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accounting 3
accounting chapter 3 WGU C213
| Term | Definition |
|---|---|
| Balance sheet | a listing of an organization's assets and of its liabilities at a certain time |
| Current assets | cash, accounts receivable and inventory |
| Cash | coins and currency as well as the balances in company checking and savings accounts |
| Accounts receivable | amounts owed to a business by its credit customers and are usually collected in cash within 10- 60 days |
| Inventory | the name given to goods held for sale in the normal course of business |
| Prepaid expenses | payments in advance for business expenses |
| Investment securities | composed of publicly traded stocks and bonds |
| Longterm investments | those assets that you expect to still be around next year when you prepare the balance sheet again |
| Property, plant and equipment | any land, buildings, machinery, tools, furniture, fixtures and vehicles used by a company in conducting its business activities |
| Accumulated depreciation | reflects the wear and tear, or depreciation of these items since they where originally purchased |
| Intangible assets | assets that have no physical or tangible characteristics. Reported ONLY when its purchased by another company |
| examples of intangible assets | agreements, contracts, right that provide economic benefits, brand name, trade names, production processes, trademarks ect. Intangible assets are not on statements |
| Other assets | ong-term assets that are not suitable for reporting under any of the previous classifications |
| Current liabilities | those obligations expected to be paid within 1 year, the most common being accounts payable |
| Accounts payable | accounts that need to be paid to others usually companies |
| Short-term loans payable | formal, intrest-bearing loans that are expected to be paid back within one year |
| Current portions of long-term debt | some liabilities, such as mortgages, are payable in equal monthly installments over a specified number of years. The portion of these liabilities that is payable within 12 months from the balance sheet date |
| Unearned revenue | represents obligations to provide service to customers who had paid for a service they had not yet received |
| Long term debt | long term notes, bonds, mortgages and similar obligations on the balance sheet |
| Capital lease obligation | a long- term liability in the balance sheet |
| Deferred income tax liability | the income tax expected to be paid in future years on income that has already been reported in the income statement but which, because of the tax law, has not yet been taxed |
| Stockholders equity | the difference between assets and liabilities in corporations |
| Common stock | stockholders equity investment |
| Par value | the market value of the shares at issuance |
| Additional paid- in capital | invested by stockholders that exceeds the par value of the issued shares |
| Preferred stock | stockholders equity investment |
| Retained earnings | the cumulative amount of a corporation's profits that have been reinvested on behalf of the stockholders |
| Treasury stock | repurchased shares when a company buys back its own shares |
| Accumulated other comprehensive income | the grouped together and reported changes which companies experience increases and decreases in equity each year because of the movement of market prices or exchanges rates |
| Derivative | a financial instrument, such as an option or a future, that derives its value from the movement of a price, an exchange rate or an intrest rate associated with some other item |
| Noncontrolling intrest | arises when a corporation has subsidiaries are not 100% owned by the corporation |
| Recognition | boil down all the estimates and judgements into one number and report that one number in formal financial statements |
| Disclosure | convey the details in a narrative note without ever including anything in the financial statements themselves |
| Valuation | once it has been determined that an item should be recognized in financial statements, the question then arises about what dollar amount to assign to the item |
| Transaction analysis | the process of determining how an economic event impacts the financial statements |
| Executory contract | it is an exchange of promises about the future |
| Asset mix | the proportion of total assets in each asset category, is determined to a large degree by the industry in which the company operates |
| Financial mix | the % of total financing (liabilities plus equity) in each individual category |
Created by:
1piper4me
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