The expense associated with a commitment to repair or replace a product for a specified period of time. The expense should be reported on the income statement at the time that the sale of the product is reported in order...
The expense associated with a commitment to repair or replace a product for a specified period of time. The expense should be reported on the income statement at the time that the sale of the product is reported in order...
A check that has been issued but has not yet been paid by the bank on which it is drawn. An uncleared check is also known as an outstanding check.
A department that is directly involved in manufacturing products. Examples are the machining, finishing, and assembling departments.
The gross amount of purchases minus the amount of purchase returns, purchase allowances, and purchase discounts.
This is an operating expense resulting from making sales on credit and not collecting the customers’ entire accounts receivable balances.
A method used by retailers to achieve the LIFO cost flow without tracking individual units. A further advantage is that pools of products are used. This will likely mean less liquidation of LIFO cost layers that would...
Accounts receivable that serve as the collateral for a loan.
The amounts withheld for employees’ checks for Social Security tax, Medicare tax, federal income tax, state income tax, and voluntary deductions such as United Way, union dues, 401(k) contributions,...
A method where only the variable manufacturing costs are assigned to inventory and the cost of goods sold. Fixed manufacturing costs are viewed as expenses of the period in which they are incurred. This method is not...
Using the information generated in activity-based costing to plan and control activities and processes.
An asset account used to record a loan to another party that has real estate as collateral.
Under the accrual method of accounting, this account reports the employer’s portion of the Social Security and Medicare tax that pertains to the period indicated in the heading of the income statement, whether or...
These journal entries are made after the financial statements have been prepared at the end of the accounting year. Most of the closing entries involve the income statement accounts (revenues, expenses, gains, losses,...
The expense incurred during the time interval indicated on the income statement for using rented equipment.
Selling price per unit minus variable costs per unit, or revenues per unit minus expenses per unit.
Are commissions a cost of goods sold account or an expense? Definition of Commissions Commissions are compensation for obtaining sales. Hence, sales commissions are a selling expense and will be recorded in general...
In accounting this is the rate used to discount future cash flows in order to determine their present value.
See deferred expense.
What is a liability account? Definition of Liability Account A liability account is a general ledger account in which a company records the following which resulted from business transactions: Amounts owed to suppliers...
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...
Federal government securities sold at a discount (because of no interest payments) with maturity dates of less than one year.
See perpetual system of inventory.
The moving average cost of inventory items under the perpetual inventory system. A new average cost per unit is developed after each purchase of an inventory item. To learn more, see Explanation of Inventory and Cost of...
One of the main financial statements of a nonprofit organization. This financial statement reports the amounts of assets, liabilities, and net assets as of a specified date. This financial statement is similar to the...
To loan money for a limited time in exchange for the borrower’s promise of repayment and interest compensation.
See Allowance for Doubtful Accounts.
See Internal Revenue Service (IRS).
Free on Board. See FOB destination and FOB shipping point.
Receivables due from customers. See accounts receivable.
Are dividend payments shown as an expense on the income statement? Definition of Dividend Payments The cash dividends paid to stockholders are a distribution of the corporation’s earnings. Dividends are not an expense...
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 net amount of revenues and gains minus expenses and losses for the sole proprietorship owned by Matt Jones. After the financial statements are prepared for the year, this amount will be transferred to Matt Jones,...
A loss from holding an asset and the loss has not yet been reported in the financial statements.
Same as book value. For example, an asset’s net book value is equal to the asset’s cost minus its accumulated depreciation.
In regression analysis this is a statistic (designated as r-squared) indicating the percentage of the change occurring in the dependent variable that is explained by the change in the independent variable(s). The percent...
An entry without debit or credit amounts. For example, assume that a corporation has 100,000 shares of $0.50 par value common stock before a 2-for-1 stock split. At the time of the split a memo entry would be entered in...
What would cause a decrease in accumulated depreciation? Definition of Accumulated Depreciation Accumulated depreciation is the cumulative amount of depreciation taken since a depreciable asset was put into service. The...
See quick ratio.
On account. Goods purchased with terms of net 10 days, net 30 days, or 2/10, net 30 are goods purchased on credit. Goods sold with similar terms are sales on credit.
Featured Review
"An important job opportunity within a major food company drove me here. As a non-native english speaker, I was looking for a solution to learn how to use and express my knowledge in accounting and finance in English, a requirement needed to succeed in my job application. I wanted a well-organized website gathering all the different aspects of accounting in one place. After surfing on the Internet, I finally found AccountingCoach and did not hesitate long before subscribing to the PRO membership. The variety of resources (to download, to watch, ...) was the perfect solution to both read and hear accounting and financial English." - Sebastian G.
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: