See credit memo.
See credit memo.
If a mortgage payment is due by December 31, but the payment is not made until the following month, should the loan payment be accrued at December 31? The interest portion of the mortgage payment should be accrued as of...
To record accounting entries into a journal.
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...
The par value of common and preferred stock.
A symbol that indicates the total amount of fixed costs during a specified period of time. In the equation of the straight line, y = a + bx, the total amount of fixed costs during the period is represented by...
The price at which one division or subsidiary of a company transfers products to another division or subsidiary of the company.
See mixed expenses.
Also referred to as illusory profits. Occurs because accountants use past costs rather than replacement costs. For example, in computing the cost of goods sold accountants often use the FIFO cost flow assumption. This...
Expenses that vary with some activity. For example, sales commissions expense and cost of goods sold will be greater when sales are greater; electricity expense will decrease when machine hours are reduced.
A word that means to add a column of numbers as in “Foot the amounts listed in column A.” Also see crossfoot.
Are undeposited checks reported as cash? Undeposited checks that are not postdated (not dated with a future date) are reported as cash. Accountants define cash as more than just currency and coins. For example,...
To learn more, see our Financial Ratios Outline.
The increase in a carrying amount. Also see write-up work.
The type of stock that is present at every corporation. (Some corporations have preferred stock in addition to their common stock.) Shares of common stock provide evidence of ownership in a corporation. Holders of common...
Are estimates allowed in bookkeeping? While bookkeeping involves mostly precise amounts from sales and purchase invoices, cash receipts and checks written, etc. there are situations when estimates need to be entered....
See inventory: work-in-process (WIP).
The second section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
In securities, a party that assists a company in issuing stock or bonds.
See uncleared check.
The compensation usually associated with executives, managers, professionals, office employees, etc. whose pay is stated on an annual or on a monthly basis. (On the other hand, “wages” is usually associated...
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...
Future amounts that have been discounted to the present.
See Statement of Financial Accounting Standards.
See net operating income (NOI).
A listing of the materials included in a product. A bill of material could be thought of as a bakery’s recipe for producing one of its products.
Money set aside for a specific purpose. An individual’s monthly mortgage payment might include $300 per month for the real estate taxes due at the end of the year. The $300 is said to be put into escrow each...
Form 990 is the Internal Revenue Service (IRS) form entitled Return of Organization Exempt from Income Tax. This federal form must be filed annually by tax exempt organizations. However, some organizations such as...
Is the cost of goods sold an expense? Why the Cost of Goods Sold is an Expense We often think of expenses as salaries, advertising, rent, commissions, interest, and so on. However, the cost of goods sold is also an...
The revenue from the next unit.
Point of sale.
An additional quantity of items held in inventory in order to minimize the chance of an item being out of stock.
See inventory: finished goods.
The products with significant value that emerge at a split-off point in a process. When a joint product has little value it is referred to as a by-product.
The internal growth of a company’s existing businesses. Organic growth excludes the additional sales resulting from acquiring another company.
The person that owes money. If a bank lent you money, the bank is the creditor and you are the debtor.
The party receiving goods to be sold. See consigned goods.
See income statement. To learn more, see Explanation of Income Statement.
What is the free cash flow ratio? Definition of Free Cash Flow Free cash flow for a year is an amount (as opposed to a ratio or percentage) usually defined as: net cash provided by operating activities for the year minus...
See chief executive officer.
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