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ACFM 321 Chapter 3
| Term | Definition |
|---|---|
| Balance Sheet | Financial statement that presents an organized list of assets, liabilities, and equity at a particular point in time |
| Liquidity | Ability of company to convert its assets to cash to pay its current liabilities |
| Long-Term Solvency | Assessment of whether a company will be able to pay all its liabilities, which includes long-term liabilities |
| Balance Sheet | Financial statement that presents an organized list of assets, liabilities, and equity at a particular point in time |
| Liquidity | Ability of company to convert its assets to cash to pay its current liabilities |
| Long-Term Solvency | Assessment of whether a company will be able to pay all its liabilities, which includes long-term liabilities |
| Financial Flexibility | Ability of company to alter cash flows in order to take advantage of unexpected investment opportunities and needs |
| Book Value | Total assets - total liabilities, usually will not directly measure company's market value |
| Assets | Present rights of an entity to an economic benefit |
| Assets | Present rights of an entity to an economic benefit |
| Liabilities | Present obligations of particular entity to transfer an economic benefit |
| Equity | Represents residual interest in assets of entity that remains after deducting its liabilities |
| Current Assets | Includes assets that are cash, will be converted into cash, or will be used up within 1 year from the balance sheet date, or operating cycle if longer |
| Operating Cycle | Period of time necessary to convert cash to raw materials, raw materials to finished product, finished product to receivables, and then finally receivables back to cash |
| Cash | Currency and coins, balances in checking accounts, and items acceptable for deposit in these accounts, such as checks and money orders received from customers |
| Cash Equivalents | Include money market funds, treasury bills, and commercial paper; investments that have a maturity date no longer than 3 months from date of purchase |
| