See generally accepted accounting principles (GAAP).
See generally accepted accounting principles (GAAP).
See residual income (RI).
A current or future cost that will differ among alternatives. For example, if a company is deciding whether to expand its sales territory, the real estate tax and depreciation on the company’s headquarters building...
A current liability account that reports the amounts owed to employees for hours worked but not yet paid as of the date of the balance sheet.
Someone who performs a task for a company, but is not an employee. The IRS has criteria to assist in distinguishing between an independent contractor and an employee.
A projection or estimate of the future quantities and selling prices of products and/or services.
Commitments are items that are not reported as liabilities as of the balance sheet date. Some of these items are reported in the notes to the financial statements. Examples include noncancelable contracts to rent space...
A decrease in the value of a long term asset to an amount that is less than the amount shown under the cost principle.
A structured market for trading stocks and bonds such as the New York Stock Exchange or NASDAQ. Capital market can also include less structured markets such as private placements.
A statistic known as the coefficient of determination. This statistic indicates the percent change in the dependent variable that is explained by the change in the independent variable(s).
In accounting and bookkeeping this term is used to describe paying a vendor more than once for the amount owed.
See entity as a whole.
Operating expenses are the costs of a company’s main operations that have been used up during the period indicated on the income statement. For example, a retailer’s operating expenses consist of its cost of...
An asset account in a bank’s general ledger that indicates the amounts owed by borrowers to the bank as of a given date.
See cash surrender value.
See donor-imposed restriction.
Long-term assets that are reported under the classification of property, plant, and equipment on a company’s balance sheet. These assets are depreciated over their useful life.
The time required to set up a piece of production equipment.
A term that describes the steps when processing transactions (analyzing, journalizing, posting, preparing trial balances, adjusting, preparing financial statements) in a manual accounting system. Today many of the steps...
Journals other than the general journal. Special or specialized journals include the cash receipts journal, the cash disbursements journal, the purchases journal, and the sales journal.
A sole proprietorship, partnership, or corporation organized for the purpose of earning profits and enhancing the financial position of the owners.
The term used by manufacturers to indicate that its manufacturing overhead applied or assigned to its output is less than the amount actually incurred.
Waste, scrap, evaporation, etc. in the manufacturing of products. Normal spoilage is considered unavoidable and is part of the cost of producing the good output. Abnormal spoilage is considered avoidable and is not part...
Someone who has granted credit. If a bank lends a company money, the bank is a creditor. If a supplier sold merchandise to a company on credit, the supplier is a creditor.
Long term assets of a company such as minerals, oil reserves, timberland, stone quarries, etc. The term depletion is associated with natural resources.
The acronym for cost of sales or for the cost of services.
A lease that “in substance” is a purchase and financing arrangement. When a lease meets certain criteria, the asset being “rented” is recorded as an asset and a liability is also recorded. A lease...
A person who is considered to be both the employer and the employee. For example, the sole owner of a sole proprietorship is self-employed.
Another word for purchasing.
See accrued payroll.
See stockholder.
See mixed expenses.
Sending merchandise to another party (an agent, consignee) in order to sell the merchandise. Also see consigned goods.
See activity-based costing.
The allocation to expense of the cost of an intangible asset such as a patent or goodwill.
A balance on the right side (credit side) of an account in the general ledger.
See fixed manufacturing overhead volume variance.
A stated legal amount often appearing on preferred stock, bonds, and some common stock.
Costing system wherein fixed manufacturing overhead is allocated to (or absorbed by) products being manufactured. This system, which treats fixed manufacturing costs as a product cost, is required for external financial...
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