Debit
1) (Noun) The left-hand side of a ledger page, or an amount entered on the left-hand side of a ledger page. 2) (Verb) To record a debit entry to the left-hand side of a ledger page.
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Debt
An amount that is owed.
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Debt to equity ratio
1) A comparison of a business entity's total debt to its total equity. 2) Measures how dependent a business has become on borrowed money. A rule of thumb is that lenders don't like to see a ratio higher than 2 to 1 or twice the debt to equity.
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Debtor
A person or entity who has an obligation to pay.
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Deduction method
A method of deducing the cost of goods sold by adding beginning inventory to merchandise purchases and subtracting ending inventory.
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Default
Failure to pay a debt when due.
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Deferred income
See Deferred revenue.
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Deferred revenue
Refers to advances from customers and is recorded as a liability until it is actually earned.
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Deficit
An amount of money that falls short of an expected amount. Used in non-profit financial statements instead of the word "loss".
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Dependability
One of the two primary characteristics of accounting information that make financial statements useful. To depend on a financial statement means that the information contained in them must be reliable or trustworthy.
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Depreciation
A portion of the cost that reflects the use of a fixed asset during an accounting period. Cost recovery.
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Dialogue
A conversation between two or more people.
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Direct cost
Cost that can be directly associated with the production of revenue, such as direct labor or direct materials.
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Direct expense
Direct cost.
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Disbursement
Payment of cash.
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Disclosure
Reporting information about conditions that pertain to the financial statements.
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Discount
Any deduction from a gross amount.
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Disposition of assets
When assets of an entity are removed either by sale, trade or discard.
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Dividend
Funds distributed to shareholders of a corporation that are based on profitable operations.
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Double-Entry Method
One of the six basic assumptions of accounting information. The assumption that financial statements are prepared using the "double-entry" method. It is a method of accounting that uses two sides of a ledger page to keep track of transactions. The accounting equation Assets = Liabilities + Equity is the foundation for this system. All entries on the left (debit) side must equal all entries on the right (credit) side of the ledger.
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