Quality assurance is a set of steps, measures and policies implemented to ensure a high quality output. In other words, it is a systematic practice that aims to achieve top quality within all the processes of a given organization.
Explanation:
Quality assurance (QA) is an ongoing activity implemented in all processes involved in the production of any good or service. The goal of QA is to achieve the highest quality level possible. The term is often confused with quality control, which is a gap analysis that evaluates expected final output quality vs. actual quality. Quality assurance deals with each step of the process to identify possible deviations in each stage.Since each stage has its own output the final result will be enhanced if each stage’s output is enhanced. Companies can optimize their QA processes by following the ISO 9000 guidelines. These are principles developed by the International Organization for Standardization that assist companies to redesign its processes to increase the quality of its outputs. This is not only applicable to manufacturing processes, it also applies to internal administrative processes, since they also produce outputs that are used by other departments and they have an indirect impact on the overall quality of the company’s products or services.
In a nutshell:
- Quality assurance encompasses the processes and procedures that systematically monitor different aspects of a service or facility.
- Through audits and other forms of assessment, quality assurance efforts detect and correct problems or variances that fall outside established standards or requirements.
- In other words, quality assurance ensures a high level of quality during the development of products or services.
Revenue, also called a sale, is an increase in equity related to the sale of a product or service that earned income. In other words, revenue is income earned by the company from its business activities. There are many different types of revenues including product sales, consulting fees and other services, rent, and even commission based fees. Any type of income that is earned from business operations is considered to be a revenue.
Explanation:
The revenue account is a temporary equity account that increases total equity in the company. This means that the revenue account has a credit balance and is closed at the end of each accounting cycle to a permanent or balance sheet account. This makes sense because the revenue account is supposed to record the income earned in the current period.It doesn’t consist of a cumulative balance of all earnings in the company history. Thus, all prior period earnings must be removed from the account, so the balance only reflects the current year’s earnings. In a corporation, revenues are closed to the retained earnings; whereas, a partnership closes revenues to the partners’ capital accounts. In both cases the revenue account is closed to a permanent equity account on the balance sheet.
In a nutshell:
- Revenue, often referred to as sales or the top line, is the money received from normal business operations.
- Operating income is revenue (from the sale of goods or services) less operating expenses.
- Non-operating income is infrequent or nonrecurring income derived from secondary sources (e.g., lawsuit proceeds).
A retail price is the cost paid for a good at retail stores. It is a term applied to the price that final consumers pay at retail outlets to differentiate from intermediate prices paid upward in the supply chain.
Explanation:
The retail price is the final price that a good is sold to customers for, those being the end users or consumers. That means that those customers do not buy the product to re-sell it but to consume it. Retail price is differentiated from manufacturer price and distributor price, which are prices set from one seller to another through the supply chain. In competitive, free markets, the final seller or retailer sets the retail price considering costs as well as supply and demand conditions. When setting the price, the retailer will try to obtain an appropriate profit margin but at the same time to show an attractive price in comparison to competitors. Anyway, the manufacturer can recommend a retail price in order to have some influence in the decision and thus to guarantee a price aligned to the marketing strategy.
In a nutshell:
- The manufacturer’s suggested retail price (MSRP) is the sticker price recommended by a product’s producer to retailers.
- They are frequently used in the sale of automobiles, although most retail products come with an MSRP.
- Many retailers will sell products below the MSRP to reduce inventory, attract more consumers, or during a sluggish economy.
Remuneration is a payment received in exchange for services provided. It is a sum of money that serves a compensational purpose.
Explanation:
In an organizational context, remuneration is given to individuals in exchange for services provided either as employees or as independent contractors. These remunerations can be variable or fixed depending on the nature of the agreement. Some remunerations are variable by nature, as in the case of technicians and occasional hires like for maintenance tasks or one-time jobs. In other cases variable remunerations are calculated based on the number of hours worked at a predefined hourly rate.In other cases, remunerations are fixed, as in the case of salaried employees. On the other hand, these employees can also have both fixed and variable remunerations when the compensation structure defined by the company that hired them includes items like commissions and bonuses.These remunerations are subject to taxation and in some cases these taxes are directly deducted from the payment. Overall, the total remuneration an individual receives can contain different items like wages, commissions, bonuses, stock options and any other economic incentive.
In a nutshell:
- Remuneration is the total amount an employee receives for performing a job.
- Remuneration includes not only base salary but all other forms of financial compensation an employee receives.
- A company contribution to a retirement plan is deferred compensation, and as such is a component of remuneration.
- At the executive level, remuneration may include a combination of salary, stock shares, bonuses, and other financial compensation.
- For employees in service jobs, tips are considered part of remuneration.
A receipt is a document that states the details of a given financial transaction. It describes all the relevant elements of the operation.
Explanation:
Receipts are issued in many different scenarios to have a written record of what has happened. The most common receipts are sales receipts. These documents state a detailed description of the sale, they contain some elements like the date of the transaction, the price of each item and the total cost; the amount paid or owed (depending if the receipt was paid at the time or if it was a transaction that will be paid in the future), it states which items were sold and the quantity of each and the name of the company and the client, among other details.The purposes of these receipts are many. First of all they serve as accounting records. Also, they give the customer a written proof of the transaction in case they have a claim in regard to the items being bought. Receipts can also be issued to record that something was transferred, as in the case of a barter transaction. Finally, receipts can also be issued when a company hands off some money that has to be reimbursed or justified later on, as in the case of travel expenses that must be reported by the employee after the trip has ended.
In a nutshell:
- Receipts are an official record that represents proof of a financial transaction or purchase.
- Receipts are issued in business-to-business dealings as well as stock market transactions.
- Receipts are also necessary for tax purposes as proof of certain expenses.
A rebate is a fraction of a sale transaction that is returned to the customer after the operation is closed. It is a sales incentive that rewards a client with a certain portion of the transaction value.
Explanation:
Rebates are a marketing strategy employed to create an incentive to keep purchasing. Differently from discounts, rebates are given after the sale is concluded. These rebates were normally sent by physical email with an application that had to be filled and sent back in order to receive it. Companies would ask for certain personal information from the client to issue the rebate, which also serves as a market research tool. After the rebate application is received the company processes it and if it meets certain criteria the rebate is issued and sent to the customer. In modern days, instant rebates also exist. Those are delivered to clients immediately after they have completed the purchase, normally through gift cards or coupons. Rebates are highly advantageous for both clients and companies since both parties benefit from them. Most rebates are stated as a percentage of the transaction value or they can also be established as a fixed amount of money.
In a nutshell:
- A rebate is a credit paid to a buyer of a portion of the amount paid for a product or service.
- In a short sale, a rebate is a fee that the borrower of stock pays to the investor who loaned the stock.
- Rebates on securities are facilitated by margin accounts, which have balances that are calculated daily based on the stock’s price movements
Realizable value is the net amount of money that you will get from selling one of your assets. In other words, realizable value is equal to the sale price of an asset less any applicable fees. Notice this has nothing to do with the fair market value of the asset being sold.
Explanation:
This concept can also be applied to loans. In this case, it means the amount of money a lender expects to collect from his borrower. Most companies use some form of credit. Some companies have credit with vendors in the form of accounts payable while other companies have credit with customers in the form of accounts receivable. These lines of credit or borrowings are record on the books at their actual amount.
In a nutshell:
- Amount realized is the total amount received from a sale transaction.
- It encompasses all forms of compensation, including cash, the FMV of any property received, and any liabilities that the purchaser assumes as a result of the transaction.
- It also factors in selling expenses, such as redemption fees, advertising and legal fees, commissions, and exit charges.
- Amount realized is used to calculate realized taxable gains and losses.
A real estate investment trust (REIT) is a legal entity made up of outside investors and their funds designed to finance and operate real estate ventures that produce earnings for the investors.
Explanation:
Similar to mutual funds, many investors pool their funds into a single piece of land property (schools, apartments, office parks, etc.) with the intention of increasing their returns as the property value increases. This structure allows each investor to be part of a larger investment that they wouldn’t have been able to afford on their own.The reason these are often compared to mutual funds is because Dwight D. Eisenhower created the REIT Title with the intention of mirroring the structure of mutual funds in order to stimulate the real estate industry. They are now widely used all over the world because they benefit the expansion of real estate while also providing returns to investors as rent is collected from those using the property.
In a nutshell:
- A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing properties.
- REITs generate a steady income stream for investors but offer little in the way of capital appreciation.
- Most REITs are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments).
- REITs invest in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses.
A real account is a permanent account in the general journal that does not close at the end of a period. In other words, these accounts stay open allowing their balances to accumulate and carry over to the next period for the company’s lifetime.
Explanation:
Real accounts reflect the current and ongoing financial status of a company because they carry their balance forward into the next accounting period. These accounts are typically reported on the balance sheet at the end of the year as assets, liabilities, or equity.These account balances change throughout the accounting period. Management can review the extent of these changes by comparing the initial and final balance of each account. The final balance will become reported on the balance sheet at the end of the period and will be carried over to the next period becoming the initial balance for the next accounting period.The relationship between real and nominal accounts is that a change in one of them might derive in a change on the other. This means that if a nominal account increases or decreases it will increase or decrease a permanent account.
In a nutshell:
- A Real Account is a general ledger account relating to Assets and Liabilities other than people accounts.
- These are accounts that don’t close at year-end and are carried forward.
- An example of a Real Account is a Bank Account.
Raw materials are the inputs or resources that a company uses to manufacture its finished products. In other words, this is the unprocessed material like metal stock, rubber blanks, or unrefined natural resources that companies use in their manufacturing processes to produce finished goods to sell to consumers.
Explanation:
A good example of raw material is lumber for a guitar manufacturer like Fender Guitars. When Fender gets a shipment of lumber, it records the lumber as raw material inventory because the wood will eventually be finished goods inventory or guitars.There are many different types of inventory across the business spectrum. Manufacturers have different types of inventory than retailers and retailers have different types of inventory than restaurants. These materials are most often associated with manufacturers.
In a nutshell:
- Raw materials are the input goods or inventory that a company needs to manufacture its products.
- Examples of raw materials include steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.
- Raw materials can be direct raw materials, which are directly used in the manufacturing process, such as wood for a chair.
- Indirect raw materials are not part of the final product but are instead used comprehensively in the production process.
- The value of direct raw materials inventory appears as a current asset
on the balance sheet.
