Term
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Definition
| companies record, in the periods in which the events occur; transactions that change a company's financial statements, even if cash was not exchanged |
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Definition
| expenses incurred but not yet paid in cash or recorded |
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Term
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Definition
| revenues earned but not yet recieved in cash or recorded |
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Term
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Definition
| a list of accounts and their balances after all adjustments have been made |
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Term
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Definition
| entries made at the end of an accounting period to ensure that revenue recognition and expense recognition principles are followed |
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Term
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Definition
| the difference between the cost of a depreciable asset and its related accumulated depreciation |
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Term
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Definition
| entries at the end of an accounting period to transfer the balances of temporaryaccounts to a permanent stockholders' equity account, retained earnings |
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Term
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Definition
| an account that is offset against an asset account on the balance sheet |
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Term
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Definition
| the process of allocating the cost of an asset to expense over its useful life |
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Term
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Definition
| the planned timing of revenues, expenses, gains and losses to smooth out bumps in net income |
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Term
expense recognition principle
(matching principle) |
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Definition
| dictates that companies match efforts (expenses) with results (revenues) |
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Term
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Definition
| an accounting period that is one year long |
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Term
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Definition
| a temporary account used in closing revenue and expense accounts |
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Term
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Definition
| an assumption that the economic life of a business can be divided into atrificial time periods |
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Term
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Definition
| balance sheet accounts whose balances are carried forward to the next accounting period |
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Term
| post closing trial balance |
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Definition
| a list of permanent accounts and their balances after a company has journalized and posted closing entries |
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Term
prepaid expenses
(pre payments) |
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Definition
| assets that result from the payment of expenses that benefit more than one accounting period |
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Term
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Definition
| indicates the level of full and transparent information that a company provides to users of its financial statement |
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Term
| revenue recognition principle |
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Definition
| companies recognize revenue in the accounting period in which it is earned |
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Term
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Definition
| an entry made at the beginning of the next accounting period; the exact opposite of the adjusting entry made in the previous period. |
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Term
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Definition
| revenue, expense, and dividend accounts whose balances a company transfers to retained earnings at the end of an accounting period |
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Term
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Definition
| cash received before a company earns revenues and recorded as a liability until earned |
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Term
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Definition
| the length of service of a productive asset |
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Term
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Definition
| a multiple column form that companies may use in the adjustment process and in preparing financial statements |
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Term
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Definition
| credit asset, debit expense |
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Term
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Definition
| debit liability (decrease), credit revenue (increase) |
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Term
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Definition
| debit asset, credit revenue |
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Term
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Definition
| debit expense, credit liability |
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Term
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Definition
| an account that is offset against a revenue account on the income statement |
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Term
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Definition
| the total cost of merchandise sold during a period |
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Term
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Definition
| the excess of net sales over the cost of goods sold |
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Term
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Definition
| gross profit expressed a percentage by dividing the amount of gross profit by net sales |
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Term
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Definition
| sales - sales returns, allowances, discounts |
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Term
| periodic inventory system |
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Definition
| company does not maintain detailed records of goods on hand and determines the cost of goods sold only at the end of an accounting period |
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Term
| perpetual inventory system |
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Definition
| company maintains the cost of each inventory item and the records continuously show the inventory that should be on hand |
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Term
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Definition
| measures the percentage of each dollar of sales that results in net income, computed by net income/net sales |
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Term
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Definition
| a deduction made to the selling price of merchandise granted by the seller so that the buyer will keep the merchandise |
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Term
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Definition
| company's earnings provide a fulll and transparent depiction of its performance; computed by net cash provided by operating activities/ net income |
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Term
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Definition
| primary source of revenue in a merchandising company |
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Term
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Definition
| an inventory costing method that uses the weighted average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold |
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Term
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Definition
| goods held for sale by one party although ownership of the goods is retained by another party |
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Term
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Definition
| the cost of purchasing the same goods at the present time from the usual suppliers in the usual quantities |
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Term
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Definition
| 365/inventory turnover ratio |
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Term
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Definition
| manufactured items that are completed and ready for sale |
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Term
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Definition
| earliest goods purchased are the first to be sold |
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Term
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Definition
| freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer |
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Term
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Definition
| freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller |
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Term
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Definition
measures the liquidity of inventory by measuring the number of times average inventory sold during the period.
cost goods sold/ average inventory |
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Term
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Definition
| inventory system in which companies manufacture or purchase goods just in time for use. |
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Term
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Definition
| assumes that latest units purchased are the first to be sold |
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Term
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Definition
| for a company using LIFO, the difference between inventory reported using LIFO and inventory using FIFO |
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Term
Lower of cost or market
(LCM) |
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Definition
| a basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost |
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Term
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Definition
| basic goods that will be used in production but have not yet been placed in production |
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Term
| specific identification method |
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Definition
| an actual physical flow costing method in whih items sold and items still in inventory are specifically costed to arrive at cost of goods sold and ending inventory |
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Term
| Weighted average unit cost |
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Definition
| average cost that is weighted by the number of units purchased at each unit cost |
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Term
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Definition
| that portion of manufactured inventory that has begun the production process but is not yet complete |
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