into the software and can instantaneously obtain a complete set of financial statements by simply selecting them from a menu. After reviewing the financial statements, the accountant is able to make additional...
into the software and can instantaneously obtain a complete set of financial statements by simply selecting them from a menu. After reviewing the financial statements, the accountant is able to make additional...
Revenues for $24,000. During 2024 ABC must move $2,000 each month from the liability account on its balance sheet to a revenue account on its income statement. This deferring of revenue to the periods in which it is...
deducting the cost of goods sold and all other expenses including income tax expense. The calculation is: Net Income after Tax divided by Net Sales. The profit margin ratio is most useful when it is compared to 1) the...
What is the three-way match? Definition of Three-Way Match In the accounting and bookkeeping area of accounts payable, the three-way match refers to a procedure used when processing an invoice received from a vendor or...
certified public accountants or CPAs by earning at least 150 college credits, passing the rigorous CPA Exam, and having several years of experience.) Annual Salary of Accountant The annual salary range for a full-time...
. Therefore, the relevant amounts for the decision include the cost of the new equipment and the revenues and cost savings that will result from purchasing and using the new equipment. Further, the costs that will remain...
the robot is whether to spend an additional $70,000 today (the $80,000 cost of the robot minus the $10,000 to be received from the old machine) in order to save $50,000 each year for 10 years. It may be difficult to...
with recently deposited checks from customers, the money in a checking account is available on demand. (This is why banks refer to the amounts in their customers’ checking accounts as demand deposits.) The balances in...
What is the difference between liability and debt? Definition of Liability In accounting and bookkeeping, the term liability refers to a company’s obligation arising from a past transaction. Examples of Liabilities A...
that are recorded in income statement accounts. This allows the balance sheet account Owner’s Capital (or Retained Earnings) to avoid having all of the thousands or millions of revenue and expense transactions from...
What is the entry when merchandise has been received but not the vendor's invoice? Definition of Merchandise Received but Not Vendor’s Invoice If a retailer receives merchandise from one of its vendors, but has...
the company’s true amount of cash. Example of an Outstanding Check in the Bank Reconciliation In the bank reconciliation process, the total amount of outstanding checks is subtracted from the ending balance on the...
range in size from sole practitioners to a few huge international firms that employ hundreds of thousands of CPAs throughout the world. In between are local and regional firms as well as very large national and...
transaction To move an amount from an incorrect account (that was used when recording a previous transaction) to the correct account Join PRO to Track Progress Mark the Question as Read Must-Watch Video Learn How to...
coverage from December 1 through May 31. Examples of Two Methods for Recording Prepaid Expenses One method for recording a prepaid expense is to record the entire payment in an asset account. For example, assume that on...
. The journal entry will debit Cash for $3,000 and will credit L. Ott, Capital for $3,000. Later, the L. Ott withdraws $500 from the business for her personal use. The journal entry for this transaction will debit L....
/ 3 years). This allocation of the phones’ cost to the accounting periods that benefit from the asset’s use follows the accountant’s matching principle. This makes the company’s financial statements more...
activities. The combination of the cash inflows and the cash outflows from a company’s operations (activities outside of its investing and financing activities). loss on disposal, net of tax. An accounting loss on the...
, the book value per share of common stock is $12.42. This book value is likely to be far different from the market value of a share of the common stock. Join PRO to Track Progress Mark the Question as Read Must-Watch...
of the accounting year. As a result, a real account begins each accounting year with its balance from the end of the previous year. Because the end-of-the-year balance is carried forward to the next accounting year, a...
will appear as steps or stairs rising from left to right. To illustrate a stepped cost, let’s assume that you are developing a website and find that the monthly cost of hosting the site is based on the number of...
and the words investor relations 10-K. From the website select annual filings for Form 10-K. Choose the PDF format. Approximately half way down on the table of contents you will see Financial Statements. When you review...
any wages she earns from January 1-4) will be included in her January 9 paycheck. Given this information, the company has wages payable of $560 ($400 + $160) as of December 31. Reporting Wages Payable on the Balance...
that will be distributed to people outside of the company. These common rules range from basic underlying principles and assumptions to the detailed rules established by the Financial Accounting Standards Board (FASB)...
as accounts payable or accrued compensation. Examples include the interest expense that the company has incurred (but has not yet paid) and repairs that took place but the vendor’s invoice has not been processed....
automatically and only require information on the other account. Examples of Double Entry When a company borrows money from a bank, the company’s asset Cash is increased and the company’s liability Notes Payable or...
%)]. Since bonds are a form of debt, the existing stockholders’ ownership interest in the corporation will not be diluted. Therefore, the future gains from use of the bond proceeds (minus the bond interest payments)...
What is a stockholder? Definition of Stockholder A stockholder (also known as a shareholder) is the owner of one or more shares of a corporation’s capital stock. A stockholder is considered to be separate from the...
of Accrued Payroll Let’s assume that a retailer’s hourly-paid employees are paid each Friday for the hours they worked during the previous week. Let’s also assume that as of December 31, the hours worked from...
What is a general ledger? Definition of General Ledger A general ledger is a grouping of perhaps hundreds of accounts that are used to sort and store information from a company’s business transactions. The general...
the budget for January 2024 and adds the budget for January 2025. This rolling budget now covers the 12 months from February 1, 2024 through January 31, 2025. At the end of February 2024, the rolling budget will drop...
method of accounting) begins operations on December 27. The employees working from December 27 through December 31 will receive their first paychecks on January 4. If the employees earn a total of $5,000 of wages during...
and are expected to grow exponentially from Year 4 through Year 15 While Project #187’s payback period is faster, Project #188 is significantly more profitable. Hence, the limitation of using only the payback period...
the banking system and eventually the bank of the payee will take the amount of the check from the payee’s checking account. The payee will in turn reinstate the liability amount owed to it by Company X. In essence...
What is the gross margin ratio? Definition of Gross Margin Ratio The gross margin ratio is a percentage resulting from dividing the amount of a company’s gross profit by the amount of its net sales. (The gross margin...
What is interest income? Definition of Interest Income Interest income is the amount of interest earned on investments (that promise to pay interest) and/or compensation for agreeing to receive cash payments from...
ownership of the unit to the lessee (tenant) at the end of the one-year lease. Another lease might involve a business leasing a forklift from a forklift dealer. This lease states that it is noncancelable and requires 60...
, the resulting allocation is somewhat arbitrary. Because of the arbitrariness, some people describe cost allocation as the spreading of a cost. Accountants have made efforts to improve the cost allocation techniques....
What is a flexible budget? Definition of a Flexible Budget A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static...
Featured Review
"I currently work as a computer engineer. I became a PRO user on AccountingCoach to track my progress and enhance my experience on the platform. What I like most about the material is that it provides multiple mediums, including text explanations and videos to enhance the experience. This has all benefited me in providing me with a better foundational knowledge of financial and managerial accounting and has helped me to excel in my accounting and finance courses in my MBA program." - Jonathan J.
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: