The amounts in a company’s bank account that are not yet accessible because the checks deposited into the account have not yet cleared the bank on which they were drawn.
The amounts in a company’s bank account that are not yet accessible because the checks deposited into the account have not yet cleared the bank on which they were drawn.
See inventory: work-in-process (WIP).
An amount remaining after another amount is subtracted. In the accounting equation, owner’s equity is the residual of assets minus liabilities.
Scrap or waste that should have been avoided. In other words, abnormal spoilage is the amount that is over and above the normal amount that is expected in a production process.
This term is used in place of retained earnings when the balance in the retained earnings account is negative (a debit balance).
See first in, first out (FIFO).
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.
A decrease in the value of a long term asset to an amount that is less than the amount shown under the cost principle.
What is the abbreviation for debit and credit? Abbreviation for Debit and Credit The abbreviation for debit is dr. and the abbreviation for credit is cr. Apparently the “dr.” is associated with the term used in Italy...
See Federal Insurance Contribution Act (FICA).
See production service department.
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,...
Repairs that do not improve an asset or extend the asset’s life. These repairs are charged to Repairs Expense or Maintenance Expense when incurred. Major repairs such as a complete engine overhaul that extends the...
To learn more, see our Financial Ratios Outline.
A dividend in the form of more shares of stock. A 5% stock dividend means that a stockholder holding 100 shares would receive 5 additional shares of stock. Since all shareholders receive additional shares, each...
The second section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
An asset account in a bank’s general ledger that indicates the amount at which the bank is reporting or carrying its investments.
See carrying amount.
The chief accounting officer of a company. This person would head up the accounting department.
Actions taken or not taken prior to issuing financial statements in order to improve the amounts appearing in the financial statements.
See uncleared check.
Management information system.
A cost object is often a product or department for which costs are accumulated or measured. For example, a product is the cost object for direct materials, direct labor and manufacturing overhead. The factory maintenance...
Under the accrual basis of accounting, this account reports the cost of the electricity, heat, sewer, and water used during the period indicated in the heading of the income statement. Because utility companies deliver...
The assigning or dividing up of amounts. For example, depreciation is an allocation process because it assigns an asset’s cost to expense in each of the years the asset is expected to be used. There is also an...
Costs that have been used up or consumed. Expired costs are reported as expenses. (Costs that have not yet expired are reported as assets.)
A bond with collateral.
See full disclosure principle.
In accounting this is the rate used to discount future cash flows in order to determine their present value.
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.
The terms which indicate when payment is due for sales made on account (or credit). For example, the credit terms might be 2/10, net 30. This means the amount is due in 30 days; however, if the amount is paid in 10 days...
Inventory that is less than the expected amount. It might be associated with theft or damage.
An unsecured bond. For example, a bond not secured by a lien on the issuer’s property.
A check bearing a date in the future. The company receiving such a check should not report the check as cash until the date of the check.
See stockholder.
A term used to describe checks written by a company that have been received and paid by the bank on which they were drawn or written. The check number and amount will appear on the company’s checking account...
The name used by a buyer of goods or services for the sales invoice or bill received from the supplier of the goods or services.
The situation where manufacturing service departments provide service to each other. For example, the factory maintenance department provides services to the factory administrative department and the factory...
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