The discounted value of a series of equal amounts occurring at the beginning of each equal time interval.
The discounted value of a series of equal amounts occurring at the beginning of each equal time interval.
A method used by retailers for estimating the cost of ending inventory without tracking the individual units of product.
What are the ways to value inventory? Definition of Valuing Inventory Generally, the financial statements of a U.S. company must report its inventory at its historical cost (not at its selling prices). Inventories are to...
Depreciated Asset Assume that a machine having a cost of $100,000 was put into service 12 years ago. It was estimated to have a useful life of 10 years and a salvage value of $1,000. Today the asset continues to be...
Stockholders' Equity (Word Scramble) Download PDF To see each answer, press or click on the blue "Unscramble" button. If you have difficulty answering the following questions, learn more about this topic...
be calculated by discounting the bond’s future cash amounts (semiannual interest payments and the maturity amount) back to the amount of cash paid to buy the bond (the present value). Example of Actual or Real...
What are assets? Definition of Assets In accounting and bookkeeping, a company’s assets can be defined as: Resources or things of value that are owned by a company as the result of company transactions Prepaid expenses...
value of money where current dollars are more valuable than future dollars. 4. Which of the following best describes the annual external financial statements of a corporation that has several wholly owned subsidiaries?...
, the calculation is: beginning book value of $60,000 X 40% = $24,000. Continue until the accumulated depreciation reaches $90,000. Download our Double-Declining-Balance Method Form and Template....
Depreciation is credited with the depreciation expense of the accounting period. Example of Double Declining Balance Depreciation Let’s assume that a retailer purchases fixtures on January 1 at a cost of $100,000....
A potential liability dependent upon some future event occurring or not occurring. For example, a company is named as a defendant in a $1 million lawsuit. Does that mean the company automatically has a liability of $1...
for each year of employment times the employee’s average monthly salary or wages during a three-year period prior to retirement. A hypothetical calculation for an employee retiring at age 65 might be 1% X 30 years of...
Is there a difference between an expense and an expenditure? Definition of Expense An expense is reported on the income statement in the period in which the cost matches the related sales, has expired, was used up, or...
A rolling budget adds a future accounting period’s budget to replace a budget for an accounting period that has past. For example, a company’s 2024 annual budget will become a rolling budget if in February...
Improving Profits Improving Profits Improving profits or reducing operating losses is likely to require some decisions and some action. Both the decisions and the actions involve the future and may involve: expanding a...
not purchased in a transaction. However, these may be the corporation’s most valuable assets. Example of Book Value per Share of Stock If a corporation without preferred stock has stockholders’ equity on December 31...
A word that means to add column totals across to see if the sum will equal the grand total. In the table below each of the columns A through Total was “footed” (added or summed) in order to get each...
at the beginning of the current period. Contractual Wrong. Coupon Wrong. Market Right! 15. A bond's maturity value is more likely to be its __________. Issue Price Wrong. Par Amount Right! 16. A 12% $100,000 bond...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
What is the payback reciprocal? The payback reciprocal is a crude estimate of the rate of return for a project or investment. The payback reciprocal is computed by dividing the digit “1” by a project’s payback...
What is ROI? Definition of ROI ROI is the acronym for return on investment. Traditionally, ROI related 1) the income statement profit to the 2) the balance sheet investment. A drawback of ROI is that the accounting...
-term assets that are used in a business. The purpose of depreciation is to match the cost of the asset with the revenues that are earned from the use of the asset. Note that the purpose of depreciation is not to...
our Financial Ratios (Explanation). 1. Which of the following is not a current asset? Inventory Wrong. Inventory IS a current asset. Prepaid Insurance Wrong. Prepaid Insurance IS a current asset because it is likely to...
consider a project, its internal rate of return must equal or exceed the hurdle rate. The hurdle rate is also used to discount a project’s future cash flows to its net present value. Example of Hurdle Rate The...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
What are the two methods for recording prepaid expenses? Definition of Prepaid Expenses Prepaid expenses refers to payments made in advance and part of the amount will become an expense in a future accounting period. A...
Our Explanation of Improving Profits will assist you in focusing on the costs and revenues that are relevant (and ignoring those which are not relevant) for improving profits and eliminating losses. Examples of the...
and/or revenues that have already been recorded in the general ledger accounts. The reason is that some of the recorded amounts will actually be used up and/or earned in a future accounting period. An example...
. The combination of these two account balances means the book value or the carrying value of the bonds payable is $101,000 ($100,000 plus $1,000). Over the life of the bonds, the premium on bonds payable must be...
Depreciation (Word Scramble) Download PDF To see each answer, press or click on the blue "Unscramble" button. If you have difficulty answering the following questions, learn more about this topic by reading our...
Our Explanation of Stockholders' Equity covers the unique terminology for a corporation's paid-in capital, retained earnings, treasury stock, and accumulated other comprehensive income. Included are cash dividends, stock...
when a corporation’s 1) cash dividend per share of common stock is divided by 2) the earnings per share of common stock. Mark as wrong Mark as right book value of a corporation This value is equal to the amount of...
Our Explanation of Debits and Credits describes the reasons why various accounts are debited and/or credited. For the examples we provide the logic, use T-accounts for a clearer understanding, and the appropriate general...
of a company and are one of the main elements of the balance sheet and accounting equation. Deferred revenues are one of these. Mark as wrong Mark as right assets These are a company’s resources that have future...
What is a post-dated check? Definition of a Post-dated Check A post-dated check (or post-dated cheque) is a check written with a future date. In other words, the date that appears on the check is after the date when the...
Elements of Financial Statements (Word Scramble) Download PDF To see each answer, press or click on the blue "Unscramble" button. 1. Probable future economic benefits is part of the definition of __________....
into service until the date of the balance sheet. The account Accumulated Depreciation is a contra asset account because it will have a credit balance. The credit balance is reported in the property, plant and equipment...
that can easily be audited. In contrast, the market value is subjective: one person thinks the land is worth $1 million while another thinks it’s worth $1.5 million. Further support for the cost principle is the...
than $1,000,000. The difference between the $1,000,000 of face value and the amount the bond market is willing to pay is the discount on bonds payable. The amount of the discount is a function of 1) the number of years...
Featured Review
"I'm currently a finance associate for a nonprofit. I came to a career in finance from having been involved with nonprofits in other capacities. I realized after starting my position (my first real finance job) that I was missing key contextual pieces. AccountingCoach was recommended to me as a professional development solution to help round out my knowledge. I like that the material is self-paced, meaning you can do as little or as much as you want in a sitting. It's also easy to look up specific terms or lingo and see what they mean, which is very helpful in the day-to-day. I don't have time to take an evening class, so it's a perfect middle-ground solution for me! Thanks to the material, I have come a long way from where I started 1.5 years ago, and I'm now able to play a much more essential role when it comes to our monthly and yearly reporting. I have also been given more responsibilities at my job, as my understanding of financial concepts and terminology has increased." - Alex K.
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: