A formal written promise to pay interest every six months and the principal amount at maturity.
A formal written promise to pay interest every six months and the principal amount at maturity.
This is the period of time that it will be economically feasible to use an asset. Useful life is used in computing depreciation on an asset, instead of using the physical life. For example, a computer might physically...
Goods sold by a retailer, wholesaler, distributor, manufacturer, etc.
A check that has been issued but has not yet been paid by the bank on which it is drawn. An uncleared check is also known as an outstanding check.
See chief operating officer.
A journal entry made on the first day of a new accounting period to undo the accrual type adjusting entries made prior to the preparation of the financial statements dated one day earlier. Reversing entries allow for an...
See discount on bonds payable.
Usually a claim on an asset that is pledged as collateral. The lien is usually filed with a government office.
See electronic funds transfer.
The party who delivered its goods to another party (consignee). The objective is for consignee to sell the goods for the consignor. Also see consigned goods.
See return on capital employed.
Usually refers to manufacturing overhead costs such as factory supplies, factory depreciation, indirect factory labor, etc. To learn more, see Explanation of Manufacturing Overhead.
A cost or expense that is not directly traceable to a department, product, activity, customer, etc. As a result indirect costs and expenses are often allocated to the department, product, etc. For example, a...
The gross amount of purchases minus the amount of purchase returns, purchase allowances, and purchase discounts.
In some countries turnover refers to sales. Turnover is also associated with some financial ratios such as the inventory turnover ratio, the accounts receivable turnover ratio, and asset turnover ratio.
Financial Executives Institute.
A series of equal amounts occurring at the beginning of each equal time interval. Also known as an annuity due. An example would be the monthly rent on an apartment.
This is the bottom line of the income statement. It is the mathematical result of revenues and gains minus the cost of goods sold and all expenses and losses (including income tax expense if the company is a regular...
The abbreviation of the accounting and bookkeeping term credit.
Manufactured products that are often expressed in units, machine hours, etc.
The bottom line of the income statement when revenues and gains are less than the aggregate amount of cost of goods sold, operating expenses, losses, and income taxes (if the company is a regular corporation).
The chief accounting officer of a company. This person would head up the accounting department.
See endowment fund.
That part of the accounting system which contains the balance sheet and income statement accounts used for recording transactions.
Usually means to scrap a long-term plant asset and receive no proceeds from its disposal.
See equivalent units of production.
See Public Company Accounting Oversight Board (PCAOB).
Usually a bank, finance company, or person that makes a loan to another party, who is referred to as the borrower.
Also referred to as the useful life. This differs from the physical life of an asset. For example, a computer may have a physical life of 50 years, but its economic or useful life might be five years.
In the equation of a straight line, y = a + bx, ‘bx’ is the total variable cost resulting from the variable cost rate ‘b’ multiplied times the quantity ‘x’.
Billing a client based on the value of the information or service provided rather than billing based on time spent.
The leading accounting and bookkeeping software for small businesses in the United States. QuickBooks is the registered trademark of Intuit Inc.
The record of journal entries appearing in order by date. Some refer to the journal as the book of original entry, since the entries are first recorded in a journal. From the journal the entries will be posted to the...
The borrower who provides to a lender an asset as collateral for a loan.
See FASB Interpretation.
See return on investment (ROI).
A cost object is often a product or department for which costs are accumulated or measured. For example, a product is the cost object for direct materials, direct labor and manufacturing overhead. The factory maintenance...
Receivables other than Accounts Receivable. Examples include amounts due from employees and income tax refunds receivable.
What is a transposition error? Definition of Transposition Error A transposition error occurs when an amount is recorded incorrectly as the result of switching the positions of two (or more) digits. The switching of the...
To receive money in exchange for a promise to repay the amount to the lender.
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