Administrative expenses are part of the operating expenses (along with selling expenses). Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries...
Administrative expenses are part of the operating expenses (along with selling expenses). Administrative expenses include expenses associated with the general administration of the business. Examples include the salaries...
Retained earnings not available for dividends.
The statement of comprehensive income covers the same period of time as the income statement, and consists of two major sections: Net income (taken from the income statement) Other comprehensive income (adjustments...
Inventory that is less than the expected amount. It might be associated with theft or damage.
The best fitting line through a series of points as determined by the least-squares method.
The inability to pay liabilities as they become due. Some consider a company to be insolvent when its current liabilities exceed its current assets.
See manufacturing costs.
An expense outside of a company’s main operating activities of buying and selling merchandise or providing services. For example, interest expense is a nonoperating expense.
See direct costing.
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...
See direct materials usage variance.
Preferred stock that can be exchanged by the holder for a specified number of shares of common stock of the same company.
See net present value.
The second section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
A current asset representing amounts paid in advance for future expenses. As the expenses are used or expire, expense is increased and prepaid expense is decreased.
A cost flow assumption where the first (oldest) costs are assumed to flow out first. This means the latest (recent) costs remain on hand. To learn more, see Explanation of Inventory and Cost of Goods Sold.
A tax status allowed by the U.S. Internal Revenue Service.
Future cash amounts that have not been discounted to their present value.
The cash amounts received after deducting the related income taxes and also the cash amounts paid after deducting the cash saved when the amounts are income tax deductible.
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...
An asset having accumulated depreciation equal to its depreciable cost (cost minus estimated salvage value). The use of an asset after it is fully depreciated will mean no depreciation expense for those accounting...
Is the reversal of a previous year's accrued expense permanent? Definition of Reversal of Accrued Expense An accrued expense typically requires an accrual adjusting entry recorded at the end of an accounting year (or any...
To repurchase bonds that the company had previously issued.
In accounting this is the rate used to discount future cash flows in order to determine their present value.
The regular retained earnings. Retained earnings that have not been restricted.
See budgetary slack.
Life insurance with a cash value (as opposed to term insurance, which does not have a cash value).
Actual changes in cash as opposed to accounting revenues and expenses.
Repairs that do not improve an asset or extend the asset’s life. These repairs are charged to Repairs Expense or Maintenance Expense when incurred. Major repairs such as a complete engine overhaul that extends the...
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...
What is the earnings per share (EPS) ratio? Definition of Earnings per Share The earnings per share ratio, or simply earnings per share, or EPS, is a corporation’s 1) net income (or earnings) after tax that is...
A fee for the printing of checks ordered by a company. Often the amount is deducted automatically from a company’s checking account by the company that printed the checks.
See job order costing.
An average that changes with an additional purchase. See perpetual moving average in Explanation of Inventory and Cost of Goods Sold.
To eliminate debt such as a company’s repurchase or retirement of its outstanding bonds.
See certified public accountant.
The allocation of one year’s income tax expense to the various sections of the income statement. For example, extraordinary items must be reported after income tax on the income statement, while operating revenues...
See inventory carrying costs.
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: