Questions & Answers (Q&A)

Q&A Archive (1,104)

What is a fully depreciated asset?

Definition of Fully Depreciated Asset A fully depreciated asset is a plant asset or fixed asset where the asset's book value is equal to its estimated salvage value. In other words, all of the depreciation that was intended (cost minus estimated salvage… Read More.

What is an unsecured creditor?

Definition of Unsecured Creditor An unsecured creditor is often a vendor or supplier that: Shipped goods to a customer as part of a sale on credit Has not been paid Does not have a lien on the customer's assets If the customer… Read More.

What is a sale on credit?

Definition of Sale on Credit A sale on credit is revenue earned by a company when it sells goods and allows the buyer to pay at a later date. This is also referred to as a sale on account. Normally, this means… Read More.

What is obsolete inventory?

Definition of Obsolete Inventory Obsolete inventory refers to products that a company had purchased or produced which cannot be sold. The obsolete items may be the result of one or more of the following: Innovations that make the products worthless, inconvenient, unattractive,… Read More.

What are gains?

Definition of Gains In financial accounting, gains often pertain to some of a company’s transactions which occur outside of the company’s main business activities. Transactions which are outside of a company’s main business activities are referred to as nonoperating activities. Gain vs… Read More.

What is a permanent account?

Definition of Permanent Account In accounting, a permanent account refers to a general ledger account that is not closed at the end of an accounting year. The balance in a permanent account is carried forward to the subsequent year, where it becomes… Read More.

What are credit terms?

Definition of Credit Terms Credit terms indicate when payment is due for a company's sales invoice (which the customer will refer to as a purchase invoice). The credit terms also indicate whether a discount can be taken if the invoice is paid… Read More.

What are quick assets?

Definition of Quick Assets Quick assets are a company's current assets which can quickly be converted into cash. Quick assets provide the liquidity necessary to pay the company's obligations when they come due. The total of a company's quick assets is compared… Read More.

What is a product cost?

Definition of a Retailer's Product Cost In accounting, a retailer’s product cost is the cost paid to a supplier plus any other costs that are necessary to get the product in place and ready for sale. For example, if a retailer pays… Read More.

What is a special journal?

Definition of a Special Journal A special journal (also known as a specialized journal) is useful in a manual accounting or bookkeeping system to reduce the tedious task of recording both the debit and credit general ledger account names and amounts in… Read More.