Studied by 0 people
Looks like no one added any tags here yet for you.
Internal Controls
A company’s plan to 1.) Safeguard the company’s assets, and 2.) Improve the accuracy and reliability of accounting information.
Separation of Duties
Authorizing transactions, recording transactions, and maintaining control of related assets should be separated among different employees.
First-in, first-out method (FIFO)
Inventory costing method that assumes the first units purchased (the first-in) are the first ones sold (the first-out).
Last-in, first-out method (LIFO)
Inventory costing method that assumes the last units purchased (the last-in) are the first ones sold (the first out).
Multi-step income statement
An income statement that reports multiple levels of income (or profitability).
Residual (Salvage) value
The amount the company expects to receive from selling the assets at the end of its service life.
Straight Line Depreciation Calculation
Allocates an equal amount of depreciation to each year of the asset's service life.
Double Declining Balance Depreciation Calculation
An accelerated method that allocates higher depreciation in the earlier years of the asset’s life and lower depreciation in later years.
Intangible Asset
Long-term assets that lack physical substance, and whose existence is often based on a legal contract.
Net Accounts Receivable
The calculated difference between total accounts receivable and the allowance of uncollectible accounts.
Net Revenues
Total revenues less any discounts, returns, and allowances.
Gross Profit
Sales revenue less cost of goods sold.
Book Value
Original cost of a long-term asset less accumulated depreciation.
Contra Revenue Account
An account with a balance that is opposite, or contra, to that of its related (companion) revenue account.
Allowance for Uncollectible Accounts
Contra asset account representing the amount of accounts receivable that we do not expect to collect. Major category - contra asset, asset; Normal balance - credit; Financial statement - Balance Sheet.
Sales Allowance (Contra Revenue)
Seller reduction of customers’ balance owed or provision of a partial refund because of some deficiency in the company’s product or service. Major category - contra revenue, revenue; Normal balance - debit; Financial statement – Income Statement.
Sales discount (Contra Revenue
Reduction in the amount to be paid by a credit customer if payment on
account is made within a specified period of time. Major category - contra revenue, revenue; Normal balance - debit; Financial statement - Income Statement.
Sales return (Contra Revenue)
Customer returns a product. Major category - contra revenue, revenue;
Normal balance - debit; Financial statement – Income Statement.
Bad Debt Expense
The amount of the adjustment to allowance for uncollectible accounts, representing the cost of estimated future bad debts charged to the current period. Major category - Expense; Normal balance - debit; Financial statement – Income Statement.
Cost of goods sold
Cost of inventory that was sold during the period. Major category - Expense; Normal balance - debit; Financial statement – Income Statement.
Amortization Expense
Allocation of the cost of an intangible asset over its service life. Major category - Expense; Normal balance - debit; Financial statement – Income Statement.
