Accounting Chapter 17

Front 1

Asset turnover ratio

Back 1

An activity ratio that measures profitability because it relates a company's ability to generate sales to the amount of assets that the company uses. (Net Sales / Average Total Assets)

Front 2

Change in accounting principle

Back 2

Modifications made to the accounting records that result when a company switches from one generally accepted method of accounting to anouther or when a company adopts a new accounting principle.

Front 3

Comprehensive income

Back 3

Income that reflects all changes in owners' equity during the period except those resulting from investments by, or distributions to, owners and those resulting from errors made in previous periods.

Front 4

Cost center

Back 4

A center that is responsible for controlling costs and providing a good or service in an efficient manner.

Front 5

Diluted earnings per share

Back 5

Earnings per share that reflect the amount of change in earnings per share that would occur as a result of activities like conversions and the exercise of stock options.

Front 6

Discontinued operations

Back 6

The result of a company selling or disposing of a segment of its business.

Front 7

Du Pont method of return on investment

Back 7

A combination of return on sales ratio (a profitability measure) and asset turnover ratio (an activity measure). (Net Income / Net Sales) x (Net sales / Average total assets)

Front 8

Earnings

Back 8

Income from continuing operations; consisting of revenues minus expenses and also gains minus losses.

Front 9

Earnings per share

Back 9

A common size measure of a company's earnings performance; the reported net income of the company less preferred dividends for the period divided by the weighte-average number of common shares outstanding.

Front 10

Extraordinary items

Back 10

Events that occurred during the accounting period that are both unusual and infrequent.

Front 11

Investment center

Back 11

A center that is responsible for using assets in an effective and efficient manner to generate profits.

Front 12

Net Income

Back 12

An income measure that includes both the operating and other nonowner activities that caused changes in retained eaarnings during the period.

Front 13

Product line (divisional) income reports

Back 13

Specific-purpose internal reports designed to provide more detailed information than general-purpose income statements regarding the results of operations for a product line or company division.

Front 14

Profit center

Back 14

A center that is responsible for making a profit; it must effectively generate revenues and efficiently control costs.

Front 15

Revenue center

Back 15

A center that is responsible for generating revenues and promoting the company's products and services effectively.

Front 16

Throughput costing method

Back 16

A method of determining profits in which only direct materials aare included in cost of goods sold and all other production costs are expensed as incurred.

Front 17

Variable costing method

Back 17

A method of determining profits in which only costs that vary with production are included in cost of goods sold and facility-sustaining overhead costs are expensed as incurred.