Ratio
The result of dividing one number by another in order to ascertain a numerical comparison.
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Raw materials inventory
Inventory goods on hand that will be used to manufacture a product.
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Realization
When something actually happens. In accounting, revenue is recognized when goods and services are delivered (realized). Expenditures are recognized when goods and services purchased are received (realized). Expenses are recognized when assets are consumed or used.
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Receivable
An amount due from a customer.
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Receivables turnover ratio
Total credit sales for the year divided by the amount of outstanding accounts receivable.
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Recognition
When a revenue or expense item is recorded in an accounting period. Revenue recognition is governed by the concept of realization.
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Reconcile
To compare one balance of an account with another. To reconcile the accounts receivable detail ledgers with the accounts receivable control account.
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Report Accountants
An accountant who prepares a client's financial statements usually includes a report stating whether he compiled, reviewed or audited the financial statements. The report cites the scope and limitations of the accountant's performance.
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Retail method
A method of determining what cost of goods sold were when ending inventory is not known. Divide sales revenue by average mark-up plus 1.00.
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Retained earnings
An account in the equity section of a balance sheet for a corporation. The account contains accumulated net income from operations less dividends.
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Return on assets ratio
Earnings before interest and taxes divided by net assets. A way to determine how much an owner is making on his investment.
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Return on equity ratio
(later)
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Return on investment ratio
(later)
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Returns and allowances
A general ledger account that contains a record of customer returns of merchandise and/or allowances made on the sales price due to damaged goods, etc.
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Revenue
The amount realized from the sale of goods and services during an accounting period resulting in an increase in equity.
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Revenue rule
One of the five rules of operation of financial statements. Revenue is said to be realized in the period that the sold goods are delivered or the sold services are rendered (performed).
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