A gain that occurs by holding an asset. For example, if a company bought land for $20,000 many years ago and today the company continues to hold the land and its value is now $175,000, the company has a holding gain of...
A gain that occurs by holding an asset. For example, if a company bought land for $20,000 many years ago and today the company continues to hold the land and its value is now $175,000, the company has a holding gain of...
on the company’s balance sheet is accurate. The additions and deductions on the bank statement are compared (or reconciled) with the items that are entered in the company’s general ledger Cash account. Some...
See external financial reporting.
A reduction in the cost of goods purchased that is allowed by the supplier based on the authorized return of goods. Also a general ledger account in which the purchase returns are recorded under the periodic inventory...
Usually the difference between the cost of inventory at LIFO versus the cost of inventory at FIFO.
The expenses directly incurred by a nonprofit organization in providing one of its programs.
See credit memo.
The abbreviation for the accounting and bookkeeping term debit.
A company might construct a building and then sell the building to an investor who in turn leases the building back to the company.
See chief executive officer.
The internal growth of a company’s existing businesses. Organic growth excludes the additional sales resulting from acquiring another company.
Sales before deducting sales returns, sales allowances, and sales discounts.
The borrower who provides to a lender an asset as collateral for a loan.
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...
See FASB Interpretation.
Management information system.
A part of a manufacturer’s inventory that includes direct and indirect materials. Also see inventory: materials.
Bonds with one maturity date (as opposed to serial bond).
The benefit foregone by choosing another course of action. Also known as the opportunity cost. The lost opportunity is sometimes measured by the lost contribution margin (sales minus the related variable costs).
A publication by the U.S. Internal Revenue Service (IRS) to assist employers with federal payroll taxes. The complete title of the publication is Publication 15 (Circular E), Employer’s Tax Guide. It is available...
Net sales revenues minus the cost of goods sold.
The person or organization to whom a check is written.
See accrued payroll.
Past omitted dividends on cumulative preferred stock. Generally these omitted dividends were not declared and, therefore, do not appear on the corporation’s balance sheet as a liability. However, they must be...
Pushing authority and decision making down to the managers and employees who are closer to the work.
The present fair market value.
Point of sale.
See consistency.
See net operating income (NOI).
A class of corporation stock that provides for preferential treatment over the holders of common stock in the case of liquidation and dividends. For example, the preferred stockholders will be paid dividends before the...
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 Statement of Financial Accounting Standards.
See inventory: work-in-process (WIP).
How do you compute a selling price if you know the cost and the required gross margin? Definition of Selling Price A selling price is the amount that a customer will pay to buy a product. If a retailer wants to earn a...
A liability account that reports the estimated amount that a company will have to spend to repair or replace a product during its warranty period. The liability amount is recorded at the time of the sale. (It is also the...
The time from when goods are ordered until the time when the goods are received.
An Italian monk associated with debits, credits, and double-entry accounting approximately 500 years ago.
Sending merchandise to another party (an agent, consignee) in order to sell the merchandise. Also see consigned goods.
Magnetic ink character recognition.
Selling expenses are part of the operating expenses (along with administrative expenses). Selling expenses include sales commissions, advertising, promotional materials distributed, rent of the sales showroom, rent of...
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