Glossary of Accounting Terms
Letters R-Z
Recognition is the fact of recording an event in financial records (books).
Retained earnings form a component of equity resulting from earnings activities.
Revenue is an increase in assets or decrease in liabilities resulting from the operating activities of an entity.
Salary payable represents amounts of future cash payments to employees for work that has already been performed.
Salvage value is portion of an asset cost that is expected to be recovered at the end of its useful life.
Selling and administrative expenses are expenses of selling and administrative nature that are not directly traceable to a specific product. Examples are advertising, administrative salaries and insurance, among others.
Single-step income statement shows only one step in determining a net income (or net loss).
Source document serves as a basis for an accounting entry. Source documents are what accountants use to record accounting transactions. Source documents are also called business documents.
Specific identification is an actual physical flow inventory costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory.
Statement of changes in equity shows all changes in owner's equity for a period of time. This statement is also called Owners' Equity Statement.
Straight-line depreciation is a depreciation method in which periodic depreciation is the same for each period of the asset useful life.
Sum-of-the-years-digits method applies a decreasing rate to the asset depreciable value and produces a decreasing depreciation expense over the useful life of the asset. The decreasing rate equals the fraction of a current year's digit to the total of all year digits in the asset useful life.
Supplies is an asset account used to keep track of supplies (i.e., pencils, paper). The Supplies account is increased when new supplies are acquired and decreased when supplies are used / expensed(usually in a single adjusting entry at period end).
T account is an individual accounting record that shows information about increases and decreases in one balance sheet or income statement account. It is so called because it has a form of letter T.
Tangible assets are those which one can touch and include natural recourses, machinery, tools, equipment, buildings and land, among others.
Temporary accounts are closed at the end of each period. These are mostly income statement accounts, except for a distribution account that is equity statement account. Temporary accounts are also called nominal accounts.
Transportation-in expenditures are cost incurred to delivery inventory from the vendor (supplier) to the company. Transportation-in costs are treated as part of the inventory costs (product costs).
Transportation-out expenditures are expenses incurred to deliver products from the company to the customer. Transportation-out expenditures are treated as period costs and expensed in the period of occurrence.
Trial balance is a list of all accounts with their balances at a point in time.
Unearned revenue represents cash received and recorded as liabilities before revenue is earned. These amounts are shown in the liabilities section on the balance sheet.
Units-of-production method determines the useful life of an asset based on the units of production. Each period, the units of production determine the depreciation expense.
Useful life is a term of service during which an asset is expected to provide benefits to a company.
Warranty is the seller or manufacturer's promise to do something for a customer (repair, exchange, refund) about a bad or broken product during a specified time period without additional charges (for free).
Weighted-average (average cost) inventory costing method assumes that the average cost of inventories is to be recognized as the cost of goods sold.
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