Accounting

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Accounts Receivable

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Selling merchandise or services on credit;recorded as debt

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Allowance Method

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Provides an expense for uncollectible receivables in advance of their write-off.

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Contra Asset

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An account that affects the assets accounts,such as the allowance for uncollectable accounts receivable or accumulated depreciation.

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Uncollectable accounts expense

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Theh operating expense incurred because of the failure to collect receivables.

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Acceleration depreciation method

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declining-balance method; the decline in an assets productivity or earning power is greater in the early years of its use than in later years.

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Amortization

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The amount of cost to transfer to expense

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Book value

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cost less than accumulated depreciation; net amount

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fixed assets

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long term or relatively permanent assets

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intangable assets

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assets that dont physically exist.

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Residual Value

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At the end of its expected useful life must be estimated at the time the asset is placed in service

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Straight-line method

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provides for the same amount of depriciation expense for each year of the assets useful life.

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Discount

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The creditor sets a rate of interest and deducts the interest from the face amount of the note.

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quick assets

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cash, cash equivalents, and receivables that can be quickly converted into cash

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cash dividend

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A cash distribution of earnings by a corporation to it is shareholders.

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common stock

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only one class of stock is issued; each share of common stock has equal rights

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cumulative preferred stock

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A right to receive regular dividends that were not paid in prior years before any common stock dividends are paid.

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PAR

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Shares of stock that have an assigned amount

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Premium

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when a stock is sold for more than its par value

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Stated Value

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a value similar tp par value, approved by the board of director of a corporation for No-par stock

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Consolidated Financial Statements

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At the end of the year, th efinancial statements of the parent and subsidiary are combined and reported as a single company.

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discontinued operations

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a gain or loss from disposing of a business segment or component of an entity is reported on the income statement as a gain or loss.

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Earnings Per Common share

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The net income per share of common stock outstanding during a period

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Extraordinary Items

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Events or transactions that are significantly different from the typical or normal operating activities of a business or occur frequently.

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fixed assets impairment

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occurs when the fair value of a fixed asset falls below its book value and is not expected to recover.

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Restructuring charge

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costs associated with involuntary terminating employees, terminating contracts, consolidating facilities, or relocating employees.

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taxable income

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a corporation is determined according to tax laws and is reported to taxing authorities on the corporations tax returns.

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Cash Flows From Financial Activities

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Cash flows form transactions that affect the net income.

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Cash Flows from investing activities

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cash flows from transactions that affect the investments in noncurrent assets.

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cash flows from operating activities

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cash flows from transactions that affect the equity or debt of the business.

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direct method

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reports the sources of operating cash and the uses of operating cash

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Free Cash Flow

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A measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productivity capacity and dividends

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Indirect Method

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Reports sources of operating cash and the uses of operating cash

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Statement of cash flows

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reports a firms major cash inflows and outflows for a period.

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Common size statement

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All items are expressed in percentages

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horizontal analysis

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Teh percent analysis of increases and decreases in related items in comparative financial statements

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Leverage

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The difference in the rate on stockholders equity and the rate on total assets.

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Profitability

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Teh ability of a business to earn income.

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Solvency

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The ability of a business to meet its financial obligations

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Vertical analysis

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a percent analysis may also be used to show the relationship of each component to the total within a single statement; statements may be prepared in either detailed or condensed form.