Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
38 Cards in this Set
- Front
- Back
|
are generally acquired through a process of direct negotiation between the borrower and lender while the acquisition of investment securities is typically through a third-party broker or dealer. |
Loan |
|
|
is an accounting technique used by a company to record the profits earned through its investment in another company. |
Equity Method |
|
|
It can take the common forms of secured or unsecured corporate debentures |
Debt Securities |
|
|
are securities (tradable financial assets, such as equities or fixed income instruments) that are purchased in order to be held for investment. |
Investment Securities |
|
|
is the standard technique used when one company, the investor, has a significant influence over another company, the investee. |
Equity method |
|
|
is essentially an event or transaction where an acquirer acquires control of either one or over one business. |
Business combination |
|
|
can be defined as a set of integrated assets and activities which are capable of being managed and conducted with an intention of offering a return to the investing members or other participants, owners and members. |
Business |
|
|
This is a business combination wherein various departments of large industrial units come together under single management. |
Vertical Combination |
|
|
refer to transactions in which one company gains control, or at least controlling interest, in another company. |
Business combination |
|
|
This business combination type involves different business units coalesce themselves under a single management |
Circular combination |
|
|
is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets-a benchmark. |
Derivatives |
|
|
Also referred as voluntary combination, it is an association of two or more business units of same nature under a single management. |
Horizontal combination |
|
|
involves two or more business entities performing subsidiary services combining themselves under a single management. |
Diagonal combination |
|
|
an agreement between two parties for the purchase and delivery of an asset at an agreed upon price at a future date. |
Futures |
|
|
are purchased by a broker-dealer or other intermediary, for quick resale (i.e. trading account securities). |
Securities |
|
|
are similar to futures, but do not trade on an exchange, only over-the-counter. |
Forwards |
|
|
are another common type of derivative, often used to exchange one kind of cash flow with another. |
Swaps |
|
|
derivatives are difficult to value because they are based on the price of another asset. |
Downside of Derivatives |
|
|
are usually leveraged instruments, which increases their potential risks and rewards. |
Derivatives |
|
|
are standardized and eliminate or reduce many of the risks of over-the-counter derivatives. |
Exchange traded derivatives |
|
|
This is the more conventional approach used by accountants and most of the business enterprises adopt this method. |
The Transaction or the Operation Approach to Income Measurement |
|
|
This approach is also known as capital maintenance approach. Increase in assets is the result of income. |
The Balance sheet approach |
|
|
Under this approach, the income is measured with the help of the value added by the firm during a particular period and the same is determined by the differences between the value of the product/output over the cost of raw materials including stores and necessary components which are purchased from outside and are used in this production process of the concern. |
Value added approach |
|
|
This approach differs from the previous approach, viz. the transaction approach, in the sense that it expresses a description of the activities of a firm rather than on the reporting of transactions alone. |
Activities Approach to Income Measurement |
|
|
A very common approach to business combinations is___ |
Merger |
|
|
is a report that firms use to explain changes in their cash balances over a period of time by identifying all of the sources and uses of cash for the period spanned by the statement. |
Statement of cash flows |
|
|
revenue should be recorded when they are earned, regardless when cash is received. |
Revenue recognition principle |
|
|
is defined as any item with monetary value that a commercial bank will accept for deposit plus any amount currently on deposit with a bank. |
Cash |
|
|
include cash flows that arise out of of the purchase and sale of long-term assets such as property, plant and equipment.
|
Cash flow from investing activities |
|
|
It involves the buying and selling of goods or providing services to other businesses. |
Cash flow from operating activities |
|
|
This ratio indicates a firm's ability to meet its current obligations. |
Operating Cash Flow / Current Maturities of Long-Term Debt and Current Notes Payable |
|
|
include cash flows from day-to- day operations of the business. |
Cash flow from operating activities |
|
|
This ratio indicates a firm's ability to cover cash dividends with the yearly operating cash flow. |
Operating Cash Flow / Cash Dividends |
|
|
It presents the income statement on a cash basis, instead of accrual basis. |
Direct method |
|
|
This ratio indicates a firm's ability to cover total debt with the yearly operating cash flow. |
Operating Cash Flow/ Total Debt |
|
|
This ratio indicates the funds flow per common share outstanding. |
Operating Cash Flow Per Share
|
|
|
Sometimes referred to as the reconciliation method, It adjusts net income for items that affected net income but did not affect cash. |
Indirect Method |
|
|
represent changes in the firm's use of debt and equity. |
Cash flow from financing activities |
