T – Accounting Glossary

glossary-smartiesAccounting definitions.

Source: Wikipedia.org

Throughput
Throughput in theory of constraints is the rate at which a system produces money, in contrast to output, which may be sold or stored in a warehouse. The signal provided by throughput is received (or not) at the point of sale — exactly the right time. Output that becomes part of the inventory in a warehouse may mislead investors or others about the organization’s condition by inflating the apparent value of its assets. The theory of constraints and throughput accounting explicitly avoid that trap.

Throughput accounting
Throughput accounting is an alternative to cost accounting based on Standard or Activity Based Costing (ABC) proposed by Eliyahu M. Goldratt. Throughput accounting claims to improve management decisions by using measurements that more closely reflect the effect of decisions on three critical monetary variables (Throughput, Inventory, and Operating Expense — defined below).

Trade credit
Trade credit exists when one provides goods or services to a customer with an agreement to bill them later, or receive a shipment or service from a supplier under an agreement to pay them later. It can be viewed as an essential element of capitalization in an operating business because it can reduce the required capital investment to operate the business if it is managed properly.

Treasury stock
In finance, a treasury stock (a.k.a. reacquired stock) is stock which is bought back by the issuing company. It reduces the amount of outstanding stocks on the open market. On the balance sheet, treasury stock is listed under Shareholder Equity.

Trading Stock
Merchandise held by the business for sale to customers.

Trial balance
A statement of general ledger accounts that enables an accountant to confirm whether amounts debited equal amounts credited.