Glossary of Terms
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- Ending inventory:
- Merchandise (for sale to customers) on hand at the ending of an accounting period.
- Equity:
- The residual interest in the assets of business entity that remains after deducting its liabilities.
- Estimated Useful Life:
- Estimated useful life of an asset is the total number of service units expected from the asset. Service unit may be measure in terms of years the asset is expected to be used, units expected to be produced, miles expected to be driven, or similar measure. In computing the estimated useful life of an asset, the accountant should consider all relevant information, including (1) past experience with similar assets, (2) the asset’s present condition, (3) the company’s repair and maintenance policy, (4) current technological and industry trends, and (5) local conditions such as weather.
- Ethics:
- A code of conduct that addresses whether everyday actions are right or wrong.
- Evaluation:
- The examination of the entire decision-making process with a view to improving it.
- Excess capacity:
- Machinery and equipment kept on hand and on a standby basis.
- Expenses:
- The cost of goods and services used up in the course of earning revenues. Decreases in owner’s equity that result from operating a business.