Questions & Answers (Q&A)

Q&A Archive (1,122)

What is a deferral adjusting entry?

Definition of Deferral Adjusting Entry A deferral adjusting entry (one of three types of adjusting entries) pertains to a transaction that has already been recorded in the general ledger accounts. However, at the time that the transaction was recorded, part of the… Read More.

What is cumulative preferred stock?

Definition of Cumulative Preferred Stock Cumulative preferred stock is a type of preferred stock for which any omitted dividends must be paid before the corporation is allowed to pay a dividend on its shares of common stock. Typically, the corporation's board of… Read More.

What are payroll taxes?

Definition of Payroll Taxes The payroll taxes are the federal, state, and local taxes that pertain to the wages, salaries, commissions, bonuses, etc. of a company's employees. Some of the employee-related payroll taxes are: Withheld from employees' wages and then matched by… Read More.

What is common stock outstanding?

Definition of Common Stock Outstanding Common stock outstanding is defined as the shares of common stock that have been issued minus any shares of common stock known as treasury stock. The number of shares of common stock outstanding is shown in the… Read More.

What is a multiple-step income statement?

A multiple-step income statement presents two important subtotals before arriving at a company's net income. For a company that sells goods (merchandise, products) the first subtotal is the amount of gross profit. The second subtotal is the amount of operating income. Example… Read More.

What are credit sales?

Definition of Credit Sales As opposed to cash sales, credit sales (or sales on credit) allow the customer to pay the seller at a later date. Perhaps the seller allows its credit worthy customers to pay in 10 days, 15 days, 30… Read More.

What does 2/10 mean in accounting?

Definition of 2/10 2/10 is part of an early payment discount that allows a customer or client to pay after the sale or service has been provided. This sales discount allows the customer/client to deduct 2% of the amount owed if the… Read More.

What is interest income?

Definition of Interest Income Interest income is the amount of interest earned on investments (that promise to pay interest) and/or compensation for agreeing to receive cash payments from customers at a later than normal date. The interest income earned by most companies… Read More.

What is a depreciable asset?

Definition of Depreciable Asset A depreciable asset has the following characteristics: A tangible asset (other than land) Has a useful life of more than a year Is used in the business The asset's cost minus its salvage value is systematically allocated to… Read More.

What is a single-step income statement?

A single-step income statement arrives at a company's net income in one step or subtraction: [total revenues and gains] – [total expenses and losses]. Example Single-Step Income Statement Here is an example of a condensed single-step income statement for a hypothetical sole… Read More.