What are purchasing power gains or losses? Those gains or losses that result from holding monetary assets (cash and rights to receive cash) and monetary liabilities (all liabilities other than those requiring the performance of service) during periods of inflation or deflation.
What is the Purchase Method? A method of preparing consolidated financial statements in which the net assets of the purchased company are revalued to their fair market value is called purchase method.
What is meant by Publicly Held Corporation? A corporation, the stock of which is owned by outside investors, and which stock and/or bonds are listed on a national and regional exchange.
What is the pooling or interest method? Pooling or interest method is a method of accounting for a business combination in which the combining companies are treated as if their net assets were pooled instead of one company having purchased outright the other. Assets and liabilities are combined at their net book value.
What is meant by the term “Parent company”? Parent company is the corporation that owns the majority of the common stock of another company.
What is meant by the prior period adjustments? Prior period adjustments are the transactions that relate to an earlier accounting period but that were not determinable by management in the earlier period. Specifically limited by a FASB statement.
What is meant by primary earning per share (eps)? The net income available to common stock, divided by the sum of the weighted average common shares and common stock equivalents is called primary earning per share.
What is meant by the term “Proxy”? Proxy is a legal document signed by the shareholders that gives another individual or individuals, usually existing management, the right to vote the shares in the manner they deem best.
What is Par Value? Par value is an amount designated in the articles of incorporation or by the board of directors and printed on the stock certificate.
What is the present value of a single amount? – Definition The value of a future promise to pay or receive a single amount at a specified interest rate is called the present value of a single amount. Explanation In many business and personal situations, we are interested in determining the value today of receiving …
What is the present value of an annuity? The present value of a series of future promises to pay or receive an annuity at a specified interest rate. The value today of a series of equal payments or receipts to be made or received on specified future dates is called the present value of an …
What is meant by Present Value? The amount that must be invested now, at a given rate of interest, to produce a given future value is called present value.
What is meant by the term “Patent”? The patent is an exclusive right to use, manufacture, process or sell a product that is granted by the US Patent Office.
What is the percentage of the net sales Method? – Definition Percentage of Net Sales is a method of estimating uncollectible accounts expense under which the amount of uncollectible accounts expense is determined by the analysis of the relationship between net credit sales and the prior year’s uncollectible accounts expense. Explanation The percentage-of-net-sales method determines …
What is meant by Payee? A payee is a person to whom the payment for the note is to be made.
What is Profit Margin Percentage Formula? Profit Margin Percentage can be calculated as the net income divided by the sales. Profit Margin % = Net Income / Sales
What is meant by the principal on a promissory note? Principal on a promissory note is the original amount of a promissory note on which interest is calculated.
What is Post Closing Trial Balance? Post Closing Trial Balance is a trial balance prepared from the ledger account after the closing entries have been posted. Used to help ensure that these entries have been posted correctly.
What is mean by accounting term “Period Expenses”? Period expenses are the expenses of a business that cannot be directly related to a product or services and matched against revenues in the period the revenues are earned.
What is meant by accounting term Posting? Posting is the process of transferring information from journal entries to the ledger accounts.
What is meant by the term Publicly Owned? Publicly owned is a term indicating that a corporation’s stock is traded on an organized exchange (such as the New York or American Stock Exchange), easily enabling individuals to buy or sell shares of stock in these corporations.
What is Public Accounting? Public Accounting is the field of accounting that, for a fee, provides a variety of accounting services to individuals and firms.
What is Private Accounting? Private Accounting is the practice of accounting in a single firm.
What is the partnership? Partnership is an unincorporated business entity owned by two or more individuals.
Definition If the purchaser informs the supplier that some goods are defective or damaged or not according to specification, the supplier may agree to reduce the price of such goods. This reduction in price is known as purchases allowance.
Definition The concession allowed by the supplier on the purchase of goods is called purchases discount. Or The allowance given for prompt payment for merchandise purchased for resale. Example John Foods (Pvt) Limited announced 10% to 25% discount on its all products from 1st January to 20 January 2019. When you will purchase some products …
Definition If goods purchased are found defective, unsatisfactory or excess in quantity, they are returned to the supplier, these are called purchases returns or returns outwards. Example: Goods of $500 returned to Marry. Generally, goods are returned due to the following reasons: When goods are defective When goods are not according to specification. When goods …
Definition In Accounting, purchases do not mean buying anything but it has special meaning. When saleable goods or merchandise are bought in a business these are called purchases. Example Stationery is purchased by a stationer is called “Purchases” Cloth purchased by a cloth merchant is called “Purchases” Cement purchased by a cement dealer is called …
Definition We can define Proprietor as: “He is the owner of the business. He invests his capital, gives his time and attention to the business. He enjoys profit and bear loss of the business.”