In regression analysis this is a statistic (designated as r-squared) indicating the percentage of the change occurring in the dependent variable that is explained by the change in the independent variable(s). The percent...
In regression analysis this is a statistic (designated as r-squared) indicating the percentage of the change occurring in the dependent variable that is explained by the change in the independent variable(s). The percent...
Waste, scrap, evaporation, etc. in the manufacturing of products. Normal spoilage is considered unavoidable and is part of the cost of producing the good output. Abnormal spoilage is considered avoidable and is not part...
To receive money in exchange for a promise to repay the amount to the lender.
Advertising Expense is the income statement account which reports the dollar amount of ads run during the period shown in the income statement. Advertising Expense will be reported under selling expenses on the income...
The acronym for cost of sales or for the cost of services.
See International Financial Reporting Standards (IFRS).
See entity as a whole.
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...
The total of interest and principal payments required to be paid on loans payable.
A multi-column listing of the amounts needed to eliminate a balance in a systematic manner over the life of the item. For example, an amortization schedule for a 15-year mortgage loan would show the 180 payments. The...
Also referred to as draws. These are a reduction of owner’s equity, but are not a business expense and they do not appear on the sole proprietorship’s income statement.
A term used when referring to property, plant, and equipment. Fixed assets other than land are depreciated.
See mixed expenses.
In accounting this means to defer or to delay recognizing certain revenues or expenses on the income statement until a later, more appropriate time. Revenues are deferred to a balance sheet liability account until they...
Federal Unemployment Tax Act. See federal unemployment tax.
A statistical tool that uses the least-squares method to estimate the fixed and variable components of mixed costs.
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.
The additional amount given to employees for the overtime hours. Usually this is the “half-time” in time and one-half. For example, if an employee’s hourly pay rate is $10 per hour and the employee...
A bond (long term note) that can be exchanged by the holder for a specified number of shares of stock in the company. The convertibility feature usually allows for the bond to have a lower interest rate when it is...
The repeated elimination of products without a corresponding decrease in overhead costs. As a result the amount of overhead allocated to each unit of product increases. If selling prices are increased to cover the higher...
Losses result from the sale of an asset (other than inventory) for less than the amount shown on the company’s books. Since the loss is outside of the main activity of a business, it is reported as a nonoperating...
This term is used in place of retained earnings when the balance in the retained earnings account is negative (a debit balance).
A reduction in the original selling price.
See certificate of deposit.
The party receiving goods to be sold. See consigned goods.
A temporary account used in the periodic inventory system to record the purchases of merchandise for resale. (Purchases of equipment or supplies are not recorded in the purchases account.) This account reports the gross...
For a manufacturer these would include factory supplies and other materials considered to be manufacturing overhead.
A target rate. For example, companies may decide to invest only in projects that generate an internal rate of return that is in excess of 12%. The 12% figure becomes the hurdle rate.
See economic order quantity (EOQ) model.
Spoilage or waste that is likely to occur and cannot be avoided at a reasonable cost.
An amount that should be charged to the current accounting period as an expense.
Sometimes used as a heading in place of paid-in capital.
What is GAAP? Definition of GAAP GAAP is the acronym for generally accepted accounting principles. GAAP consists of the following: Basic underlying accounting principles, assumptions, and concepts such as the cost...
A current or future cost that will differ among alternatives. For example, if a company is deciding whether to expand its sales territory, the real estate tax and depreciation on the company’s headquarters building...
In accounting and bookkeeping this term is used to describe paying a vendor more than once for the amount owed.
A person whose pay is based on an annual amount (instead of being based on an hourly rate of pay multiplied by actual hours worked). For example, the officers of a corporation and the heads of departments within a...
An unsecured bond. For example, a bond not secured by a lien on the issuer’s property.
Featured Review
"I was struggling with my accounting classes at first, as all of the material was confusing. Therefore, I joined PRO Plus and took each of the certificate courses. Before long the material began to make perfect sense. AccountingCoach helped me to get an A in each of my accounting classes, so I could maintain my 4.0 and make it into The National Society of Collegiate Scholars. I have decided to change my major to a bachelor of science in accounting, followed by a masters of science in accounting. I want to get my CPA in California." - Kyle T.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviews
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: