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Chapter 19
| Term | Definition |
|---|---|
| Administrative Expenses | Costs related to the management of a business. |
| Base Period | A period that is used for comparison in Financial Statement analysis |
| Capital Stock | The account that represents the total amount of investment in the corporation by its stockholders (owners) |
| Cash Inflows | Receipts of Cash |
| Cash Outflows | Payments of Cash |
| Comparability | Accounting characteristic that allows the financial information to be compared from one period to another period; also allows the comparison of financial information between business |
| Financing Activities | Business activities involving debt and equity transactions |
| Full Disclosure | Accounting principal requiring a financial report to include enough information so that it is complete |
| Gross Profit on Sales | The amount of profit made during the fiscal period before the expenses are deducted; it is found by subtracting the cost of merchandise sold from net sales |
| Horizontal Analysis | The comparison of the same item(s) on financial statements for two or more accounting periods or dates; used to determine changes from one period to another. |
| Investing Activities | Business activities involving investments and plant assets |
| Materiality | An accounting guideline stating that information considered important (relative to the other information) should be included in financial reports |
| Net Purchases | The total cost of all merchandise purchased during the period, less any purchase discounts, returns, and allowances |
| Net Sales | The amount of sales for the period less any sales discounts, returns, and allowances |
| Operating Activities | Business activities involving normal business operations |
| Operating Expenses | The cash spent or assets consumed to earn revenue for a business; operating expenses do not include federal income tax expense |
| Operating Income | The excess of gross profit over operating expenses; taxable income |
| Relevance | An accounting characteristic requiring that all information that would affect the decisions of financial statement users be disclosed in the financial reports |
| Reliability | A characteristic requiring that accounting information be reasonably free of bias and error |
| Retained Earnings | A corporation's accumulated net income that is not distributed to stockholders |
| Selling Expenses | Expenses a business incurs to sell or market its merchandise or services |
| Statement of Retained Earnings | A financial statement that reports the changes in the retained earnings account during the period |
| Stockholders' Equity | The value of the stockholder' claims to the corporation. |
| Vertical Analysis | A method of analysis that expresses financial statement items as percentages of a base amount. |
Created by:
jbowers21
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