Key accounting definitions
FIGURING IT OUT
| Non-operating expenses Expenses not directly related to the main activities of a business, for instance managerial commission or bonus, interest paid, cash discount, prior year charges and miscellaneous debits. |
| Out-of-date cheque A cheque which has not been presented to the bank on which it is drawn for payment within a reasonable time of its date and which may therefore be dishonoured by the bank without any breach of the banker customer contract. |
| Notional charge concept Certain charges are taken in accounts whose exact extent of value cannot readily be computed, e.g., depreciation, which is taken at certain percentages of the value of the assets, presuming that such percentage represents a near type picture. |
| Optimum bonus system Incentive system in which the gain from increased output is shared between employees and the employer in agreed proportions. |
| Over capitalisation A firm is over capitalised if its capital is more than what is justified by its earning capacity. |
| Expected activity This is a measure of the expected production volumes for a forthcoming period, and may be expressed in terms of anticipated units of input or output, or as a percentage utilisation of capacity. |
| Extra ordinary item An extremely unusual and infrequent expense or revenue that is shown along with income tax effects on an income statement. Examples are losses from earthquakes and gain or losses on the retirement of bonds. |
| Final dividend Second dividend for a year, unpaid at year-end, when added to interim dividend for the year (normally paid in that year), makes up total dividends for the year. |
| Financial report A report on operating results and financial position of an organisation including the income statement, balance sheet and interpretive annotations. |
| Fixed overhead cost The cost which accrues in relation to the passage of time and which, within certain output and turnover limits, tends to be unaffected by fluctuations in the levels of activity (output or turnover). |
| Goods received note A document prepared by a recipient to record receipt of goods either because an advice note has not been received, or to create a common format for use within the recipient's system. |
| Handling cost Costs of handling materials from their arrival till delivery for production -- cost of inspection, internal conveyance, storage, issues, losses due to damages during transportation.interpretive annotations. SOURCE: ICWAI |