The depreciation method that results in the same equal amount of depreciation expense for each full year over the life of the asset. See Explanation of Depreciation for an illustration and further discussion of...
The depreciation method that results in the same equal amount of depreciation expense for each full year over the life of the asset. See Explanation of Depreciation for an illustration and further discussion of...
A nongovernment group of seven members assisted by a large research staff which is responsible for the setting of accounting standards, rules, and principles for financial reporting by U.S. entities. Go to www.fasb.org...
Often a 1% or 2% reduction in the amount owed if an invoice is paid within 10 days of the invoice date instead of the customary 30 days.
The expense incurred during the time interval indicated on the income statement for using rented equipment.
An item that is dependent on another item. For example, your wages would be a dependent variable and the hours you work would be the independent variable. This relationship is often expressed as y = a + bx, where y is...
Manufacturing overhead assigned to units of output. Often this is applied via a standard overhead rate. See the Explanation of Standard Costing.
Activities that are not specifically associated with a specific product or customer. For example, the costs of an audit and filing information with government agencies are examples of organization-sustaining activities.
This current liability account reports the amount a company must remit to a court or other agencies for amounts withheld from its employees’ salaries and wages.
Goods sold by a retailer, wholesaler, distributor, manufacturer, etc.
The difference between the call price of a bond or preferred stock and its stated or par value.
A current asset that reports the amount paid for dues that have not yet expired. As the prepaid dues expire, the account Prepaid Dues is reduced and dues expense is increased.
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 amount that a bank commits to lend a borrower during a specified purpose.
A loan having the security of a lien on the borrower’s real estate.
Financial Statements Video Training Part 8 Balance sheet: working capital, current ratio, financial leverage, notes to financial statements, comparative balance sheets Must-Watch Video Learn How to Advance Your...
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.
Net sales is the gross amount of Sales minus Sales Returns and Allowances, and Sales Discounts for the time interval indicated on the income statement.
Also referred to as draws. These are a reduction of owner’s equity, but are not a business expense and they do not appear on the sole proprietorship’s income statement.
The leading accounting and bookkeeping software for small businesses in the United States. QuickBooks is the registered trademark of Intuit Inc.
Commitments are items that are not reported as liabilities as of the balance sheet date. Some of these items are reported in the notes to the financial statements. Examples include noncancelable contracts to rent space...
The amount of insurance that was incurred/used up/expired during the period of time appearing in the heading of the income statement. The amount of insurance premiums that have not yet expired should be reported in the...
The first section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
An interest rate that is not explicitly stated. For example, instead of paying $100 cash a person is allowed to pay $9 per month for 12 months. The interest rate is not stated, but the implicit rate can be determined by...
The amount of cash that could be received if a whole life insurance policy were canceled.
Preferred stock where the dividend could be more than the original, stated dividend.
The current price for a commodity or other item to be delivered immediately.
Investments in common stock, preferred stock, corporate bonds, or government bonds that can be readily sold on a stock or bond exchange. These investments are reported as a current asset if the investor’s intention...
A process which discounts future cash flows to the present in order to reflect the time value of money. Examples of the discounted cash flow model are net present value and internal rate of return.
The indirect manufacturing costs actually incurred during an accounting period.
A person who is considered to be both the employer and the employee. For example, the sole owner of a sole proprietorship is self-employed.
The balance of the owner’s capital account excluding the current year’s net income and current year’s draws by the owner.
A temporary account to which the income statement accounts are closed. This account is then closed to the owner’s capital account or a corporation’s retained earnings account. This and other summary accounts...
Someone who performs a task for a company, but is not an employee. The IRS has criteria to assist in distinguishing between an independent contractor and an employee.
The accounting term that means an entry will be made on the left side of an account. To learn more about debits and credits, see our Debits and Credits Outline.
The discounted value of a series of equal amounts occurring at the end of each equal time interval. To learn more, see our Present Value of an Ordinary Annuity Outline.
Corporations whose stock is traded on stock exchanges. Also referred to as publicly-traded corporations.
A donor-imposed restriction on net assets that requires using the assets within a specified passage of time.
A financial statement that shows all of the changes to the various stockholders’ equity accounts during the same period(s) as the income statement and statement of cash flows. It includes the amounts of...
A balance sheet line to report short-term liabilities that are too insignificant to be identified separately.
Featured Review
"As a trainer/lecturer of English for Specific Purposes with a focus on Financial and Business English, AccountingCoach.com is THE website I recommend to my students. They are speakers of other languages and AccountingCouch.com makes the world of finance and Accounting in English accessible to them. They need nothing more to convince themselves of accounting and finance terminology. This is their go-to resource. Apart from improving their English levels, professionally they gain insight as well. They are getting core information, updates, and learn about trends. To this effect many students have commented. Your website is also a tremendous support to me when it comes to doing quizzes, finding material to improve reading skills and when setting exam papers. And all of that for free! Thank you Mr Averkamp. For sharing your knowledge, for making such a contribution to education, for reaching students across the globe. You are changing the world. With sincere gratitude!" - Trudie F.
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: