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Questions & Answers (Q&A)

Q&A Archive (1,098)

What is obsolete inventory?

Obsolete inventory meaning: Obsolete inventory refers to products that a company had purchased or produced but they are no longer salable. The obsolete items may be the result of one or more of the following: Innovations that make the products worthless, inconvenient,… Read More.

What are gains?

Meaning 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 that are outside of a company’s main business activities are referred to as nonoperating activities. For example,… Read More.

What are wages payable?

Wages payable refers to the wages that a company's employees have earned, but have not yet been paid. Under the accrual method of accounting, this amount is likely recorded with an adjusting entry at the end of the accounting period so that… Read More.

What is an unfavorable variance?

In accounting the term variance usually refers to the difference between an actual amount and a planned or budgeted amount. For example, if a company's budget for repairs expense is $50,000 and the actual amount ends up being $45,000 or $63,000, there… Read More.

What is a post-dated cheque?

A post-dated cheque (or postdated check) is a check written with a future date. To illustrate, let's assume that on May 22 Jim owes a supplier $2,000 for purchases made 40 days ago. Since Jim does not have the money to pay… Read More.

What is a product cost?

Product cost meaning: 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 $40 to its… Read More.

What is a special journal?

Special journal meaning: 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 a general… Read More.

What is a favorable variance?

In accounting the term variance usually refers to the difference between an actual amount and a planned or budgeted amount. For example, if a company's budget for supplies expense is $30,000 and the actual amount is $28,000 or $34,000, there will be… Read More.

What is a flexible budget variance

First, a flexible budget is a budget in which some amounts will increase or decrease when the level of activity changes. A flexible budget variance is the difference between 1) an actual amount, and 2) the amount allowed by the flexible budget.… Read More.

How do you calculate ending inventory?

There are several ways to calculate the cost of a company's ending inventory. The first method is to 1) physically count the quantity of each of the items in inventory and then 2) multiply those quantities by each item's actual unit cost.… Read More.