learn bookkeeping online for free
The specific identification inventory costing method is a way of determining the cost of goods sold and the value of the ending inventory. Under the specific identification inventory method, it is assumed that each unit of inventory can be identified and traced from purchase to sale.
A non interest bearing note or zero interest note does not have an interest rate and does not charge periodic interest payments on the outstanding liability. In order for the lender to get a return on the non interest bearing notes payable, they are issued at a discount to their face value.
Lower of cost or market is a term used to refer to the method by which inventory is valued and shown in the balance sheet of a business. The lower of cost and market rule states that the inventory must be shown at the lower of cost or replacement cost subject to upper and lower limits on replacement cost.
Installment notes are liabilities and represent amounts owed by a business to a third party. What distinguishes installment notes from other liabilities is that they are issued as a promissory note and repaid by fixed periodic payments.
With a promissory note, the business who issued the note (called the issuer) promises in writing, to pay an amount of money (principal and interest) to a third party (called the payee) at a given time or on demand.
In a standard costing accounting system, fixed manufacturing overhead has two main variances budget and volume. Fixed overheads are those costs which do not vary in response to the level of production output. To operate a standard costing system and allocate fixed overhead, the business must first decide on the basis of allocation, and calculate the standard fixed overhead allocation rate.
In a standard costing accounting system, variable manufacturing overhead has two main variances rate and efficiency. Variable overheads are those costs which vary in response to the level of production output but which cannot be attributed to individual units of production. To operate a standard costing system and allocate variable overhead, the business must first decide on the basis of allocation.
In a standard costing accounting system, direct labor has two main variances price and efficiency. Unlike direct materials, direct labor is used at the same time as it is purchased, and therefore the price and efficiency variances occur at the same time on the same production run, and a single journal is needed post the variances together with the standard and actual cost to the accounting system.