Net income results when revenues exceed expenses. A net loss occurs when expenses exceed revenues.
More from this Section
- Labor quantity variance
Labor quantity variance is the difference between the actual hours times the standard rate and standard hours times the standard rate for labor.
- Days in inventory
A variant of the inventory turnover ratio is days in inventory that measures the average number of days inventory is held; calculated as 365 divided by the inventory turnover ratio.
- Process cost system
Process cost system is a system of accounting used when a large quantity of similar products are manufactured. Production is continuous to ensure that adequate...
- Consistency principle
Consistency principle dictates that a company uses the same accounting principles and methods from to year. Consistent application enhances the comparability...
Entering transaction data in the journal is known as journalizing. Companies make separate journal entries for each transaction.
A dividend is a corporation’s distribution of cash or stock to its stock holders on a pro rata (proportional) basis. Investors are very interested...
- Earning power
Earning power means the normal level of income to be obtained in the future. Earning power differs from actual net income by the amount of irregular revenues...