Security and Medicare taxes, personal income taxes, medical insurance contributions, retirement plan contributions, garnishments, etc. Net Pay Net pay is the employee’s gross pay minus the withholdings. Net pay is...
Security and Medicare taxes, personal income taxes, medical insurance contributions, retirement plan contributions, garnishments, etc. Net Pay Net pay is the employee’s gross pay minus the withholdings. Net pay is...
. It has the effect of reducing the net cost of the interest. income tax deductible An expense that will reduce a U.S. corporation’s taxable income. Interest expense is an example. It has the effect of reducing the net...
Which date is used to record a credit card transaction? When a business uses its credit card, the transaction date is the date the credit card is used, not the date that the credit card statement is paid. For example, if...
Our Explanation of Depreciation emphasizes what the depreciation amounts on the income statement and balance sheet represent. Learn why depreciation is an estimated expense that does not assist in determining the current...
Our Explanation of Working Capital and Liquidity provides you with an in-depth look at the components of working capital and the challenges of converting current assets to cash before obligations come due. You will see...
Our Explanation of Bookkeeping provides you with a rich understanding of the recording of transactions. It then discusses the additional steps necessary for preparing accurate financial statements. This is great for...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
dollar.) 16. If the December 31 adjusting entry is not made, the company’s net income will be too __________. Select... high low 17. If the December 31 adjusting entry is not made, the amount of the company’s...
If a company issues stocks or bonds to pay outstanding debt, should this noncash transaction be included in the cash flow statement? If a company issues stocks or bonds for cash and then pays off the debt, the...
Why does the internal rate of return equate to a net present value of zero? Internal rate of return and net present value are discounted cash flow techniques. To discount means to remove the interest contained within the...
Our Explanation of Bank Reconciliation will show you the needed adjustments to the balance on the bank statement and also the adjustments needed to the balance in the related general ledger account. A comprehensive...
Our Explanation of Payroll Accounting discusses the taxes and benefits which are withheld from employees' pay as well as the taxes and benefits that are expenses for the employers. Also provided are examples of the...
Break-even Point Break-even Point The break-even point is the level of sales that result in a business having a net income of zero. In other words, its revenues will be exactly equal to its expenses. The break-even point...
Our income statement shows wide fluctuations in utilities expense from month to month. I suspect our accounting is not proper. Any suggestions? Under accrual accounting, your income statement should report the amount for...
tax (or FUTA) is paid entirely by the employer and becomes a company expense. The FUTA rate is 6%, but there is usually a FUTA credit of 5.4%. As a result, the net rate is usually 0.6% or 0.006. The rate is applied only...
Our Explanation of Payroll Accounting discusses the taxes and benefits which are withheld from employees' pay as well as the taxes and benefits that are expenses for the employers. Also provided are examples of the...
A phrase that indicates a transaction was between two independent parties and that the resulting amount is a fair representation of the value.
A lease where the lessee/tenant pays not only rent, but also the property taxes, insurance, and maintenance.
The net amount of gross sales on credit minus the sales returns, sales allowances, and sales discounts which pertain to the sales on credit.
See working capital.
Beginning in 2018, this is one of two classifications of net assets reported on the financial statements of a not-for-profit organization’s financial statements. This classification replaces the previous...
The third major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
Current assets minus current liabilities. Also see working capital.
The result of two or more amounts being combined. For example, net sales is equal to gross sales minus sales returns, sales allowances, and sales discounts. The net realizable value of accounts receivable is the...
In the context of inventory, net realizable value or NRV is the expected selling price in the ordinary course of business minus the costs of completion, disposal, and transportation. In the context of accounts receivable...
The gross purchases of merchandise for resale minus purchase returns, purchase allowances, and purchase discounts.
Same as book value. For example, an asset’s net book value is equal to the asset’s cost minus its accumulated depreciation.
The first major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
This classification of net assets has been replaced by the FASB with the classification net assets with donor restrictions.
Beginning in 2018, this is one of two classifications of net assets reported on the financial statements of a not-for-profit organization’s financial statements. This classification is to be used instead of the...
This current liability account reports the ”net” amount a company owes its employees as of the date of the balance sheet. The ”net” amount is the amount of the employees’...
The second major section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
The gross amount of purchases minus the amount of purchase returns, purchase allowances, and purchase discounts.
Gross wages or gross salaries minus withholdings for payroll taxes and other items such as insurance, union dues, United Way, etc. Also referred to as “take home pay” or the amount the employee...
The result of subtracting total liabilities from total assets. It is also the term used by not-for-profit organizations instead of owner’s equity or stockholders’ equity. To learn more see our Explanation of...
The net result of combining the discounted cash inflows and the discounted cash outflows of an investment, project, company, etc.
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...
The combined amount of the debit balance in the current asset account Accounts Receivable and the credit balance in the contra asset account Allowance for Doubtful Accounts. The difference between the balances in these...
The “bottom line” on the statement of activities. The change in net assets results from revenues, expenses, and the release of assets from restrictions. It is computed for an organization’s three...
The technique of recording accounts payable at the amount that will be paid after deducting any discount that is available for paying within the discount period. This has a theoretical advantage over the gross method...
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