A mathematical technique that determines the best-fitting line through a series of points. This is used in regression analysis.
A mathematical technique that determines the best-fitting line through a series of points. This is used in regression analysis.
A term used with standard costs to report a difference between actual costs and standard costs. To learn more, see Explanation of Standard Costing.
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 amount of owner’s equity or stockholders’ equity reported on a company’s balance sheet. This is not an indication of the company’s fair market value.
The inability to pay liabilities as they become due. Some consider a company to be insolvent when its current liabilities exceed its current assets.
The term that refers to the stock of a corporation which is traded on the stock exchanges (as opposed to stock that is privately held among a few individuals).
A current asset representing amounts paid in advance for future expenses. As the expenses are used or expire, expense is increased and prepaid expense is decreased.
A term to mean the company’s general ledger or accounting records.
A term used to describe checks written by a company that have been received and paid by the bank on which they were drawn or written. The check number and amount will appear on the company’s checking account...
A dividend paid in assets other than cash.
See income statement. To learn more, see Explanation of Income Statement.
The internal growth of a company’s existing businesses. Organic growth excludes the additional sales resulting from acquiring another company.
The party receiving goods to be sold. See consigned goods.
Often a liability representing the differences between the income tax expense associated with the revenues and expenses reported on a corporation’s income statements and the actual income tax appearing on the...
The relationship between two variables. There can be correlation without a cause-and-effect relationship. Also see coefficient of correlation.
The person that owes money. If a bank lent you money, the bank is the creditor and you are the debtor.
See direct labor efficiency variance.
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...
A non-operating item that results from the sale of a long-term asset for more (gain) or less (loss) than its carrying amount or book value.
The discounted value of a series of equal amounts occurring at future points with equal time intervals.
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.
Also referred to as real accounts. Accounts that do not close at the end of the accounting year. The permanent accounts are all of the balance sheet accounts (asset accounts, liability accounts, owner’s equity...
A company might construct a building and then sell the building to an investor who in turn leases the building back to the company.
Reports too little. If an error understates the inventory and the company’s net income, the amount of inventory and the amount of net income being reported are less than the correct amounts.
Financial statements that bear the report of independent auditors attesting to the financial statements’ fairness and compliance with generally accepted accounting principles.
A term often used in present value calculations to distinguish a one-time cash amount from an annuity (or series of equal payments).
A stockholders’ equity account that generally reports the net income of a corporation from its inception until the balance sheet date less the dividends declared from its inception to the date of the balance...
A current liability account which reflects the amount of income taxes currently due to the federal, state, and local governments.
A promise to repair, replace, refund, etc. a product during a specified period. The company making the promise has a contingent liability and a warranty expense that should be recorded at the time the product is sold.
Spreading the physical counting of inventory throughout the year. For example, a company may physically count a different 10% of its inventory each month instead of counting 100% of its inventory once per year.
A tax imposed on income earned by a nonprofit that is unrelated to its exempt purpose.
A long-term asset account reported on the balance sheet under the heading of property, plant, and equipment. Included in this account would be copiers, computers, printers, fax machines, etc.
Long-term assets including property, plant, equipment and intangible assets. Buildings, furnishings, fixtures, office equipment, and vehicles are common examples of long-lived assets which are depreciated by nonprofit...
The interest rate specified or stated in a note payable or in a bond payable. Often this rate is fixed and will not change during the life of the note or bond.
This is an administrative expense which reports the fees incurred by a company for the expenses associated with its checking account transactions.
A loan in which the interest rate does not change over the life of the loan.
An expense account which is expected to have a credit balance instead of the typical debit balance.
Journals other than the general journal. Special or specialized journals include the cash receipts journal, the cash disbursements journal, the purchases journal, and the sales journal.
See FOB destination and FOB shipping point.
The second major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
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