A pivotal area within an organization where production activities are conducted, focusing on tracking and managing production-related expenses.
Understanding the distinctions between professional income and trade income, especially in the context of taxation, essential for accurate financial reporting.
Detailed examination of the various formats for profit and loss accounts as prescribed by the Companies Act, including required disclosures and considerations for international comparability.
A profit and loss account reserve is a reserve that contains the balance of retained earnings to carry forward. It is fully distributable and shown as part of shareholders' reserves on the balance sheet.
Property management involves the operation of real estate as a business, including activities such as rental, rent collection, maintenance, and numerous other tasks related to the ownership and oversight of properties.
Provision for depreciation refers to the allocation of the cost of a tangible fixed asset over its useful life, ensuring accurate representation of asset value in financial statements and compliance with accounting and tax regulations.
Public accounting refers to the services provided by Certified Public Accountants (CPAs) to a variety of clients including individuals, businesses, governments, and non-profits. It involves independent auditing and results in the issuance of an accountant's opinion or auditor's report.
The Purchase Day Book, also known as Bought Day Book in the US, is a financial ledger in accounting where all purchase and expense transactions made on credit are recorded before being posted to the individual supplier accounts in the General Ledger.
The purchase day book, also known as the bought day book or purchases journal, is the book of prime entry where invoice amounts for purchases are recorded.
A Purchase Journal is a specialized accounting book where all purchases made on account are initially recorded. It typically includes details about the date of purchase, supplier name, purchase amount, and other relevant information to maintain accurate financial records.
In the USA, a method of accounting for business combinations in which cash and other assets are distributed or liabilities incurred. The purchase method is used if the criteria are not met for the pooling-of-interests method.
Purchases returns are goods purchased from a supplier that are returned due to being faulty, incorrect, or not meeting specifications.
A quasi-subsidiary is a company, trust, partnership, or other arrangement that does not fulfill the definition of a subsidiary undertaking but is directly or indirectly controlled by the reporting entity and provides similar benefits.
Rate of Return on Equity (ROE) measures the profitability of an investment, focusing on net income generated by shareholders' equity. It provides insights into how efficiently a company uses its equity base to generate profits.
A basis used in absorption costing for absorbing manufacturing overhead into the cost units produced.
The inventory of raw materials held at a specified time, which appears on the balance sheet under the heading of current assets.
A realizable account is an account prepared when a partnership is dissolved. It accounts for the assets of the partnership, expenses on realization, and proceeds from sales, with the resulting profit or loss shared between the partners according to their profit-sharing ratio.
Realized profit or loss refers to the profit or loss that has arisen from a completed transaction, typically the sale of goods, services, or other assets. It is recognized legally once the transaction is finalized, regardless of whether cash has been received.
Details about the functionalities and importance of receipts and receipt books typically used in business transactions to provide proof of payment and maintain records.
An accounting method that records transactions based on the actual receipt or payment of cash rather than when the transaction occurs.
A comprehensive document created for each shipment received by a company, containing detailed information used for verification and accounting purposes.
Reckoning involves settling accounts through detailed counting and computations to achieve a final total or conclusion.
Recognition is the procedure used to incorporate an accounting item into the financial statements of an organization. This process is not only essential for capturing revenue and expenditure items but has also become increasingly crucial for the proper treatment of off-balance-sheet finance.
Recoupment refers to the process of regaining or recovering losses, typically through legal means, compensation, or adjustments of accounts, often seen in various fields such as accounting, business law, and insurance.
The recoverable amount represents the value of an asset that is treated as the greatest of its net realizable value and its value in use.
Red ink is a slang term often used to describe financial losses, especially highlighted in financial statements where losses are marked in red for quick identification.
The reducing-balance method is a form of depreciation calculation that allocates a higher depreciation expense in the earlier years of an asset’s life and a lower expense in the later years.
Relevant revenue refers to the income generated from operations that are directly related to the core activities of a business. This figure is crucial for management to assess profitability and make informed financial decisions.
In financial and accounting contexts, remittance refers to the act of sending a payment, which may be accompanied by a preprinted coupon or a remittance slip that provides critical details such as account number, date, and purpose of the payment.
Repairs refer to work performed to return a property to its former condition without extending its useful life, distinguishing them from capital improvements. In the context of income property, repairs are an operating expense for accounting and tax purposes.
Replacement Cost Accounting is an accounting method allowing for additional depreciation on a part of the difference between the original cost and the current replacement cost of a depreciable asset.
The currency used by an organization to present its financial statements. It serves as the basis for the organization's financial reporting and helps standardize financial data across different entities and regions.
The reporting partner in an audit firm is responsible for forming an audit opinion on the financial statements of a client company. This role includes signing and dating the auditors' report after the board of directors formally approves the financial statements.
A reporting period is the specific span of time covered by a financial statement. This time frame is crucial as it provides stakeholders with the necessary context to evaluate a company’s financial performance and position.
Reserve for Depreciation, also known as Accumulated Depreciation, is an accounting term used to describe the total amount of depreciation that has been expensed against an asset's value over time. It reflects the reduction in an asset’s book value due to wear and tear, age, or obsolescence.
In accounting, a reserve refers to a part of a company's capital, other than its share capital. This capital can largely arise from retained profits or from the issuance of share capital at more than its nominal value. Reserves differ from provisions as they represent undistributed surpluses, with some being non-distributable. Directors may earmark these funds for specific purposes.
An account used to indicate that a portion of retained earnings is not available for dividends but is earmarked for specific purposes.
A Returns Outwards Book, also known as the Purchase Returns Book, is a book of prime entry utilized to record any returns of goods to suppliers. It ensures systematic tracking of returned items, allowing accurate updates to individual creditor's accounts and overall accounting records.
Revaluation involves increasing the value of an asset to reflect its current market value, where the asset cost account is debited and the revaluation reserve is credited.
Revenue is the total income generated by an entity from its main operating activities. It is a key indicator of financial performance and forms the base upon which profit and loss are calculated.
Revenue and Expense Accounts are fundamental components in accounting that track the income and expenditures of a business over a specific period. These accounts help determine the net profit or loss and are essential for financial reporting and analysis.
Revenue Procedures are published statements from the Internal Revenue Service (IRS) detailing instructions for the taxpayer and IRS officials in performing their duties.
Reversal, a multifaceted term, can signify a change in direction of financial markets, an offsetting accounting entry, a negative business event, or the overturning of a court decision.
A reverse premium, also known as a lease incentive, is a cash payment made by the lessor to the lessee to encourage the latter to enter into a lease agreement.
A reversing entry is a journal entry made to nullify a previous journal entry, thereby preventing errors caused by the previous entry.
A clause included in a contract of sale in which the seller retains the title of goods sold until they have been paid for. Crucial for accountants, it affects stock ownership and requires assessing the commercial substance of transactions.
A sales account is used to record both cash and credit sales transactions that take place as a result of the sale of goods or services.
A Sales Analyst operates within an accounting department and is responsible for tracking sales by region, product, or account. They ensure proper accounting and make recommendations to enhance profitability.
A sales credit note is a document issued by the seller to a customer to cancel, or partly cancel, an invoiced charge. It serves as an acknowledgment of the adjustment and facilitates a refund or a credit towards future purchases.
A Sales Day Book, also known as a Sales Journal or Sold Day Book, is an essential accounting record used to document invoices issued to customers for goods or services provided by an organization.
A Sales Day Book is a specialized subsidiary ledger used by businesses to record all the credit sales transactions before they are posted to the general ledger. This helps businesses maintain a detailed record of their sales and enhances the accuracy of their financial reporting.
A sales invoice is a document sent by the seller of goods or services to the buyer, detailing the amounts due, discounts available, payment dates, and such administrative details as account numbers and credit limits. It is a crucial component in business transactions and accounting.
The Sales Ledger Control Account, also known as the Debtors' Ledger Control Account, is a summary account in the general ledger that consolidates all individual debtor balances from the sales ledger.
Sales Returns and Allowances is an account used to accumulate price reductions given to customers due to goods being returned or merchandise being defective and not suited to customers' needs.
The Sales Returns Book, also known as the Returns Inwards Book, is a specialized ledger maintained by businesses to record the return of goods sold to customers. It helps track and manage returned inventory, ensuring accurate financial accounting and inventory control.
The net residual value of an asset at the end of its useful life, when it is no longer suitable for its original use. Fixed assets, inventory, or waste arising from a production process can all have a salvage value.
Salvage value, also known as scrap value, is the estimated residual amount that an asset is expected to realize when it is sold at the end of its useful life.
A detailed explanation and examples concerning the term 'Sans Recours' or 'Without Recourse', often used in the world of finance and accounting to limit the liability of the seller.
Legislation introduced in response to major corporate financial scandals to enhance corporate transparency and accountability.
Scrap refers to the remaining residual value of an asset at the end of its useful life, which can sometimes be recovered for a minimal monetary return, often referred to as salvage value. Additionally, scrap can arise from waste materials during a production process.
A secret reserve or hidden reserve is an account or fund that is not disclosed to stakeholders, often used by companies to smooth earnings over time.
Essential insights into 'See [Business Software Package]', covering its definition, applications within business environments, relevant examples, FAQs, related terms, and resources for further study.
Semiannual refers to an event or action occurring twice a year, often at six-month intervals. It is synonymous with the term 'biannual.'
Separable assets and liabilities refer to the specific assets and liabilities of a business that can be clearly distinguished from other assets and liabilities. This distinction is crucial when assessing the financial health of a company or when conducting valuations, such as during a merger or acquisition.
Several liability is a legal concept in which multiple parties can be held independently responsible for their own specified obligations or debts in a contractual agreement.
Shareholders' equity represents the owners' claim after subtracting total liabilities from total assets. It is a crucial metric for understanding a company’s financial health and includes components like share capital and reserves.
A short bond, also known as a short-term bond, refers to a bond with a short maturity period, generally meaning one year or less. These bonds are often classified as current liabilities under the accounting definition of short-term debt.
Short-term debt, also known as short-term liabilities, refers to debt obligations that are due for payment within one year from the date of the balance sheet. These are recorded under current liabilities, showcasing the financial obligations a company needs to settle in the near term.
Single-entry bookkeeping is an accounting system that records each transaction only once, without balancing debits and credits.
A slush fund is a financial stash reserved for illicit purposes, such as bribery or unethical activities, often without an accurate accounting record.
The first document to record a transaction, serving as proof of an event recorded by the company’s accounting system.
Standard cost refers to the predetermined unit cost of a product or service within a standard costing system. It is used for budgeting, performance evaluation, and cost control by providing a basis for comparison against actual costs.
Under a standard costing system, the standard cost allowance refers to the level of expenditure permitted for variable costs, based on actual levels of activity. It helps in budgeting and controlling costs efficiently.
An essential component in a standard costing system, the standard cost card provides a detailed record of how the standard cost of a product is built up, encompassing materials, labor, and overheads.
In standard costing, the standard cost derived from the standard quantity of materials allowed for the production of a product and the standard direct materials price for the materials specified for that product.
The standard price is a predetermined cost established for a product or service, commonly used as a benchmark for budgeting, costing, and performance evaluation in manufacturing and other industries.
Understand the concept of Standard Purchase Price, a predetermined price set for each commodity of direct material for a specified period, used in a system of standard costing.
In the context of standard costing systems, standard time refers to the time allowed to carry out a production task. It can be expressed either as the standard time allowed or in terms of standard hours representing the output achieved.
Stated value is an assigned value given to a corporation's stock for accounting purposes in lieu of par value.
A statement can refer to a summary of financial transactions, a document showing the status of assets and liabilities, or an instruction in a computer program.
A Statement of Change in Financial Position is a financial report that provides detailed information about a company's sources and applications of funds over a specific period.
A Statement of Changes in Financial Position details the sources and uses of an entity's financial resources during a specific period. It is commonly referred to as a Cash-Flow Statement.
A detailed report outlining the resources, liabilities, and capital accounts of a bank or financial institution as well as a summary of the status of assets, liabilities, and equity of a person or business organization.
A Statement of Income, also known as a Profit and Loss Statement, is a financial document that summarizes the revenues, costs, and expenses incurred during a specific period, often a fiscal quarter or year.
A detailed summary that outlines the changes in equity for a company over a financial period, reflecting the sources of funding and how funds have been utilized.
The Statement of Partners' Capital, typically presented on the balance sheet, indicates the net worth of each partner's interest in a business partnership.
An older term for the statement of total recognized gains and losses, now commonly referred to as the statement of comprehensive income, which provides a comprehensive summary of all income and expenses recognized in a financial period.
The accounting book in which the movements of inventories are recorded. The stock ledger records the receipts and issues of material as well as the balance in hand, in terms of both material quantities and values.
The stock record is an essential element in an inventory control system, documenting the movements in items of stock. This record can encompass entries in the stock ledger, which tracks stock movements in both quantities and values, or on bin cards, which focus on quantities alone.
Stockholders' equity represents the ownership interest of shareholders in a corporation, calculated as the difference between total assets and total liabilities.
Stocktaking is the process of counting and evaluating stock-in-trade, typically carried out at an organization's year end to value the total stock for final accounting purposes.
Stores in accounting refer to the part of an organization where various inventories are stored, which can include stationery stocks, maintenance components, production tools, raw materials, work in progress, and finished goods.
In accounting, stores oncost refers to the indirect costs or overheads associated with handling and storing materials used in production. These costs are not directly attributed to the cost of the raw materials themselves but are necessary for the overall production process.
A Stores Returns Note (SRN) is a document used in accounting and inventory management to record the return of goods or materials back to the warehouse or supplier. This notation is crucial for adjustments in inventory levels and accurate record-keeping in financial and material management systems.
A method of calculating the amount by which a fixed asset is to be depreciated in an accounting period, using a constant annual depreciation charge against profits year by year.
The straight-line method of depreciation is a calculation method whereby an equal amount of an asset's cost is allocated as an expense for each year of the asset's useful life. This method is commonly used for accounting and tax purposes.
A sub-subsidiary refers to a subsidiary undertaking of a company that is itself a subsidiary of another parent company.
Subjective goodwill of an enterprise is calculated by deducting its net tangible assets from the net present value of its estimated future cash flows.
Substance vs. Form Concept in accounting and taxation refers to the distinction between the material or essential part of a transaction (substance) and the observance of legal or technical order (form). It is critical to distinguish between these in various tax situations, where courts and the IRS may look past the form to determine the actual substance of a transaction.
A preliminary sum that represents the total of a set of numbers before any additional amounts, such as taxes or discounts, are included.
