Accounting Terms: A Comprehensive Glossary for Business Finance, Quizzes of Finance

Download Accounting Terms: A Comprehensive Glossary for Business Finance and more Quizzes Finance in PDF only on Docsity! TERM 1 Form 10-K DEFINITION 1 an annual report required by the Securities and Exchange Commission SEC, that provides such information as the firm's history, audited financial statements, management's analysis of the company's performance and executive compensation TERM 2 income statement DEFINITION 2 a basic accounting statement that measures the results of a firm's operations over a specified period, commonly 1 year; bottom line of the statement shows the profit or loss for the period that is available for a company's owners, aka profit and loss statement TERM 3 cost of goods sold DEFINITION 3 cost of producing or acquiring a product or service to be sold in the ordinary course of business TERM 4 gross profit DEFINITION 4 sales or revenue minus the cost of goods sold TERM 5 operating expenses DEFINITION 5 marketing and selling expenses, general and administrative expenses, and depreciation expense TERM 6 operating income DEFINITION 6 sales less the cost of cost of goods sold less operating expenses, earnings before interest and taxes TERM 7 taxable income DEFINITION 7 operating income minus interest expense, earnings before taxes TERM 8 net income DEFINITION 8 aka net profit/earnings available to common stockholders, earnings available to the firm's common and preferred stockholders TERM 9 earnings per share DEFINITION 9 net income on a per share basis TERM 10 dividends per share DEFINITION 10 amount of dividends a firm pays for each share outstanding TERM 21 liqiduity DEFINITION 21 ability to convert an asset into cash quickly without a significant loss of its value TERM 22 current assets DEFINITION 22 aka gross working capital, assets that consist primarily of cash, marketable securities, accounts receivable, inventories TERM 23 cash DEFINITION 23 dollars on hand, demand deposits and short-term marketable securities that can quickly be converted into cash TERM 24 accounts receivable DEFINITION 24 money owed by customers who purchased goods or services from the firm on credit TERM 25 inventories DEFINITION 25 raw materials, work in progress and finished goods held by the firm for eventual sale TERM 26 fixed assets DEFINITION 26 assets such as equipment, buildings and land TERM 27 depreciation expense DEFINITION 27 noncash expense to allocate the cost of depreciable assets, such as plant and equipment over the life of the asset TERM 28 accumulated depreciation DEFINITION 28 sum of all depreciation as taken over the entire life of a depreciable asset TERM 29 gross fixed assets DEFINITION 29 original cost of a firm's fixed assets TERM 30 net fixed assets DEFINITION 30 gross fixed assets minus the accumulated depreciation taken over the life of the assets TERM 31 debt DEFINITION 31 liabilities consisting of such sources as credit extended by suppliers or a loan from a bank TERM 32 equity DEFINITION 32 stockholder's investment in the firm and the cumulative profits retained in the business up to the date of the balance sheet TERM 33 current debt DEFINITION 33 aka short term liabilities, debt due to be paid within 12 months TERM 34 accounts payable DEFINITION 34 aka trade credit, credit provided by suppliers when a firm purchases inventory on credit TERM 35 accrued expenses DEFINITION 35 expenses that have been incurred but not yet paid in cash TERM 46 common-sized balance sheet DEFINITION 46 balance sheet in which a firm's assets and sources of debt and equity are expressed as a percentage of its total assets TERM 47 debt ratio DEFINITION 47 firm's total liabilities divided by its total assets, measures the extent to which a firm has been financed with debt TERM 48 net working capital DEFINITION 48 difference between a firm's current assets and its current liabilities TERM 49 accrual basis accounting DEFINITION 49 method of accounting whereby revenue is recorded when it is earned, whether or not the revenue has been received in cash, expenses are recorded when they are incurred even if the money has not actually been paid out TERM 50 cash basis accounting DEFINITION 50 method of accounting whereby revenue is recorded when physical cash is actually received, expenses are recorded when physical cash is paid out TERM 51 statement of cash flows DEFINITION 51 statement that shows how the changes in balance sheet accounts and income effect cash and cash equivalent, and breaks the analysis down to operating, investing and financing activities TERM 52 free cash flows DEFINITION 52 amount of cash available from operations after the firm pays for the investments it has made in operating working capital and fixed assets, cash is available to distribute to firm's creditors and owners TERM 53 financing cash flows DEFINITION 53 amount of cash received from or distributed to the firm's investors, usually in the form of interest, dividends, issuance of debt, or issuance or repurchase of stocks