Term
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Definition
| Ratio used to assess a company's ability to settle its current debts with its most liquid assests; defined as quick assets(cash, shot-term investments, and current receivables) divided by current liabilities |
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Term
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Definition
| Cost of inventory sold to customers during a period; also called "cost of sales" |
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Term
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Definition
| Used to describe credit terms for credit transactions |
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Term
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Definition
Free on board - the point when ownership of goods passes to the buyer.
FOB shipping point - the buyer pays shipping costs and accepts ownership of goods when the seller transfers goods to carrier.
FOB destination - the seller pays shipping costs and buyer accepts ownership of goods at the buyer's place of business. |
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Term
| General & Administrative Costs |
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Definition
| Expenses that support the operating activities of a business. |
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Term
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Definition
| Net Sales - Cost of Goods Sold |
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Term
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Definition
| (Net Sales - COGS) / Net Sales |
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Term
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Definition
| Same as Gross Margin: Net Sales - COGS |
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Term
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Definition
| Catalog (full) price of an item before any trade discount is deducted. |
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Term
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Definition
| Goods that a company owns and expects to sell to customers; also called merchandise or inventory. |
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Term
| Multiple-Step Income Statement |
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Definition
| Income statement format that shows subtotals between sales and net income, categorizes expenses and often reports the details of net sales and expenses. |
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Term
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Definition
| Expenses of promotiong sales, such as displaying and advertising merchandise, making sales, and delivering goods to customers. |
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Term
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Definition
| Inventory losses that occur as a result of theft or deterioration. |
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Term
| Single-Step Income Statement |
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Definition
| Income statement format that includes cost of goods sold as an expense and shows only one subtotal for total expenses |
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Term
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Definition
| Reduction from a list or catalog price that can vary for whole-salers, retailers, and consumers. |
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Term
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Definition
| Principle that prescribes the less optimistic estimate when two estimates are about equally likely |
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Term
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Definition
| Principle that prescribes use of the same accounting method(s) over time so that financial statements are comparable across periods. |
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Term
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Definition
Estimate of number of days needed to convert inventory into receivables or cash.
(Ending Inventory / COGS) * 365 |
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Term
| First-In, First-Out (FIFO) |
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Definition
| Method to asssign cost to invetnory that assumes items are sold in the order acquired; earliest items purchases are the first sold. |
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Term
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Definition
| A financial statement that reflects only a limited period of a company's financial statement, not the entire fiscal year. |
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Term
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Definition
Number of times a company's average inventory is sold during a period:
COGS / Average Inventory |
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Term
| Last-In, First Out (LIFO) |
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Definition
| Method to assign cost to inventory that assumes costs for the most recent items purchased are sold first and charged to cost of goods sold |
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Term
| Lower of Cost or Market (LCM) |
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Definition
| Required method to report inventory at market replacement cost when that market cost is lower than recorded cost. |
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Term
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Definition
| Expected selling price (value) of an item minus the cost of making the sale. |
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Term
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Definition
| Method to estimate ending inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail |
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Term
| Specific Identification Method |
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Definition
| Method to assign cost to inventory when the purchase cost of each item in inventory is identified and used to compute cost of inventory. |
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Term
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Definition
| Method to assign inventory cost to sales; the cost of available-for-sale units divided by the number of unites available to determine per unit cost prior to each sale that is then multiplied by the units sold to yield the cost of that sale. |
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Term
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Definition
| Subsidiary ledger listing individual customer accounts |
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Term
| Accounts Receivable Ledger |
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Definition
| Subsidiary ledger listing individual customer accounts |
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Term
| Cash Disbursements Journal |
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Definition
| Special journal normally used to record all payments of cash |
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Term
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Definition
| Special journal normally used to record all receipts of cash |
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Term
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Definition
| Information system principle that prescribes an accounting system to conform with a company's activities, personnel, and structure |
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Term
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Definition
| General ledger account, the balance of which equals the sum of the balances in its related subsidiary ledger |
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Term
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Definition
| Information system principle that prescribes the benefits from an activity in an accounting system to outweigh the costs of that activity |
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Term
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Definition
| Information system principle that prescribes an accounting system be able to adapt to changes in the company, its operations and needs of decision makers |
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Term
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Definition
| Component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting |
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Term
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Definition
| Component of an accounting system that keeps data in a form accessible to information processors |
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Term
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Definition
| Journal normally used to record all purchases on CREDIT |
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Term
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Definition
| Information system principle prescribing that its reports be useful, understandable, timely, and pertinent for decision making |
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Term
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Definition
| Journal normally used to record sales of goods on credit |
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Term
| Schedule of Accounts Payable |
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Definition
| List of the balances of all accounts in the accounts payable ledger and their total |
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Term
| Schedule of Accounts Receivable |
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Definition
| List of the balances for all accounts int he accounts receivable ledger and their total |
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Term
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Definition
| Segment operation income / segment average assets for the period |
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Term
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Definition
| Any journal used for recording and posting transactions of a similar type |
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Term
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Definition
| List of individual sub-accounts and amounts with a common characteristic; linked to a controlling account in the general ledger |
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