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20 Cards in this Set

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  • Back
Impaired assets
where the asset's market value is deemed to have permanently declined below its reported value. When impairment occurs, company removes the impaired amt. from the asset value reported on balance sheet and moves to the income statement
Asset Write-off or Asset Write-down
the act of charging an asset amount to expense or loss to reduce the value of the asset and thus one's profits and earnings
Marketable securities
short-term investments, such as stock holdings, that can be quickly sold to raise cash
Current assets
assets expected to be converted into cash or used in operations within the next year
Net working capital
current assets - current liabilities. depends on operating cycle of company
operating cycle
time between paying cash for goods or employee services, and receiving cash from customers
accrued liabilities
refers to incomplete transactions.

Example: Warranty on products sold - when sale is recorded, companies must estimate the amt. of warranty liability likely to be incurred and record that warranty cost in the same period that the sale is recorded.
You may accrue a liability when:
* occurrence of obligation is probable
* amt of obligation is reasonably estimable
deferred revenue
payment up front for goods/services not yet rendered.
contributed capital
net funding that a company receives from issuing and acquiring its equity shares (stock)
Income Statement
reports revenues earned during that period, the expenses incurred to generate those revenues, and the resulting net income or loss
increases to net assets (assets less liabilities) as a result of business activities
the outflow or use of assets to generate revenues, including costs of products and services sold, operating costs like wages and advertising, and nonoperating costs like interest on debt
Net income
Revenues - Expenses, when the result is positive (net loss when negative)
Operating Expenses
usual and customary costs that a company incurs to support its main business activities, including cost of goods sold, selling expenses, depreciation expenses, amortization, and R&D
Nonoperating Expenses
relate to company's financing and investing activities, and inclue interest revenue and interest expense
Transitory items
One-time events (selling a building) that does not make up core income
Revenue Recognition
a principle prescribing that revenue is recognized when earned
Gross profit
sales minus cost of goods sold, indicates how much money you have left to cover overhead expenses (employee wages, sg&a, etc)
Credit Terms
2/10, net 30 means that the buyer can reduce its price by 2% if it pays within 10 days, and net 30 means that the buyer must ay its bill within 30 days
Matching principle
all expenses incurred in generating revenues be recognized in the same period as the related revenues