: Attention, accounting students! Here are 30 basic accounting terms youll need to know! #accounting #business #financ Accounting, Pinterest for business, Basic

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    Partnerships do not generally provide such legal protections unless they are formed and operated as LLPs according to state law. LLPs are treated as partnerships for income tax https://business-accounting.net/ purposes and are therefore exempt from the separate income taxation faced by most corporations. The acquisition of any long-term assets such as property, plan and equipment.

    Operating expenses are necessary for a company to do business and generate revenue, like rent, utilities, payroll, and utilities. These expenses aren’t typically affected by company sales Learn common accounting terms or market trends. COGS or COS is the first expense you’ll see on your profit and loss (P&L) statement and is a critical component when calculating your business’s gross margin.

    Stock Market

    Income statements are one of three standard financial statements issued by businesses. Examples include bank loans, unpaid bills and invoices, debts to suppliers or vendors, and credit card or line of credit debts. Rarely, the term “trade payables” is used in place of “accounts payable.” Accounts payable belong to a larger class of accounting entries known as liabilities.

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    Probable future obligations to pay assets or provide services to another entity. Liabilities are also referred to as a company’s debts and are the result of a company’s debt financing. The difference between the standard or budgeted fixed overhead and actual amount spent. Fixed Overhead costs are the indirect manufacturing costs that are not expected to change with the volume of activity. Most financial analysts work for investment banking companies, stock brokerage firms, banks and other financial institutions involved in providing debt or equity financing to businesses or advice to investors. A transaction a company enters into to sell its accounts receivable to a third party at a discounted price for cash.

    Cumulative preferred stock

    The credit terms on such sales typically allow customers to make minimum monthly payments and charge interest on any unpaid balances from month to month. Sales of goods or services to customers choosing to pay with a credit card such as VISA or MasterCard. Companies accepting and electronically processing a customer credit card receive an immediate cash deposit to their bank account in an amount equal to the sales price, less a processing fee. The fee typically runs from 3-5% of the processed amount and is an expense of the business. This explains why some businesses refuse to accept credit cards, even though they may lose customers as a result. Most businesses accept credit cards but simply hike-up prices to cover the processing costs. Some of these companies alternatively provide sales discounts to cash-paying customers to pass along all or a portion of the resulting fee savings to the customer.

    Under a perpetual inventory accounting system, the return of a product to a supplier should be recorded with a corresponding reduction in inventory at the time of return. If the original purchase was made on account, a reduction should also be made in accounts payable. If the goods were previously paid for, then a cash refund should be received or accounts payable may be reduced against future credit purchases. A form of business ownership in which a single individual owns all of the business assets, bears all of the business liabilities, and is the sole beneficiary of any net income or losses from business operations.

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    It is calculated by the market price of one share multiplied by the number of shares outstanding. A business that assembles or constructs a tangible product for sale to customers. Manufacturing business customers are typically wholesale or retail merchandisers involved in the distribution of manufactured products to the ultimate end user or consumer. The difference between the total actual overhead costs incurred and the total standard overhead cost applied to Work in Process. This can be broken down into Variable Manufacturing Overhead Variance and Fixed Manufacturing Overhead Variance. The amount of interest paid plus the amount of any interest to be paid in the future as a result of any borrowing of assets for current period use. A loosely used term which may refer to revenues less expenses as in the case of net income.

    • Of Sales and Marketing would be classified as product and selling costs, respectively.
    • Funds used by anot-for-profitorganizationtoaccountfor all resources used for the development of aland improvementor building addition or renovation.
    • Incomefrom SECURITIES and other non-business investments; such asDIVIDENDS,INTEREST, etc.
    • Profit and Loss (P&L) Statement – A P&L statement provides a summary of the revenue, expenses and costs that a company incurs over a period of time.

    There is no legal obligation to declare and pay dividends and increasing retained earnings can be used to finance a company’s future growth. Stockholders in companies that do not generally pay dividends hope to earn a return on their investment through the subsequent sale of their stock at higher prices. Sometimes referred to as the “quick ratio.” The acid-test ratio is used in financial statement analysis as a more stringent measure of a company’s liquidity than the current ratio. The ratio is calculated by adding amounts of selected current assets which are most liquid, and dividing that total by the amount of total current liabilities. There is no standardization in the assets to be used in the numerator for this ratio.

    Other revenues and expenses

    LOSSgenerated from activities involved in the conduct of atradeor business in which the taxpayer does not materially participate. Amount pershareset in the ARTICLES OFINCORPORATIONof a CORPORATION to be entered in the CAPITAL STOCKSaccountwhere it is left permanently and signifies a cushion ofEQUITYcapital for the protection of CREDITORS. Price pershareat which a new or secondary distribution of securities is offered forsaleto the public. Valueassigned to ASSETS or LIABILITIES that is not based on cost ormarket(e.g., the value of a service not yet rendered). Collectivetermfor written promissory notes that are due in less than one year and are held by the entity to whom payment is promised. Excess orDEFICITof totalREVENUESand GAINS compared with total expenses and losses for an ACCOUNTINGperiod. Reportissued by anACCOUNTANTbased on limited procedures that states that nothing has come to the accountant’s attention to indicate that the financial information is not fairly presented.

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