The person that owes money. If a bank lent you money, the bank is the creditor and you are the debtor.
The person that owes money. If a bank lent you money, the bank is the creditor and you are the debtor.
Sales before deducting sales returns, sales allowances, and sales discounts.
The cost of the next unit.
The name used by a buyer of goods or services for the sales invoice or bill received from the supplier of the goods or services.
Cash received. Receipts are different from revenues.
A predetermined dollar amount that a pound of material or an hour of labor should cost during an accounting period.
Recording an entry in an account in the general ledger or in a subsidiary ledger.
The amount received from the sale of an asset, from the issuance of bonds or stock, or from a bank loan.
Also referred to as manufacturing overhead, indirect manufacturing costs, factory burden, and manufacturing support costs. To learn more, see Explanation of Manufacturing Overhead.
The acronym for original equipment manufacturer.
The process of becoming outdated or no longer being economically feasible (often caused by technology advances). For example, personal computers and computer chips from 2010 are obsolete even though they can be operated....
See cash surrender value.
An intangible asset reported on the balance sheet at the company’s cost (or lower). Often, successful trade names were developed by companies over many years. As a result the cost of the trade name is minimal, but...
Which accounts get closed at the end of a fiscal year? The temporary accounts get closed at the end of an accounting year. Temporary accounts include all of the income statement accounts (revenues, expenses, gains,...
The amount by which the proceeds from the sale of an automobile used in the business exceeded its carrying amount at the time it is sold.
A variance arising in a standard costing system that indicates the difference between the actual cost of direct materials and the standard cost of direct materials. Recognizing this variance at the time the direct...
Sales made on account. Sales where the customer is allowed to pay at a later date. Noncash sales.
Are fixed assets the same as plant assets? Definition of Fixed Assets and Plant Assets My experience indicates that people use the term fixed assets to mean the same as plant assets. As a result, I define both fixed...
The gross purchases of merchandise for resale minus purchase returns, purchase allowances, and purchase discounts.
What is an early payment discount? Definition of Early Payment Discount An early payment discount is a reduction in the amount on a supplier’s invoice if the customer pays the supplier promptly. The early payment...
See net realizable value.
What is working capital? Definition of Working Capital Working capital is the amount of a company’s current assets minus the amount of its current liabilities. Example of Working Capital Let’s assume that a...
A reduction in the cost of goods purchased that is allowed by the supplier based on the authorized return of goods. Also a general ledger account in which the purchase returns are recorded under the periodic inventory...
A corporation’s net income after income taxes minus the dividends pertinent to the preferred shares of stock (if any).
What is inventory valuation? Definition of Inventory Valuation In the U.S., inventory valuation is the dollar amount associated with the items remaining in a company’s inventory. Generally speaking, the amount is the...
A journal entry that adjusts an amount already recorded on the books of a company because part of the amount pertains to a future accounting period. To learn more, see Explanation of Adjusting Entries.
An abbreviation for the word account.
See debenture bond.
Goods sold by a retailer, wholesaler, distributor, manufacturer, etc.
See earnings per share.
What are the journal entries for a stock split? Definition of a Stock Split A stock split usually increases the number of shares of a corporation’s common stock with the intention of reducing the market price of each...
See post balance sheet event.
The second major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
A measurement of financial performance of a company’s operating division that is not responsible for its financing and income taxes. The calculation is likely to be 1) the division’s operating income before...
Direct materials, direct labor and manufacturing overhead costs. Also referred to as product costs, production costs, and inventoriable costs.
What are net assets? Definition of Net Assets Net assets is defined as total assets minus total liabilities. Examples of Net Assets In a sole proprietorship the amount of net assets is reported as owner’s equity. In a...
What is an outstanding check? Definition of Outstanding Check An outstanding check is a check that a company has issued and recorded in its general ledger accounts, but the check has not yet cleared the bank account on...
See not sufficient funds (NSF) check.
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