Dictionary of...Accounting Terms
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vacation pay
- A common fringe benefit given to employees during a period in which they do not have to work. If an employee earns one week of paid vacation to be taken after working one full year, the employer should recognize this cost/expense and liability while the employee is earning it. One possible journal entry is to debit Vacation Pay Expense and to credit Vacation Pay Payable. Later, when the employee takes the vacation time, the employer would debit Vacation Pay Payable and credit Cash.
vacation pay expense
- An income statement account showing the amount of vacation expense earned by employees (by working) during the specified accounting period.
vacation pay payable
- A balance sheet liability account which reports the total amount owed to employees at the balance sheet date for future vacation days as a result of the employees' past work.
valuation
- To determine what something is worth. For example, the account Allowance for Doubtful Accounts is used with Accounts Receivable in order to present the value of the accounts receivable. [On the other hand the account Accumulated Depreciation is used with property, plant, and equipment to indicate how much of an asset's cost has been allocated to Depreciation Expense. The Accumulated Depreciation account is not intended to be a valuation account.]
value billing
- Billing a client based on the value of the information or service provided rather than billing based on time spent.
variable cost
- A cost or expense that increases in total as volume or an activity increases. (Or decreases in total as volume or an activity decreases.) For example, if a company pays a sales commission on all of its sales, commission expense is a variable expense. The cost of gasoline is a variable cost in relationship to vehicle miles driven.
variable cost ratio
- Variable costs and expenses divided by net sales. To learn more, see Explanation of Breakeven Point.
variable costing
- See direct costing.
variable expenses
- Expenses that vary with some activity. For example, sales commissions expense and cost of goods sold will be greater when sales are greater; electricity expense will decrease when machine hours are reduced.
variable manufacturing overhead applied
- The variable manufacturing costs other than direct materials and direct labor that have been assigned to the products manufactured via a predetermined rate. Ideally, by the end of the accounting year the amount applied will equal the amount actually incurred.
variable manufacturing overhead efficiency variance
- A variance arising in a standard costing system that indicates the difference between the standard amount of variable manufacturing overhead for the good units produced (standard hours times standard rate) and the variable manufacturing overhead based on actual activity (actual direct labor hours or actual machine hours times standard rate). To learn more, see Explanation of Standard Costs & Variances.
variable manufacturing overhead incurred
- The actual cost incurred for manufacturing costs other than direct materials and direct labor which increase as production volume increases. Examples include manufacturing supplies and electricity to operate the production equipment.
variable manufacturing overhead spending variance
- A variance arising in a standard costing system that indicates the difference between the actual variable manufacturing costs incurred and the expected variable manufacturing overhead costs based on some activity such as actual direct labor hours or actual machine hours. To learn more, see Explanation of Standard Costs & Variances.
variance
- A term used with standard costs to report a difference between actual costs and standard costs. To learn more, see Explanation of Standard Costs & Variances.
variance analysis
- To learn more, see Explanation of Standard Costs & Variances.
vehicles
- A long-term asset account that reports company's cost of automobiles, trucks, etc. The account is reported under the balance sheet classification property, plant, and equipment. Vehicles are depreciated over their useful lives.
vendors
- Suppliers. Companies that provide goods or services.
vertical analysis
- A type of financial analysis involving income statements and balance sheets. All income statement amounts are divided by the amount of net sales so that the income statement figures will become percentages of net sales. All balance sheet amounts are divided by total assets so that the balance sheet figures will become percentages of total assets.
volume
- Sometimes referred to in the context of cost or expense behavior such as "variable expenses increase as volume increases." In this context volume might be an activity such as the number of machine hours, the number of units produced, the number of pounds processed, the number of units sold, or the dollars of goods sold.
volume variance
- See fixed manufacturing overhead volume variance.
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