The amount in a bank account according to the bank’s records.
The amount in a bank account according to the bank’s records.
Earnings are said to be of a high quality if the accounting policies are conservative. One indication is that the cash flows from operating activities shown on the statement of cash flows consistently exceed the amount...
A symbol that indicates the total amount of fixed costs during a specified period of time. In the equation of the straight line, y = a + bx, the total amount of fixed costs during the period is represented by...
Prior to 2018, this term was used by a not-for-profit organization to describe net assets without donor-imposed restrictions. Since 2018, this term has been replaced with the classification net assets without donor...
A loan from a bank or other lender for which the borrower is not required to pledge assets as collateral for the loan.
The activities provided by a nonprofit in carrying out one of its major programs.
One component of the FICA tax (the other component is Social Security). This payroll tax is withheld from employees’ payroll checks and is also matched by the employer. The employee and the employer each pay the...
See straight-line method of depreciation.
A phrase used in reconciling the bank statement. It refers to the ending balance shown on the bank statement.
Management information system.
Financial statements (such as the income statement and balance sheet) that summarize much of the detail into a few major lines of information.
The stated legal amount appearing on bonds.
A multicolumn listing of each payment required during the period of a loan. Each payment is detailed by the amount of interest, the principal payment, and the remaining unpaid principal balance. The interest portion of...
Under accrual accounting, how are worker comp premiums handled? Worker comp insurance premiums should be charged to the areas where the related wages and salaries are charged. Let’s assume that the net cost of worker...
A cost associated with a batch of items, but not directly traceable to an individual item within the batch. For example, the cost to set up a machine to run a batch of 5,000 items is a batch-level cost. This cost must...
The symbol that represents the total cost in the equation of the cost line y = a + bx.
See the Explanation of Break-even Point.
An amount that should be charged to the current accounting period as an expense.
How do drawings affect the financial statements? Definition of Drawings Drawings are the withdrawals of a sole proprietorship’s business assets by the owner for the owner’s personal use. The drawings or draws by the...
Usually refers to one of the accounts receivable that was deemed to be uncollectible or worthless and was removed from the general ledger account Accounts Receivable.
A quality of accounting information that facilitates comparing a company’s reporting of one accounting period to another. For example, the reader of a company’s financial statements can assume that the...
An additional quantity of items held in inventory in order to minimize the chance of an item being out of stock.
This current liability account reports the amount a company owes the United Way organization as of the balance sheet date. The amount includes the withholdings from employees’ pay plus the amount owed by the...
A method used by retailers for estimating the cost of ending inventory without tracking the individual units of product.
Point of sale.
The balance of the owner’s capital account excluding the current year’s net income and current year’s draws by the owner.
Usually a change in the estimated useful life of an asset or a change in the estimated salvage value. The change usually causes a change in the depreciation expense for the current year and subsequent years. The...
Preferred stock that can be exchanged by the holder for a specified number of shares of common stock of the same company.
Why do we charge depreciation? Definition of Depreciation Accountants charge (to expense) Have a significant cost Will be useful for more than a year Will not be useful indefinitely Since the asset land is assumed to be...
What is a voided check? A voided check is a check written or partially written but then canceled or deleted by the maker of the check. The notation of “void” is used because checks are prenumbered for control...
A tax imposed on income earned by a nonprofit that is unrelated to its exempt purpose.
The allocation of the cost of a plant asset to expense in an accelerated manner. This means that the amount of depreciation in the earlier years of an asset’s life is greater than the straight-line amount, but will...
The preparation of financial statements from a client’s information and without any review or audit of the amounts.
See Explanation of Accounting Equation.
The formal planning for significant expenditures, such as property, plant and equipment.
One of two broad functional categories for sorting and reporting a nonprofit organization’s expenses. (The other is program expenses.) Supporting services expenses consists of 1) management and general expenses,...
See job order costing.
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