Payable.
A term that refers to a negative checking account balance. It arises when a company writes checks in excess of the amount it has on deposit in its checking account.
Often this account appears as a line in the retained earnings section of stockholders’ equity (balance sheet) and will show the year-to-date net income. The reason is that some accounting software will not put the...
See equivalent units of production.
See pass-through contributions.
See payroll taxes payable.
An income statement account for expense items that are too insignificant to have their own separate general ledger accounts.
In activity-based costing, this refers to the number of items that will be produced after a machine has been setup.
The price at which one division or subsidiary of a company transfers products to another division or subsidiary of the company.
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 designation awarded by one of 50 U.S. states or five jurisdictions to a college graduate who has passed the rigorous Uniform CPA Exam and has met the required work experience. See Accounting Careers.
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...
The percentage resulting from dividing the dividends per share by the market price per share.
See inventory carrying costs.
See endowment fund.
In accounting this refers to the multiplication of quantity times price, or number of units times price or cost per unit.
That part of the accounting system which contains the balance sheet and income statement accounts used for recording transactions.
To eliminate debt such as a company’s repurchase or retirement of its outstanding bonds.
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.
A certified public accountant (CPA) who practices accounting in his or her own firm without another CPA as a partner or shareholder.
The owner’s equity account that contains the amount invested in the sole proprietorship by Matt Jones plus the net income since the company began minus the draws made by Matt Jones since the company began. The...
The first-in, first-out cost flow assumumption under the perpetual inventory system. The first (oldest) costs are the first costs removed from inventory at the time that goods are sold. The most recent costs will remain...
The standards, rules, guidelines, and industry-specific requirements for financial reporting. To learn more about accounting principles, see our Accounting Principles Outline.
This term is often associated with an investment in the common stock (and/or preferred stock) of a corporation when the stock is publicly traded.
One of the types of adjusting entries that are made at the end of the accounting period in order to report (1) revenues that have been earned but have not yet been entered into the accounting records, and/or (2) expenses...
The dollar amount associated with the goods in a company’s inventory. Initially the cost per unit is the cost to get the inventory items in place and ready for use. However, under certain circumstances the cost may...
The section of the U.S. Internal Revenue Service (IRS) code which includes public charities such as religious, scientific, educational, and certain other organizations. Under section 501(c)(3) a nonprofit can be approved...
An amount owed on bill or invoice from a vendor or supplier of goods or services.
Featured Review
"I work independently, as well as with an accounting company, doing bookkeeping for clients. I've been doing this now for almost 15 years. When I started working with my accounting firm, I realized I lacked knowledge on the accounting side of things, and so I signed up with AccountingCoach to help me bridge the gap. I chose this program because of its systematic approach to the learning process. Having the ability to test to see what I've retained, whether through the quizzes or flashcard features, has been invaluable. This program has given me the confidence to speak the language of CPAs—something I didn't have before I started with AccountingCoach. I highly recommend this program to anyone just getting started in the accounting profession or looking to enhance their knowledge." - Andy B.
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: