Let’s start at the beginning which means, starting with the basics.
Let’s start at the beginning which means, starting with the basics.
What is an accrual? – the accrual method, income, and expenses are recorded as they occur, regardless of whether or not cash has changed hands. An example is a sale on credit. The transaction is entered into the books when the invoice is generated rather than when the money is collected. Likewise, an expense occurs when materials are ordered, not when the check is written.
Adjustment any transaction that occurs outside of the original sale which may affect the gross profit on the initial purchase. Example, when the car deal is billed or processed an amount is credited to we-owe or due-bill for tint when the invoice for the tint is received in accounting if the final cost exceeds the amount that was allowed in the deal (in we-owe or due-bill). Anything above or below the original allowance when the vehicle was sold and originally recorded is an adjustment to the original sales transaction.
An asset is defined as anything a company owns that has cash or economic value, such as real estate, equipment, prepaid expenses, accounts receivable, inventory, and goodwill.
The balance sheet is defined as a statement of financial position as of a specific date.
Bird-dog fee/referral is defined as commissions paid to a non-employee for a sales lead or referral that led to a sale.
Chargeback is the amount demanded by the lender (finance department) or manufacturer (rebates (sales department) when a sales transaction is paid in full or repossessed by the lender. An example is a customer sells or trades-in a vehicle, at that time they request cancelation of all products added to the original sale. The amount of the chargeback is a pro-rated amount based on the mileage or length of time of the un-used portion of the policy. The demand for cancelation can also occur if the vehicle is repossessed for lack of payment, the refund in this example is refunded to the lender.
Chart of accounts (COA) is a listing of each account a company owns, along with the account type and account balance, shown in the order the accounts appear in the company’s financial statements. “Chart of accounts” is the official accounting term for the display of this information, which includes both balance-sheet accounts and income statement accounts.
Reference Chart of Accounts Definition | Investopedia https://www.investopedia.com/terms/c/chart-
Check request is an instrument used to initiate or request reimbursement payable to a customer, vendor (one-time transaction) or employee; a check request may also be used for example in the parts department for the purchase of parts if payment is needed on delivery. A check request does not replace a purchase order.
Cost of sales is defined as the total cost of a new or used vehicle, parts sold and labor sold. Credit (-) is described as a journal entry recording an increase in assets. With cash basis accounting, credits are recorded when income is received. With accrual basis accounting, credits are recorded and recognized when income is earned.
Curtailment is a request for reduction of a loan payment (such as a request for payment on a floor planned unit) still active in stock but aged above the aging policy set forth by the floorplan lender.
Debit (+) is defined as an accounting entry which results in either an increase in assets or a decrease in liabilities or net worth, opposite of credit.
Depreciation an allowance for the wear and tear and decline in value of the business property.
Direct deposit is a deposit of money by a payer directly into a payee’s bank account.
What is a doc? A doc(daily operating control) is the operational document that gives the organization a good picture or assessment of where they are currently or in a given period and where they are going in relation to their financial goals.
Expense (s) is an outflow of money to another person or group to pay for an item or service, or for a category of costs.
FDAF Ford advertising similar to GM’s advertising program.
A fixed asset is defined as an item with a useful life greater than one reporting period, and which exceeds an entity’s minimum capitalization limit. A fixed asset is not purchased with the intent of immediate resale, but rather for productive use within the entity. An inventory item cannot be considered a fixed asset since it is purchased with the intent of either reselling it directly or incorporating it into a product that is then sold.
The following are examples of general categories of fixed assets:
- Computer equipment
- Computer software
- Furniture and fixtures
- Intangible assets
- Leasehold improvements
A fixed asset appears in the financial records at its net book value, which is its original cost, minus accumulated depreciation, minus any impairment charges. Because of ongoing devaluation, the net book value of an asset is always declining.
Fixed expenses are expenses included in personnel, semi-fixed and fixed expenses, it does not change in proportion to vehicle sales.
Fixed sales are generated in the parts, service and body shop.
A floorplan is the finance of vehicles by another source such as Ally, Ford Motor Company when the car is sold, the dealer is responsible for paying off the floorplan per the established agreement. The security that a bank holds against units in the dealers’ inventory.
A forecast is a projection of sales, expenses, and profits for a specific future period to set objectives and setting future goals.
General journal/ journal voucher a general journal or journal voucher is used in accounting to record adjustment entries in the DMS system; all additional entries are recorded outside of the original transaction entry.
Gross profit is defined as sales minus cost of sales on any goods or services rendered.
Holdback is an amount specified on new vehicle invoices billed to the dealership. The amount of the holdback may differ depending on the manufacturer. Holdback is not part of the cost of the vehicle and should be handled as a receivable from the factory.
The income statement shows how an organization performed during a specified period.
Internal sales occur when the sale of vehicles, services, parts or materials by the New Vehicle or Used Vehicle Department, Service Department or the Parts and Accessories Department to an operating department of the business. Such sales transactions provide a means of charging the department benefited and reimbursed the selling department with the prime cost of the items sold plus an amount agreed upon by departments.
Journal defined are entries are records of individual financial transactions in a company’s accounting system. Due to the standards of double-entry bookkeeping, journal entries typically involve a debit to one or more accounts and a credit to one or more accounts in the same amount.
Liabilities are defined as anything a company owes an example is accounts payable, due bill or we owe to a customer, possibly amount owed for a referral such as a bird-dog fee.
MCO/MSO manufacturer’s statement of origin is a specified document certifying the country of origin of the merchandise required by certain foreign countries for tariff purposes.
Odometer or mileage statement a document used to record the actual mileage of the vehicle purchased, sold or traded.
Out of trust, a vehicle is usually out of trust if the dealership does not pay the floorplan lender per the predetermined agreement.
Policy work is defined as the internal selling price of labor and materials for which neither the customer charged.
Policy work –vehicles is defined as the repair or adjustment of vehicles previously sold or leased (except under an agreement).
Power Of Attorney, the Legal delegation of authority, to act on behalf of another.
Policy work – parts & service is defined as the repair or adjustment of defective service work and the replacement of defective services and parts sold.
Prepaid are assets representing expenditures for future benefits which will be expensed over a period, as such benefits accrue. An example is prepaid advertising or prepaid postage.
A purchase agreement is a type of legal document outlining the different conditions and terms that are related to the sale of goods. It creates a legally binding contract between the buyer and the seller. – See more at http://www.legalmatch.com/law-library/article/what-is-a-purchase-agreement.html#sthash.nspUdZhM.dpuf
A purchase order is defined as a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from external suppliers.
Purchase Allowance is defined as discounts allowed to a dealer by the factory for the purchase of certain parts and accessories.
Rebates/incentives limited to new vehicles can be a great way to save money in the long run. Whether they are vehicle incentives or vehicle rebates, these money-saving programs offered by the vehicle manufacturer often represent the best offers around when purchasing a new vehicle. Maybe the manufacturer is offering a cash rebate to stimulate sales, special new car prices on last year’s model or low-interest rates to make leasing more attractive. Financing offers are often used to motivate shoppers to buy immediately. Some rebates and incentives are only available to certain consumers, such as a first-time buyer program, military discount or loyalty cash for customers who buy another vehicle from the same manufacturer.
Rebate is an incentive paid by a car manufacturer as a way to increase sales of products.
Reconditioning cost is the cost the dealership incurred to restore a used vehicle to salable condition.
Retail sales are the process of selling consumer goods and/or services (cars, trucks, parts, service) to customers through multiple channels of distribution to earn a profit. Demand is created through diverse target markets and promotional tactics.
Retail sales contract and vehicle sight draft are examples of instruments for the payment of a vehicle. Until the dealership presents the retail sales contract or vehicle sight draft to the lender or bank the dealership is not paid for the car.
Revenue is the total amount of money received by the organization for goods (new or used vehicles, parts) sold or services provided during a specified period. It also includes all net sales, exchange of assets; interest and any other increase in owner’s equity and are calculated before any expenses are subtracted.
Salvage title typically means at some point in the vehicle’s history the car has been claimed as a total loss by an insurance company because of an accident or flood damage. It can even happen in some states if it’s a recovered stolen vehicle. Also, government agencies routinely test new cars, and cars sold after the government gets its use out of them are given a salvage title as well.
Semi-fixed expenses are operating expenses which vary with, but not necessarily in direct proportion to sales volume.
A sight draft is defined as pay on demand document; it does not necessarily mean that the draft is honored immediately by the bank or credit union. In most cases, the bank receiving the draft will take some time to verify the document, along with other documents that are presented with the sight draft. Any apparent issues with the documents are reported to the payee as they are discovered, making it possible to contact the client and take whatever measures are necessary to resolve the situation.
What is a soft close? A soft close is defined as closing the books using an abbreviated closing procedure. By using a soft close, the accounting department can issue financial statements very quickly and then return to its normal day-to-day activities.
Spot Delivery is a description which refers to the dealer placing a consumer in a car “on the spot,” to get the sale completed.
Sublet transactions happen when a vehicle is submitted to a dealership for repairs, if the dealer is not able to make some of the repairs for whatever reason, the repairs are outsourced to another vendor, the dealer is still responsible for the vehicle until all repairs are completed paid for and delivered to the customer by the original dealer.
Title in the United States is defined as a certificate of title for a vehicle (also known as a car title) is a legal form, establishing a person or business as the legal owner of a vehicle
Total fixed overhead expenses are the total operating expenses of the building less variable (commissions paid to the sales staff or delivery expense) selling expenses.
Trade-in is usually limited to a vehicle traded-in on a new or used vehicle purchase from an automotive dealer. Trade-in price is when dealers offer a trade-in price for your used vehicle when you buy a new or another used vehicle. The trade-in price is negotiable and very close to what a vehicle may sell for at a used vehicle auction.
Unapplied labor time is the cost of the technician’s compensation for productive time not applied as a cost on a repair order.
Variables sales are sales generated by the new, internet, used, lease and fleet departments.
A variable expense is directly related to vehicle sales and will increase or decrease as the volume of sales changes.
Wholesale sales are defined as what the dealer paid for the used vehicle when it was traded-in. Along those lines, new-car pricing would be a vehicle’s invoice price. The wholesale price is the dealer’s rock-bottom figure/
Work in process or work in progress vehicles in the service department or body shop located in the service bays or on the dealership premises waiting for parts or technician assignment as examples to complete the work.
Working capital is defined as current assets minus current liabilities plus owners’ equity. One of the most significant uses of working capital is inventory. The longer inventory sits on the showroom floor or in the warehouse, the longer the company’s working capital is tied up. Working capital is a measure of the company’s health.