A payment. The expenditure might be for a significant long term asset (capital expenditure), a short term asset (prepaid insurance), a reduction in a liability, or for an immediate expense such as rent.
A payment. The expenditure might be for a significant long term asset (capital expenditure), a short term asset (prepaid insurance), a reduction in a liability, or for an immediate expense such as rent.
Cash received. Receipts are different from revenues.
Bonds and other debt securities that a company intends to hold until the securities mature. In addition to intent, the company must have the financial ability to be able to hold them until they mature.
The 500 year-old accounting system where every transaction is recorded into at least two accounts. To learn more, see Explanation of Debits and Credits.
The expensing of an intangible asset from the balance sheet to the income statement.
A method of payment used in place of a paper check.
The additional amount given to employees for the overtime hours. Usually this is the “half-time” in time and one-half. For example, if an employee’s hourly pay rate is $10 per hour and the employee...
The income statement account which contains a portion of the cost of equipment that is being expensed during the time interval shown in the heading of the income statement.
See notes to financial statements.
See exchange of similar nonmonetary assets.
A graph’s horizontal base which indicates the total number of units or other units of volume or activity for the amounts indicated by the y-axis.
A parody of FIFO used to describe a very slow-moving item in inventory.
Multiplying the individual items contained in each bill of material times the number of units expected to be produced during a specified time period. The result is the total quantity of each input that will be needed for...
Also referred to as a “p.o.” A multi-copy form prepared by the company that is ordering goods. The form will specify the items being ordered, the quantity, price, and terms. One copy is sent to the vendor...
A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.
A situation where there is correlation between the independent variables used in explaining the change in a dependent variable. When this condition exists, you cannot have confidence in the individual coefficients of the...
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...
Sometimes referred to in the context of cost or expense behavior such as “variable expenses increase as volume increases.” In this context volume might be an activity such as the number of machine hours, the...
The stated legal amount appearing on bonds.
Financial statements based upon various assumptions.
In financial accounting this term refers to the amount of debt excluding interest. Payments on mortgage loans usually require monthly payments of principal and interest.
Buildings is a noncurrent or long-term asset account which shows the cost of a building (excluding the cost of the land). Buildings will be depreciated over their useful lives by debiting the income statement account...
An asset’s cost that has been assigned to Depreciation Expense.
See separation of duties.
See Accounting Research Bulletin.
A current asset representing the cost of supplies on hand at a point in time. The account is usually listed on the balance sheet after the Inventory account. A related account is Supplies Expense, which appears on the...
See accrued rent expense. Also see accrued rent income.
Also referred to as book value or carrying value; the cost of a plant asset minus the accumulated depreciation since the asset was acquired. This net amount is not an indication of the asset’s fair market value....
See Explanation of Inventory and Cost of Goods Sold.
See Explanation of Inventory and Cost of Goods Sold.
The first major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
What is the meaning of debit? Definition of Debit The term debit is similar to the term used in Italy more than 500 years ago when the double entry accounting system was documented. What you need to know today is that...
A right to buy a specific number of shares of stock at a specific price by a specific date.
Often referred to as write-up work, a compilation refers to financial statements prepared by an accountant without reviewing or auditing the amounts. Often the accountant merely takes a client’s amounts and...
A current asset whose ending balance should report the cost of a merchandiser’s products awaiting to be sold. The inventory of a manufacturer should report the cost of its raw materials, work-in-process, and...
A corporation with a limited number of stockholders and whose stock is usually not publicly traded.
See petty cash replenishment.
The accounting guideline requiring that revenues be shown on the income statement in the period in which they are earned, not in the period when the cash is collected. This is part of the accrual basis of accounting (as...
Officers of a corporation are appointed by the board of directors to execute the policies that have been established by the board of directors. The officers include the chief executive officer (CEO), the chief operations...
The cost of telephone service that was used during the period shown on the income statement.
Featured Review
"Earlier this year, I began my own bookkeeping business in Indiana to help small local service businesses with their books. As I was preparing for that transition, I started looking for some basic accounting training as my degree in college was in music education. Someone recommended your website to me, and I loved it! I became a PRO user after I had been using the free version of your website for a while. I felt that having access to the additional materials (tests, quizzes, etc.) would help me synthesize and understand the information on a deeper level than simply reading about it. And it absolutely did. I liked the various ways that the website offers to engage with the information. Not only is it more interesting, but it truly aids in learning. As a trained educator, I greatly appreciated the incorporation of various learning implements to deepen understanding. I believe I have developed a much stronger understanding of accounting basics since using AccountingCoach. Obviously I'm not a CPA, but I have a good grasp on the fundamentals and the terminology involved. Thank you so much for this website—I appreciate feeling like my money is well spent, and upgrading to PRO was absolutely worth it." - Kate B.
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: