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Online Accounting Dictionary
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Cash consists of coins, currency, money orders, checks, money on hand or on deposit in a bank (e.g. checking account). Unrestricted cash is considered a current asset.
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Cash (or cash-basis) accounting recognizes the effects of accounting events when cash is exchanged regardless of the time events occur. Cash-basis accounting is not in accordance with generally accepted accounting principles (GAAP).
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Cash flow statement summarizes information about cash outflows (payments) and inflows (receipts). This statement may also include certain information not related to actual cash flows.
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Cash inflows are sources of cash; for example, payments from customers, capital acquisitions, etc.
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Cash outflows are uses of cash; for example, payments to vendors, paying off bank loans, etc.
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Claims exchange transactions increase one claim account and decrease another. Thus, only claim accounts are involved in such transactions. Total claims remain unchanged. For example, recording salaries payable is an example of a claim exchange transaction.
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Claims: A company's assets belong to the resource providers who are said to have claims on the assets.
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Closing entries are made to free up (to zero) the nominal (temporary) accounts so that they are prepared to be used in the next accounting period.
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Closing the accounts (also called closing the books) is the process of transferring the balances from the temporary accounts to the permanent account, Retained Earnings.
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Contra asset account is one that is offset against an asset account on the balance sheet. Contra asset accounts have credit balances and thus, reduce asset account balances.
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Contributed capital is a component of equity resulting from contributions of capital resources from owners.
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Contribution margin (contribution) is the difference between sales and variable costs (expenses). Contribution contributes toward fixed cost and profits. Contribution margin may be calculated in total or per unit.
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Contribution margin ratio is the contribution margin divided by the sales amount. It is the percent of sales dollars available to cover fixed costs. Once fixed costs are covered, the next dollar of sales results in the company's profit. Contribution margin ratio is expressed as a percent.
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Conversion cost is the combination of direct labor and factory overhead.
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Cookie jar accounting is an accounting practice of creating excessive accounting reserves in one year and using them to improve earnings in another one.
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Cost is a payment of cash or its equivalent for the purpose of generating revenues.
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Cost driver is any activity that causes change of costs over a given period of time. These activities are also called activity bases or activity drivers.
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Cost of goods available for sale is the cost of goods acquired during a period plus the cost of goods on hand at the beginning of the period. This cost represents all inventories available for sale during the period.
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Cost of goods manufactured represents manufacturing costs assigned to goods that were produced during an accounting period.
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Cost of goods sold (COGS) is the difference between the cost of goods available for sale and the cost of goods on hand at period end. This cost represents the cost of goods sold by the company during the period.
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Credit is the right side of a T account. Credit is also an entry on the right side of an account. Under the double entry bookkeeping system, credits decrease assets and expense and increase liabilities, equity, and income (revenues). Crediting is a verb that means making a credit entry.
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Creditor is a buyer of a bond or a note, or in other words, a lender or an investor. Creditors are governments, mutual funds, pension funds, and financial institutions from around the world.
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Cross-subsidization is a situation when one product is subsidized at the expense of others.
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Current assets are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year of the balance sheet date or the company’s operating cycle, whichever is longer.
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Current liabilities are obligations that are reasonably expected to be paid from existing current assets or through the creation of other current liabilities.
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Customer life-time value (CLV) is the net present value of all estimated future revenues from the customer.
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Customer profitability analysis is used to determine profitability of each customer or group of customers.
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Customer-level activity is an activity that relates to specific customers, not specific products. Examples of customer-level activities are: IT-support, sales calls, sales visits, catalog mailings, etc.
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