These pronouncements were issued by the Committee on Accounting Procedures of the American Institute of Certified Public Accountants during the years 1953 to 1959. They were and are part of the generally accepted...
These pronouncements were issued by the Committee on Accounting Procedures of the American Institute of Certified Public Accountants during the years 1953 to 1959. They were and are part of the generally accepted...
Receivables due from customers. See accounts receivable.
Under accrual accounting an item has been “earned” and is reported as revenue when a service has been performed or the ownership to a product has been transferred from the seller to the buyer (not when cash...
A selling expense account shown on the income statement in order to match this expense to the related sales.
A fee for the printing of checks ordered by a company. Often the amount is deducted automatically from a company’s checking account by the company that printed the checks.
An intangible asset that is reported at cost (or lower) on the balance sheet. It might consist of a name or a logo. Trademarks should be registered with the U.S. Patent and Trademark Office. Also see trade names.
The chief accounting officer of a company. This person would head up the accounting department.
The exchange or trade-in of a long-term asset for a completely different long-term asset. For example, exchanging an antique car for land.
A part of a manufacturer’s inventory that includes direct and indirect materials. Also referred to as stores.
Federal Unemployment Tax Act. See federal unemployment tax.
See weighted-average cost flow assumption and moving-average cost of inventory.
A major repair such as an engine overhaul, which will extend the useful life of the asset. The amount should be recorded in the asset account and then depreciated over the remaining life of the asset.
To include in the cost of an asset. For example, the interest incurred by a company when it constructs its own building is added to the cost of the building’s components. This is referred to as capitalizing the...
This ratio indicates the percentage of each sales dollar that is available to cover a company’s fixed expenses and profit. The ratio is calculated by dividing the contribution margin (sales minus all variable...
The percentage resulting from dividing the dividends per share by the market price per share.
The practice where an asset purchased within a year is assumed to have been purchased at the mid-point of the year. For example, an asset purchased during the calendar year 2024 is assumed to have been purchased on July...
Assigning manufacturing overhead costs to products being manufactured by using a manufacturing overhead rate.
In financial accounting this term refers to the amount of debt excluding interest. Payments on mortgage loans usually require monthly payments of principal and interest.
In the EOQ model, the holding costs are the incremental costs of storing or holding an item in inventory for one year.
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...
Billing a client based on the value of the information or service provided rather than billing based on time spent.
The point at which several products emerge from a common process.
The net result of combining the discounted cash inflows and the discounted cash outflows of an investment, project, company, etc.
A term meaning behind, such as dividends in arrears, or something occurring at the end of a period, such as the recurring payment in an annuity in arrears.
The top ranking financial person in the corporation.
Also known as income from operations, which excludes discontinued operations, extraordinary items, and nonoperating items such as interest expense, investment income, gains, and losses.
See deferral-type adjusting entry.
A bond (long-term debt) that is secured by a lien on real estate.
See paid-in capital in excess of par value – common stock, or paid-in capital in excess of par value – preferred stock.
A restricted asset for the purpose of retiring a bond.
This ratio relates the costs in inventory to the cost of the goods sold. To learn more about this ratio, see Explanation of Financial Ratios.
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...
The amount of free cash flow divided by the weighted average number of common shares of stock outstanding during the year.
See our Break-even Point Outline.
The sale, retirement, or exchange of property, plant and equipment.
This account shows the amount of delivery expense incurred (occurring) during the accounting period shown in the heading of the income statement. The title of this account could also be Freight Out or Transportation...
The additional cost of an additional quantity. It is similar to marginal cost, except that marginal cost refers to the cost of the next unit. Incremental cost might be the additional cost from the next 200 units.
An allocation of indirect costs based on the units of production, the number of machine hours, the number of labor hours, etc.
See exchange of similar nonmonetary assets.
Also referred to as operating expenses. These expenses are reported in the period in which they were incurred, not the period in which they were paid.
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