See incremental cost.
See incremental cost.
Inventory that is less than the expected amount. It might be associated with theft or damage.
The gross purchases of merchandise for resale minus purchase returns, purchase allowances, and purchase discounts.
Recording an entry in an account in the general ledger or in a subsidiary ledger.
See net realizable value.
How do cash dividends affect the financial statements? Definition of Cash Dividends Cash dividends are a distribution of a corporation’s earnings to its stockholders or shareholders. For cash dividends to occur, the...
Regression analysis with only one independent variable.
See economic order quantity (EOQ) model.
One of the main financial statements of a nonprofit organization. This financial statement reports the revenues and expenses and the changes in the amounts of each of the classes of net assets during the period shown in...
A liability account that reports the amount of taxes that a company owes as of the balance sheet date.
See uncleared check.
Under the accrual basis of accounting, the account Rent Expense will report the cost of occupying space during the time interval indicated in the heading of the income statement, whether or not the rent was paid within...
A check bearing a date in the future. The company receiving such a check should not report the check as cash until the date of the check.
A term used when referring to property, plant, and equipment. Fixed assets other than land are depreciated.
The amount that a bank commits to lend a borrower during a specified purpose.
A common fringe benefit given to employees during a period in which they do not have to work. If an employee earns one week of paid vacation to be taken after working one full year, the employer should recognize this...
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.
In securities, a party that assists a company in issuing stock or bonds.
See Financial Accounting Standards Board.
See uncleared check.
The collection of money (currency, coins, checks). Not to be confused with revenues.
To report a revenue or expense that has occurred, but has not yet been entered in the accounting records as of the end of the accounting period. To learn more, see Explanation of Adjusting Entries.
A mathematical tool to optimize profits (contribution margin) given a limited amount of inputs and other constraints.
A word that means to add a column of numbers as in “Foot the amounts listed in column A.” Also see crossfoot.
Federal Unemployment Tax Act. See federal unemployment tax.
Net income divided by net sales.
A qualitative characteristic in accounting. Relevance is associated with information that is timely, useful, has predictive value, and is going to make a difference to a decision maker.
The par value of common and preferred stock.
What is capitalized interest? Definition of Capitalized Interest Capitalized interest is the interest on debt that was used to finance a self-constructed, long-term asset. The capitalized interest for the company’s...
The amount of wages and related expenses that have been incurred by the employer (and earned by the employees) but have not yet been paid.
The description of the required reporting of expenses by some nonprofits. The expenses will be presented on lines based on the nature of the expense (salaries, fringe benefits, rent, utilities, postage, professional...
Employer payroll taxes include an employer’s portion of Social Security and Medicare taxes and the state and federal unemployment taxes.
The systematic allocation of the discount on bonds payable (reported as a debit in a contra-liability account) to Bond Interest Expense over the life of the bonds. The journal entry to amortize contains a debit to the...
Obligations not reported as liabilities on the balance sheet.
What is the net book value of a noncurrent asset? The net book value of a noncurrent asset is the net amount reported on the balance sheet for a long-term asset. To illustrate net book value, let’s assume that several...
R & D costs. These are costs incurred to develop new products or processes that may or may not result in commercially viable items. The general rule is that research and development costs are to be expensed...
A corporation’s total stockholders’ equity (excluding preferred stock) divided by the number of shares of common stock outstanding.
The price at which the holder of a bond must sell the bond to the issuer. For example, a corporation may have the right to redeem/buy back its bonds by paying the bondholder 110% of the bond’s face amount.
A check often referred to as an NSF check, a rubber check, or a check that bounced. It is a check that was not paid by the bank of the issuer (writer) of the check because the checking account of the issuer did not have...
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