Glossary
Accelerated depreciation Any of several depreciation methods that recognize an increased amount of depreciation in the earliest years of asset usage. This results in increased tax benefits in the early years of asset life, since the higher depreciation expense reduces taxable income. An example of an accelerated depreciation method is the sum-of-the-years’ digits method.
Account A separate, detailed record associated with a specific asset, liability, or equity item. For example, an entity usually has a separate account for each of its bank accounts, as well as for its accounts receivable and accounts payable.
Accounts payable An entity's short-term obligation to pay suppliers for products and services, which the entity purchased on credit. Accounts payable appears within the current liability section of an entity's balance sheet.
Accounts receivable Short-term amounts due from customers to an entity who have purchased goods or services from it on credit. Accounts receivable is listed as a current asset on an entity's balance sheet.
Accrual accounting A method of recording accounting transactions for revenue when earned and expenses when incurred. The accrual basis requires the use of allowances for sales returns, bad debts, and inventory obsolescence, which are in advance of such items actually occurring. An example of accrual basis accounting is to record revenue as soon as the related invoice is issued to the customer.
Accumulated depreciation The sum total of all ...
