What is the entry for a loan to an employee? Definition of Loan to Employee A loan to an employee is money advanced by the company to assist the employee. If the employee is expected to repay the loan within one year of...
What is the entry for a loan to an employee? Definition of Loan to Employee A loan to an employee is money advanced by the company to assist the employee. If the employee is expected to repay the loan within one year of...
See interest revenues.
See Accounting Principles Board.
See cash surrender value.
In financial accounting this term often refers to the accounting guidelines or principles of conservatism and materiality.
See direct materials usage variance. To learn more, see Explanation of Standard Costing.
Are payroll withholding taxes an expense or a liability? Definition of Payroll Withholding Taxes Payroll withholding taxes are amounts withheld from employees’ wages and salaries. The amounts withheld are actually the...
Is it a requirement for a small business to have a CPA? Generally, a small business is not required to have a CPA or certified public accountant. A CPA would be needed if the small business must have its financial...
A phrase used in depreciation and amortization to indicate that the expense is being allocated on a logical basis (because a cause and effect relationship does not exist).
See inventory: work-in-process (WIP).
A company might construct a building and then sell the building to an investor who in turn leases the building back to the company.
Receivables other than Accounts Receivable. Examples include amounts due from employees and income tax refunds receivable.
See Federal Insurance Contribution Act (FICA).
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.
The record of journal entries appearing in order by date. Some refer to the journal as the book of original entry, since the entries are first recorded in a journal. From the journal the entries will be posted to the...
See first in, first out (FIFO).
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...
What is salvage value? Definition of Salvage Value In accounting, salvage value is the amount that is expected to be received at the end of a plant asset‘s useful life. Salvage value is sometimes referred to as...
Is the cost of land, buildings, and machinery a fixed cost? Land, Buildings and Machinery are Fixed Assets It is common for people to refer to land, buildings, and machinery as fixed assets. They are also referred to as...
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...
To learn more, see our Financial Ratios Outline.
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,...
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.
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...
The second section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
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...
See carrying amount.
That part of the accounting system which contains the balance sheet and income statement accounts used for recording transactions.
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.
Are liabilities always a bad thing? Definition of Liabilities Liabilities are a company’s obligations and are usually defined as a claim on the company’s assets. However, liabilities (and stockholders’ equity) can...
A bond with collateral.
An unsecured bond. For example, a bond not secured by a lien on the issuer’s property.
What is cash from operating activities? Definition of Cash from Operating Activities Cash from operating activities usually refers to the first section of the statement of cash flows. Cash from operating activities...
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.
Featured Review
"My current position is as Accounting Manager for a construction company. I became a PRO user years ago while struggling through some of my higher-level accounting classes in college, due to some faulty teaching in lower-level courses. I like that the materials on AccountingCoach range from base knowledge all the way up to detailed explanations on fairly complicated subjects. From the start, the subject matter is explained in great detail, and the interactive ways to apply the knowledge are excellent to drill it in. I have benefited from my PRO membership because I have turned the skills I learned between this and school into a career that I love." - Joseph S.
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: