Term
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Definition
| Keep track of changes in retained earnings. |
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Term
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Definition
| Represent assets, liabilities, and shareholders equity. |
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Term
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Definition
| transferring debits and credits recorded in individual journal entries to specific accounts. |
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Term
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Definition
| A list of general ledger accounts with their balances at a particular date, before adjustments. |
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Term
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Definition
| Internal events that effect balances in the general ledger account. |
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Term
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Definition
| Transactions in which cash flow precedes expense or revenue recognition. |
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Term
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Definition
| Asset recorded when a cash disbursement creates benefits beyond the current reporting period. |
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Term
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Definition
| Liability recorded when cash is received from customers in advance of providing a good or service. |
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Term
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Definition
| Transactions where the cash outflow or inflow takes place in a period subsequent to expense or revenue recognition. |
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Term
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Definition
| When an expense has been incurred prior to cash payment. |
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Term
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Definition
| When the revenue if earned in a period prior to the cash receipt. |
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Term
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Definition
| A change statement that summarizes the profit-generating transactions that caused shareholders' equity (retained earnings) to change during the period. |
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Term
| Statement of Comprehensive Income |
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Definition
| Reports the changes in shareholders' equity during the period that were not a result of transactions with owners. |
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Term
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Definition
| Present financial position of the company on a particular date. |
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Term
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Definition
| Assest that are cash, will be converted into cash, or will be used up within one year or the operating cycle, whichever is longer. |
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Term
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Definition
| Liabilities that will be satisfied within one year or the operating cycle, whichever is longer. |
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Term
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Definition
| Report events that caused cash to change during the period. |
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Term
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Definition
| Inflows and outflows of cash related to transactions entering into the determination of net income. |
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Term
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Definition
| The acquisition and sale of (1) long-term assets used in the business and (2) non-operating investment assets. |
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Term
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Definition
| Cash inflows and outflows from transactions with creditors and owners. |
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Term
| Statement of Shareholders' Equity |
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Definition
| Discloses the sources of changes in the permanent shareholders' equity accounts that occurred during the period from investments by owners, distributions to owners, net income, and other comprehensive income. |
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Term
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Definition
| (1) Temporary accounts are reduced to zero balances, and (2) temporary account balances are closed to retained earnings. |
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Term
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Definition
| The period of time before an asset is converted to cash or until a liability is paid. |
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Term
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Definition
| The period of time to convert cash to raw materials, to finished goods, to receivables, and back to cash. |
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Term
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Definition
| Highly liquid investments that can be quickly converted into cash. |
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Term
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Definition
| Investments of the company with the ability and intent to sell within the next 12 months or operating cycle, whichever is longer. |
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Term
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Definition
| Exclusive rights that a company can use to generate future revenues. |
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Term
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Definition
| Explain or elaborate upon the data presented in the financial statements, or provide information not directly related to any specific item in the statements. |
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Term
| Summary of Significant Accounting Policies |
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Definition
| Information about the company's choices from among various alternative accounting methods. |
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Term
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Definition
| A significant development that occurs after a company's fiscal yearend but before the financial statements are issued or avail able to be issued. |
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Term
| Related Party Transactions |
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Definition
| Disclosure of the nature of the relationship, description of the transactions, and dollar amounts transaction. |
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Term
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Definition
| Intentional distortions of financial statements. |
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Term
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Definition
| Provides the analyst with an independent and professional opinion about the fairness of the representations in the financial statements and about the effectiveness of internal controls. |
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Term
| Income from Continuing Operations |
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Definition
| Revenues, expenses, gains and losses, excluding those related to discontinued operations and extraordinary items. |
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Term
| Single-Step Income Statement |
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Definition
| Groups all revenues and gains together and all expenses and losses together. |
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Term
| Multiple-Step Income Statement |
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Definition
| Reports intermediate subtotals, such as gross profit, operating income, and income before taxes. |
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Term
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Definition
| The ability of reported earnings to predict a company's future earnings. |
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Term
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Definition
| Costs associated with shutdown or relocation of facilities or downsizing of operations. |
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Term
