The formal planning for significant expenditures, such as property, plant and equipment.
The formal planning for significant expenditures, such as property, plant and equipment.
Financial Statements Video Training Part 13 Statement of cash flows: cash flows from operating activities, cash flows from investing activities, cash flows from financing activities, quality of earnings Must-Watch Video...
A term used in break-even analysis to indicate the amount of sales that are above the break-even point. In other words, the margin of safety is the amount by which a company’s sales could decrease before the...
The third major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
The percentage resulting from dividing dividends per share by earnings per share.
The person or business that receives a loan from a bank or other lender.
Often referred to as fixed assets. This would include long term assets such as buildings and equipment used by a company. Plant assets (other than land) will be depreciated over their useful lives.
A journal entry to correct an erroneous amount previously entered in the general ledger.
A business organization different from a sole proprietorship, partnership, and corporation. As the name implies it provides the limited liability protection usually associated with a corporation. To learn more about this...
Using debt in order to control more assets. Also known as financial leverage.
The compensation earned by employees who are paid on an hourly basis. It is common for production workers to earn wages, since they are usually paid via an hourly rate.
The amount a company owes for expenses or losses incurred that have not yet been paid nor recorded through a routine transaction. To learn more, see Explanation of Adjusting Entries.
See fixed manufacturing overhead volume variance.
Payables arising from the purchase of merchandise inventory and outside services. See accounts payable.
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...
An account in the general ledger, such as Cash, Accounts Payable, Sales, Advertising Expense, etc. To learn more, see Explanation of Chart of Accounts.
A bill issued by a seller of merchandise or by the provider of services. The seller refers to the invoice as a sales invoice and the buyer refers to the same invoice as a vendor invoice.
This term is used in place of retained earnings when the balance in the retained earnings account is negative (a debit balance).
The net result of combining the discounted cash inflows and the discounted cash outflows of an investment, project, company, etc.
The balance of the owner’s capital account excluding the current year’s net income and current year’s draws by the owner.
A term used to describe the net present value method and the internal rate of return. The model discounts future cash flows back to the present time.
A management tool that identifies the critical path—the path of sequential activities requiring the longest time to complete.
A loan from a bank or other lender in which the borrower has pledged an asset as collateral in case the loan cannot be repaid in full.
To eliminate debt such as a company’s repurchase or retirement of its outstanding bonds.
The gross amount of purchases minus the amount of purchase returns, purchase allowances, and purchase discounts.
Also referred to as shareholders’ equity. At a corporation it is the residual or difference of assets minus liabilities. To learn more about stockholders’ equity, see our Stockholders’ Equity Outline.
This is the classification shown on a single-step income statement which reports the operating revenues, nonoperating revenues, and gains in one section of the income statement. Revenues and gains enhance the...
A check drawn on a bank. A cashier’s check leaves no doubt that the funds represented by the check are real. A bank money order or a certified check would also assure the payee that the funds are in the bank.
On account. Goods purchased with terms of net 10 days, net 30 days, or 2/10, net 30 are goods purchased on credit. Goods sold with similar terms are sales on credit.
Usually the top ranking officer of the corporation who is charged with executing the policies set by the board of directors.
Accounts receivable that serve as the collateral for a loan.
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 amount of temporary staffing costs that were used during the time interval indicated in the heading of the income statement.
A written opinion of an independent certified public accountant that a company’s financial statements are a fair representation of the company’s financial performance and financial position. The...
One hundredth (1/100) of a percentage point. In other words, one percentage point is equal to 100 basis points. The difference between an interest rate of 6.5% and 6.75% is 25 basis points.
One of the first efforts begun in the 1970s by the Financial Accounting Standards Board to articulate and organize into a cohesive framework all of the accounting rules that had been developed in the past. It was hoped...
Financial statements based upon various assumptions.
The current price for a commodity or other item to be delivered immediately.
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...
A general ledger account which serves to summarize similar transactions. For example, all of the closing entries involving operating expenses might be posted to an operating expense clearing (or summary) account.
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