A word that means to add a column of numbers as in “Foot the amounts listed in column A.” Also see crossfoot.
A word that means to add a column of numbers as in “Foot the amounts listed in column A.” Also see crossfoot.
See inventory: finished goods.
See fixed manufacturing overhead volume variance.
In financial accounting this term often refers to the accounting guidelines or principles of conservatism and materiality.
A document that discloses important information on bonds or preferred stock. Included in the indenture would be the call price, the actions that can occur if the company fails to pay the interest or dividend, etc.
The planned or expected costs. Often used in manufacturing for accounting for inventories and production. When actual costs differ from the standard costs, variances are reported.
The cumulative amount of depletion expense pertaining to the natural resources shown on the balance sheet. The account has a credit balance and will be reported on the balance sheet as a contra asset.
The cost associated with setting up a piece of production equipment. This would include the cost of the setup mechanic, the cost of scheduling, record keeping, moving the starting material, and testing the first few...
A payment. The expenditure might be for a significant long term asset (capital expenditure), a short term asset (prepaid insurance), a reduction in a liability, or for an immediate expense such as rent.
See Financial Accounting Standards Board.
Payroll taxes include 1) the taxes withheld from employees’ wages and salaries such as Social Security tax, Medicare tax, federal income tax, and state income tax, 2) the employers’ portion of the Social...
The products with significant value that emerge at a split-off point in a process. When a joint product has little value it is referred to as a by-product.
A term used in accounting that refers to employees’ time off with pay for vacations, holidays, and sick days. Companies that are obligated to pay for these days off are required by the matching principle to record...
Interest on interest. For example, if $1,000 is deposited in an account earning interest of 6% per year the account will earn $60 in the first year. In year two the account balance will earn $63.60 (not $60.00) because...
Also referred to as illusory profits. Occurs because accountants use past costs rather than replacement costs. For example, in computing the cost of goods sold accountants often use the FIFO cost flow assumption. This...
A company’s profit before nonoperating or other items. Other or nonoperating items include interest income, interest expense, and gains and losses on sale of assets used in the business, loss on lawsuit, etc.
See bond sinking fund.
A series of equal amounts occurring at the end of each equal time interval. Also known as an annuity in arrears. An example is the monthly payments on a loan. Another example is the semiannual interest on a bond.
For a manufacturer these would include factory supplies and other materials considered to be manufacturing overhead.
A company’s receipts that appear on the company’s records but do not yet appear on the bank statement. For example, a retail store’s receipts of March 31 are deposited after banking hours on March 31 or...
See equivalent units of production.
An asset’s cost that has been assigned to Depreciation Expense.
A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.
See absorption costing.
See old-age, survivor, and disability insurance (OASDI).
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 first in, first out (FIFO).
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...
See compound interest.
The amount at which the holder of preferred stock or bonds must sell the stock or bonds back to the issuing corporation. The call price is disclosed in the indenture. The call price might be the face or par amount plus...
The time from when goods are ordered until the time when the goods are received.
In the EOQ model, order costs are the incremental costs of processing an order of goods from a supplier. Examples of order costs include the costs of preparing a requisition, a purchase order, and a receiving ticket,...
A lease that “in substance” is a purchase and financing arrangement. When a lease meets certain criteria, the asset being “rented” is recorded as an asset and a liability is also recorded. A lease...
Earnings are said to be of a high quality if the accounting policies are conservative. One indication is that the cash flows from operating activities shown on the statement of cash flows consistently exceed the amount...
A current asset account which contains the amount of investments that can and will be sold in the near future.
The present fair market value.
A cost or expense where the total changes in proportion to changes in volume or activity. For example, if a company pays a sales commission on all of its sales, commission expense is a variable expense because...
Investments in common stock, preferred stock, corporate bonds, or government bonds that can be readily sold on a stock or bond exchange. These investments are reported as a current asset if the investor’s intention...
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...
Featured Review
"I'm an independent bookkeeper. I'm very happy to have AccountingCoach as my most reliable source of information! It is my one and only resource that I don't know what I'd do without it. I became a PRO user many years ago because I was self-teaching to see if I could practice becoming involved in accounting for a living. The most important aspect of becoming a PRO user, which made me stay committed, was the easy access and all of the wonderful explanations of accounting. Easy-to-understand verbiage that didn’t go over my head was certainly key for me. If it wasn't for the easy access to all the material and resources, I would not have moved forward in my own business. I know I'm in good hands with this wonderful program. I'm well aware that I have so much confidence in what I do for my clients, knowing this program gives me valuable, reliable and helpful information when I need it most! I'm excited to see and experience your new website! I'm sure it will be even more user friendly and awesome. Thank you for being my rock for accounting!" - Nicky E.
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: