date. However, if the depositor insists on withdrawing the money before the maturity date, the financial institution will assess a penalty—usually the loss of interest. Since the depositor agreed to a maturity date,...
date. However, if the depositor insists on withdrawing the money before the maturity date, the financial institution will assess a penalty—usually the loss of interest. Since the depositor agreed to a maturity date,...
a lien on the property that protects the lender if the borrower fails to pay the amounts owed. Example of a Mortgage Loan Typically, mortgage loans are long-term loans requiring monthly payments of interest and...
consist of the costs of direct materials, direct labor, and manufacturing overhead Examples of Inventoriable Costs Assume that a retailer purchases an item for resale by paying $20 to the supplier. The item is purchased...
-on experience. Don’t be overly concerned with the starting pay since your value will come after you demonstrate your proficiency as an effective bookkeeper. Join PRO to Track Progress Mark the Question as Read...
low. There can also be differences within the same industry. For example, one computer company might assemble and ship computers within hours of receiving the order via its website. Its inventory turnover will be off...
.) Companies that use the net method will record the vendor’s invoice as follows: credit Accounts Payable for $980 and debit another account (Inventory, Purchases, etc.) for $980. If the company’s policy is to pay...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
side of a general ledger account? Select... Debit Credit 14. A sale is made with credit terms that allow the customer to pay in 30 days. Under the accrual method of accounting, which account should be debited at the...
. Net sales minus the cost of goods sold is the amount of a retailer’s __________ profit. 19. An aging of accounts __________ will be helpful in determining the correct balance for the account Allowance for Doubtful...
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...
receivable sorts a company’s unpaid __________ according to the date that the customer should pay the company. Select... purchase orders sales invoices vendor invoices 17. Credit terms of 2/10, net 30 result in...
, its working capital is $20,000. Current Ratio The current ratio is also an indicator of a company’s ability to pay its current obligations. The calculation is: current assets divided by current liabilities. If a...
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
% of the amount owed if the invoice is paid within 10 days. (The amount owed is the original invoice amount minus any returns and allowances.) If the invoice is not paid within 10 days, the buyer must pay the full amount...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
receivable is critical for a company to pay its obligations when they are due. The calculation of the accounts receivable turnover ratio is: credit sales for a year divided by the company’s average amount of accounts...
How do you write off a bad account? Definition of the Write-off of a Bad Account The write-off of a bad account usually refers to eliminating an account receivable due to the customer’s inability to pay the amount...
stockholders’ equity increased by a total of $2,000 ($100 + $1,900). If a corporation issues 500 shares of 5% preferred stock with a par value of $100 per share and receives $50,000, the entry will debit Cash for...
$40,000. Some reasons for the wide salary range include the size and location of the company, the bookkeeper’s responsibilities, the bookkeeper’s experience with accounting and other software, the ability to get...
What is the tax advantage when bonds are issued instead of stock? Definition of Bonds and Stock In this context, bonds refers to bonds payable, a form of long-term debt that typically promises to pay interest every six...
of the disposal, the equipment’s accumulated depreciation is $195,000. ABC Company is willing to remove the equipment and pay XYZ $10,000. Since XYZ is not in the business of buying and selling equipment, this sale of...
in December but allows the customer to pay 30 days later, the company’s December sales are $75,000 (even though no cash was received in December). Reporting revenues in the period in which they are earned is known as...
What is an imprest system of petty cash? Definition of Petty Cash Petty cash refers to a small amount of currency and coins that a company uses to pay small amounts without writing a check. The amount of petty cash (also...
Means Cash Not Spent If the balance in a company’s Accounts Payable account has increased, accountants will assume that the company did not pay for all of the expenses that were included in the current period’s...
entered into a contract to pay interest to its lenders, if the interest is not paid the corporation can face legal consequences. As a result, any accrued interest expense and the related liability must be recorded by...
$100,000 in mid-December but allows the customer to pay in January. ABCO’s net income is increased in December, but its Cash account will not increase until January. Next assume that ABCO acquires extensive electronic...
earnings in excess of the annual ceiling amount are taxed only for Medicare (1.45% for the employee and 1.45% for the employer). As mentioned above, there is also an Additional Medicare Tax that is withheld from high...
the inventory at its net realizable value instead of at its cost.) Examples of Inventory Cost Assume that a retailer purchases 100 units of a product for $30 per unit. In addition, the retailer must pay a freight bill...
representatives (reps) who earn a 10% commission. The commissions are paid on the 15th day of the month following the calendar month of the sales. For instance, if the company has $60,000 of sales in December, the...
on the traditional method of allocating factory overhead for pricing decisions, the company may demand that the customer pay more for the product that required no additional activities. If the customer refuses to accept...
decreases. Examples of Variable Expenses Assume that a website business sells a product and requires the customer to pay with a credit card. The credit card processor charges the business a fee of 3% of each amount...
. On each June 30 and December 31, the corporation must pay interest of $60,000 ($2,000,000 X 6% X 1/2 year). The corporation must also amortize the bond discount and the bond issue costs. The following are...
the goods on the truck belong to the buyer, the buyer should pay the shipping costs. These shipping costs will be an additional cost of the goods purchased. Example of FOB Destination Now assume that a seller quoted...
the Accounts Receivable account). On July 15, AXCO learned the identity of a specific customer that will not pay the $2,100 that it owes to AXCO from April transactions. Since the specific customer and the owed are...
Our Explanation of Bonds Payable covers the recording of bonds, the accrual of interest expense, and the amortization of the discount and premium on bonds payable. You gain an understanding on why the market value of...
Our Explanation of Future Value of a Single Amount will show you the power of compounded interest on a single deposit. You will see how the future value tables can be useful as well as the rule of 72.
for calling on customers. For this service, New Corp agrees to pay commissions of 5% of sales with payment made 10 days after the month ends. Assuming that December’s sales are $100,000 New Corp will be incurring...
Our Explanation of Accounting Equation (or bookkeeping equation) illustrates how the double-entry system keeps the accounting equation in balance. You will see how the revenues and expenses on the income statement are...
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