A term to mean the company’s general ledger or accounting records.
A term to mean the company’s general ledger or accounting records.
The date that determines which stockholders are entitled to receive a corporation’s declared dividend. No accounting entry is made on this date.
A symbol that indicates the variable cost rate and also the slope of a straight line. For example, in the equation of the straight line, y = a + bx, ‘b’ represents the variable cost rate per unit of...
The abbreviation for the accounting and bookkeeping term debit.
The relationship between two variables. There can be correlation without a cause-and-effect relationship. Also see coefficient of correlation.
The ability to generate cash.
National Association of Accountants. This organization’s name was changed to Institute of Management Accountants and currently is referred to as IMA.
The depreciation used on a company’s income tax return. Usually this is different from the depreciation used on the financial statements.
The compensation earned by hourly-paid employees during the interval of time indicated in the heading of the income statement. Under the accrual basis of accounting, the date that wages are paid does not determine when...
The reduction of an asset’s carrying amount. For example, we often reduce or write down inventory from its cost to its net realizable value when the net realizable value is lower.
Amounts spent for property, plant and equipment.
Is the direct method still used in the statement of cash flows? The direct method is one of two methods allowed for preparing the statement of cash flows (or cash flow statement). The direct method is recommended by the...
In accounting this term means a company’s net income, which is the bottom line of the income statement.
A person or organization that gives or donates money, property, services, etc.
Actual changes in cash as opposed to accounting revenues and expenses.
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...
Actions taken or not taken prior to issuing financial statements in order to improve the amounts appearing in the financial statements.
See our Standard Costing Outline.
What does it mean to check the extensions and to foot an invoice? To check the extensions on a purchase invoice means to verify that the number of units of each item multiplied by its unit cost agrees with the total...
Net income divided by net sales.
What is going concern? Definition of Going Concern The going concern assumption is a basic underlying assumption of accounting. For a company to be a going concern, it must be able to continue operating long enough to...
The symbol for the number of units of product, number of machine hours, or other indicator of activity or volume as shown in the equation of the cost line y = a + bx.
Also referred to as a shareholder. The owner of shares of stock in a corporation. Every corporation has common stock and those owners are known as common stockholders. Some corporations also issued preferred stock and...
To eliminate debt such as a company’s repurchase or retirement of its outstanding bonds.
See direct labor efficiency variance and direct labor rate variance.
The term used by manufacturers to indicate that its manufacturing overhead applied or assigned to its output is less than the amount actually incurred.
The underlying true cause of a cost occurring. In other words, the root cause is more than a mere correlation between an event and a cost. There is a real cause and effect relationship.
See accrued rent expense. Also see accrued rent income.
An unsecured bond. For example, a bond not secured by a lien on the issuer’s property.
A business that sells goods from inventory. The business could be a retailer, wholesaler, distributor, manufacturer, etc.
See long-term liabilities.
What is opportunity cost? Definition of Opportunity Cost Opportunity cost is the profit that was lost or missed because of some action or failure to take some action. Some refer to opportunity cost as opportunity lost....
Present value.
The length of time that an asset would last. Instead of the physical life, accountants focus on the useful life. For example, a computer’s physical life is perhaps 50 years. However, its useful life is likely to be...
Temporary differences between the reporting of a revenue or expense for financial statements (books) and the reporting of the item for income tax purposes. For example, it is common for companies to depreciate equipment...
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.
What is the difference between wages and salary? You should be aware that some people use the terms wages and salary interchangeably. I and many others make the following distinction… Definition of Wages Wages are...
An actual count of the goods owned by the company. The actual counts are then compared to the quantities reported on the detailed inventory records. If a difference exists, the quantity shown on the inventory record...
More formally known as the Uniform CPA Examination. This rigorous, 14-hour, computer-based exam consists of questions developed by the American Institute of Certified Public Accountants. The exam is in English only and...
Also known as a CD. A bank time deposit (savings deposit) that cannot be withdrawn until a specified date. For example, a CD might mature in 6, 9, 12, or 18 months. If the amount deposited in a CD needs to be withdrawn...
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