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Accounting Terminology Guide Over 1,000 Accounting and Finance Terms

Outlay of money to acquire or improve capital assets such as buildings and machinery. Collection of formal, written rules governing the conduct of a CORPORATION’S affairs (such as what officers it will have, what their responsibilities are, and how they are to be chosen). Bylaws are approved by a corporation’s stockholders, if a stock corporation, or other owners, if a non-stock corporation. Standard rate multiplied by a level of activity to determine the OVERHEAD cost of that activity.

Accounting Terms

Inventory cannot be valued lower than the “floor” which is the netrealizable value of the inventory less an allowance for a normal profit margin. Costs that remain constant within a defined range of activity, volume, or time period. Tangible LONG TERM ASSETS used in the continuing operation of a business that are unlikely to change for a long time.

Assets (fixed and current) (FA, CA)

If revenue is insufficient to cover expenses, insolvency becomes inevitable. It is often used as part of the calculation to evaluate a company’s value. Determining such value will be necessary to secure a business loan or pitch to investors. This is the complete record of a company’s financial transactions. Whether you do your own accounting, have an in-house accountant or hire a third party accounting firm, having a grasp on accounting speak can help your business tremendously.

  • The difference represents the value of a business, which can be a positive or negative number.
  • The postponement of the date that an expense already paid or incurred, or of a REVENUE already received, is entered in the LEDGER.
  • The TAX that an incorporated business must pay to the federal government and, often, to state and city governments as well.
  • Amount received from the sale or disposition of property, from a LOAN, or from the sale or issuance of securities after deduction of all costs incurred in the transaction.
  • Inventory is usually classified as finished goods (which are ready for sale), work-in progress goods (that require assembly) and raw materials (that will become other goods in time).

A U.S. taxpayer that pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determinable us dollar amount. This is usually done on the annual individual tax return and there is s specific form provided for this. For example, you need to pay office rent, employee wages, vehicle insurance premiums, and interests on capital loans irrespective of the volume of product sales or service provisioning.

Distribution Expense

The various government codes contain numerous provisions which impose penalties on a taxpayer (any type of taxpayer) for failure to perform a specific act or omitting vital information on a return. The difference between the REVENUES of a business and the related costs and expenses, excluding INCOME derived from a sources other Accounting Terms than its regular activities and before income deductions. The lawyer hires the CPA to do the investigation and determine the amount of money stolen or understated. The sum of beginning inventory and the net cost of purchases during a period; the total goods available for sale to customers during an accounting period.

What are the 5 terms of accounting?

Five main types of accounts appear in a COA: assets, equity, expenses, liabilities, and revenues.

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