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Definition
| Reported net of tax separately. |
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Term
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Definition
| Material gains and losses that are both unusual and infrequent in occurrence. |
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Term
| Voluntary Changes in Accounting Principles |
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Definition
| Accounted for retrospectively by revising prior years' financial statements. |
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Term
| Changes in Depreciation, Amortization, or Depletion methods, and changes in Estimates |
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Definition
| Reflected in the financial statements of the current period and future periods. |
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Term
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Definition
| The amount of income earned by a company expressed on a per share basis. |
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Term
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Definition
| The cash effect of each operating activity is reported directly in the statement. |
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Term
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Definition
| Start with reported net income and work backwards to convert that amount to a cash basis. |
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Term
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Definition
| Before revenue can be recognized (1) earnings process is complete, and (2) there is reasonable certainty as to the collectability of the asset to be received. |
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Term
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Definition
| Recognize revenue and costs only when cash payments are received. |
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Term
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Definition
| Defers all gross profit recognition until cash equal to the cost of the item sold has been received. |
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Term
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Definition
| Physical transfer of goods to another company, but consignor retains legal title. |
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Term
| Completed Contract Method |
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Definition
| Recognizes revenue at a point in time when the earnings process is complete. |
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Term
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Definition
| Allocates a share of a project's revenues and expenses to each reporting period as construction occurs. |
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Term
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Definition
| All costs incurred in the construction process are initially recorded in an asset account. |
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Term
| Billings on Construction Contract |
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Definition
| Contra account to the construction in progress asset, all periodic billings. |
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Term
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Definition
| Progress to date is estimated by calculating the percentage of estimated total cost that has been incurred to date. |
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Term
| Gross Profit Recognized this Period |
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Definition
| Total Estimated Gross Profit x Percentage Completed to Date - Gross Profit Recognized in Prior Periods |
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Term
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Definition
| The right to sell products and use a name for a specific period of time. |
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Term
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Definition
| Money can be invested today to earn interest and grow to a larger dollar amount in the future. |
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Term
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Definition
| Amount of money a dollar will grow to at come point in the future. |
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Term
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Definition
| Today's equivalent to a particular amount in the future. |
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Term
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Definition
| Cash flows occur at the end of each period. |
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Term
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Definition
| Cash flows occur at the beginning of each period. |
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Term
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Definition
| First cash flow occurs more than one period after the date the agreement begins. |
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Term
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Definition
| A company's plan to (a) encourage adherence to company policies and procedures, (b) promote operational efficiency, (c) minimize errors and theft, and (d) enhance the reliability and accuracy of accounting data. |
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Term
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Definition
| Individuals that have physical responsibility for assets should not also have access to accounting records. |
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Term
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Definition
| A percentage reduction from the list price. |
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Term
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Definition
| Reduce amount to be paid if remittance is made within a specified short period of time. |
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Term
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Definition
| Cash discounts are not taken as part of sales revenues. |
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Term
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Definition
| Sales revenue is a net amount, after discount, and any discounts not taken by the customer are interest revenue. |
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Term
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Definition
| An inherent cost of granting credit. |
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Term
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Definition
| The amount of cash the company expects to actually collect from customers. |
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Term
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Definition
| Recording an adjusting entry that debits bad debt expense and credits allowance for uncollectables. |
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Term
| Income Statement Approach |
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Definition
| Estimate bad debt expense as a percentage of each period's ned credit sales. |
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Term
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Definition
| Determine bad debt expense by estimating the net realizable value of accounts receivable. |
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Term
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Definition
| Recorded by debiting bad debt expense and crediting accounts receivable as accounts become uncollectable. |
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Term
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Definition
| Interest is deducted from the face amount to determine the cash proceeds made available to the borrower at the outset. |
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Term
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Definition
| A company sells its accounts receivable to a financial institution. |
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Term
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Definition
| Buyer assumes the risk of uncollectibility when accounts receivable are sold. |
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Term
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Definition
| Seller retains risk of uncollectability when accounts receivable are sold. |
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Term
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Definition
| A financial institution accepts a note receivable and gives the seller cash equal to the maturity value of the note reduced by a discount. |
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Term
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Definition
| Products that are not yet complete. |
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Term
| Perpetual Inventory System |
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Definition
| Continuously record changes in inventory quantity and cost. |
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Term
| Periodic Inventory System |
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Definition
| Adjust inventory and record costs of goods sold only at the end of each reporting period. |
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Term
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Definition
| Included in the purchaser's inventory as soon as the merchandise is shipped. |
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Term
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Definition
| Included in the purchaser's inventory only after it reaches he purchaser's destination. |
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Term
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Definition
| Paid by the purchaser and included as part of the cost of inventory. |
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Term
| Specific Identification Method |
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Definition
| Each unit sold during a period or each unit on hand at the end of a period is matched with its actual cost. |
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Term
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Definition
| Assumes items sold and items in ending inventory come from a mixture of all the goods available for sale. |
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Term
| Weighted Average Unit Cost |
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Definition
| Cost of Goods Available for Sale / Quantity Available for Sale |
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Term
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Definition
| Computing a moving unit cost each time inventory is purchased. |
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Term
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Definition
| Items sold are those that were acquired first. |
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Term
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Definition
| Items sold are those that were most recently acquired. |
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Term
| Just in Time (JIT) System |
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Definition
| Raw materials or components arrive just as they are needed in the production process. |
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Term
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Definition
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Term
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Definition
| Cost in Layer Year / Cost in Base Year |
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Term
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Definition
| Cost to replace the item by purchase or manufacture. |
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Term
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Definition
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Term
| Net Realizable Value less Normal Profit Margin |
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Definition
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Term
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Definition
| Estimate relies on historical relationship among (a) net sales, (b) cost of goods sold, and (c) gross profit. |
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Term
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Definition
| Relies on relationship between cost and selling price to estimate ending inventory and cost of goods sold. |
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Term
| Conventional Retail Method |
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Definition
| Excludes markdowns from the calculation of cost to retail percentage. |
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Term
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Definition
| Amounts paid to acquire the rights to explore for undiscovered natural resources or to extract proven natural resources. |
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Term
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Definition
| Expenditures such as drilling a well, or excavating a mine, or any other costs of searching for natural resources. |
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Term
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Definition
| Incurred after the resource has been discovered, but before production begins. |
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Term
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Definition
| Costs to restore land or other property to its original condition after extraction of the natural resource ends. |
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Term
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Definition
| An exclusive right to manufacture a product or to use a process. |
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Term
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Definition
| An exclusive right of protection given to a creator of a published work. |
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Term
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Definition
| An exclusive right to display a word, slogan, symbol, or emblem that distinctively identifies a company, a product, or a service. |
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Term
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Definition
| The amount paid to acquire company in excess of its fair value. |
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Term
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Definition
| Future cash flows change as a result of the exchange. |
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Term
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Definition
| Expensed in the period incurred, include organization costs related to organizing a new entity. |
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Term
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Definition
| The amount of use that the company expects to obtain from the asset before disposing of it. |
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Term
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Definition
| The difference between the cost of the asset and the anticipated residual value. |
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Term
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Definition
| Allocate the cost of the base according to the passage of time. |
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Term
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Definition
| Allocate the cost of an asset using a measure of the asset's input or output. |
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Term
| Straight-Line Depreciation |
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Definition
| Initial Cost - Residual Value / Useful Life |
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Term
| Sum-of-the-Years'-Digits Depreciation |
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Definition
| Initial Cost - Residual Value x (Useful Life / Sum) |
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Term
| Declining Balance Depreciation |
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Definition
| Book Value x Multiple of Straight-Line Rate |
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Term
| Units-of-Production Depreciation |
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Definition
| Initial Cost - Residual Value / Estimated Units to Produce |
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Term
| Group Depreciation Method |
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Definition
| Collection of depreciable assets that share similar service lives and other attributes. |
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Term
| Composite Depreciation Method |
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Definition
| Assets are physically dissimilar but are aggregated away to gain the convenience of a collective depreciation calculation. |
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