Usually an annual manufacturing overhead rate established just prior to an accounting year and based on budgeted amounts.
Usually an annual manufacturing overhead rate established just prior to an accounting year and based on budgeted amounts.
The accounting guideline requiring amounts in the accounts and on the financial statements to be the actual cost rather than the current value. Accountants can show an amount less than cost due to conservatism, but...
In accounting the qualitative characteristics include relevance, reliability, comparability, and consistency. Qualitative characteristics are discussed in the Financial Accounting Standards Board’s Statement of...
What is a stock split? Definition of Stock Split A stock split usually refers to a corporation dividing its existing number of shares of common stock into a greater number of shares. For instance, a corporation with...
Sending merchandise to another party (an agent, consignee) in order to sell the merchandise. Also see consigned goods.
An original record containing the details to substantiate a transaction entered in an accounting system. For example, the source document for a purchase of merchandise is the supplier’s invoice supported by the...
A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.
What is the periodic inventory system? Definition of Periodic Inventory System The periodic inventory system does not update the general ledger account Inventory when a company purchases goods to be resold. Rather than...
Usually a simple form used by the petty cash custodian in order to document small payments from a petty cash box.
See cleared.
A liability account on the books of a company receiving cash in advance of delivering goods or services to the customer. The entry on the books of the company at the time the money is received in advance is a debit to...
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...
See just-in-time (JIT).
Regular fees or charges often paid to an organization at regular intervals. For example, a state CPA organization might have annual dues of $200.
See long-term liabilities.
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.
What is safety stock? Definition of Safety Stock Safety stock is an additional quantity of an item held by a company in inventory in order to reduce the risk that the item will be out of stock. Safety stock acts as a...
See variable manufacturing overhead spending variance.
Financial statements based upon various assumptions.
A highly summarized income statement
A listing of the accounts in the general ledger along with each account’s balance in the appropriate debit or credit column. The total of the amounts in the debit column should equal the total of the amounts in the...
A bearer bond is a bond that is not registered in its owner’s name. The person holding the bond is presumed to be the owner of the bond. The interest on a bearer bond is received by clipping one of the dated...
The products in a manufacturer’s inventory that are completed and are awaiting to be sold. You might view this account as containing the cost of the products in the finished goods warehouse. A manufacturer must...
What does a balance sheet tell us? Definition of Balance Sheet A balance sheet reports the dollar amounts of a company’s assets, liabilities, and owner’s equity (or stockholders’ equity) as of midnight of the...
Goods placed with another party without transferring ownership. See consigned goods.
A second retained earnings account that reports the amount that a company has transferred from the unappropriated or regular retained earnings account.
The supplier of goods or services.
Assigning manufacturing overhead costs to products being manufactured by using a manufacturing overhead rate.
The quantity on hand that will trigger an order to buy more items. A company’s reorder point for Product X might be 80 units. When the quantity on hand gets down to 80, a purchase order is prepared to obtain more...
This is a contra owner’s equity account, because it has a debit balance if draws were made. Even though it is a balance sheet account, it is a temporary account. At the end of each year the account’s debit...
See fixed manufacturing overhead volume variance.
Also referred to as a sunk cost. A past cost is not relevant to a decision.
See units of production method of depreciation.
This is a non-operating or “other” item resulting from the sale of an asset (other than inventory) for more than the amount shown in the company’s accounting records. The gain is the difference between...
A stated legal amount for each share of preferred stock. The par value for every share of preferred stock issued must be recorded in the separate stockholders’ equity account Preferred Stock.
Can I capitalize this year's R&D? Generally, R&D costs cannot be capitalized for U.S. financial statements according to the Statement of Financial Accounting Standards No. 2, Accounting for Research and Development...
The result of dividing a corporation’s net income by the average amount of common stockholders’ equity during the time interval when the net income was earned. To learn more about this ratio, see Explanation...
A liability account used to record an amount received from a customer before a service has been provided or before goods have been shipped. This account is referred to as a deferred revenue account and could be entitled...
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...
The acronym for cost of sales or for the cost of services.
Featured Review
"AccountingCoach is awesome! I received my accounting degree almost four years ago. Despite having completed the accounting program, I was still a bit confused with the appropriate journal entries for some transactions. I purchased AccountingCoach PRO Plus and passed all of the four exams and received the four certificates (two at 98%, one at 95%, and one at 93%). Adding the four certificates on my resume was phenomenal but even more so was grasping the concepts. Understanding the fundamentals helped me in solving problems that were presented with different approaches. Reviewing the material on AccountingCoach presented the material in a different way and I was able to pick up the information quicker. It also helped me understand the reason for certain transactions, such as accruals and reversing entries, as I was part of a team at work who tackled year-end close. The material on AccountingCoach is an added asset to my resume and to my accounting knowledge. I can most definitely attest to its benefits." - Christopher A.
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: