Thursday, March 27, 2008


General Ledger:

It is also known as G/L and The Final Book of Entry. It is collection of all balance sheet, income, and expense accounts used to keep the accounting records of a company. A General Ledger is a perpetual record of the activity and balances of the accounts. Each company has only one General Ledger.

Generally Accepted Accounting Principles:

It is also known as GAAP. Generally accepted accounting principles are rules that are used to record accounting transactions on an accrual basis of accounting. Cash basis of accounting is a comprehensive basis other than generally accepted accounting principles.

Goodwill is an Other Asset. It is that portion of the purchase price paid for a business that is related to the intangible value of the company. The goodwill of a company may be due to a particularly favorable location; or its reputation in the community; or the quality of its employer and employees. It is calculated by subtracting the value of all net assets received upon purchase of the business from the purchase price. For example, if Company A paid one million dollars for a business that had current and fixed assets with a fair market value of $750,000, then the Goodwill is $250,000.

Gross earnings:
The total Earnings prior to deductions.

Gross Profit On Sales:
The amount by which the net sales exceed the cost of goods sold.

Gross Profit Or Margin:Gross profit or gross margin is net sales minus cost of sales or cost of goods sold. For example, if net sales were $400,000 and cost of sales were $300,000, gross profit would be $100,000. Gross margin of profit measures the ability of both to control costs and to pass along price increases through sales to customers. Gross margins vary with the type of business. For example a restaurant and bar would have a greater gross margin than a discount chain, like Wal-Mart, that depends upon volume to make money.

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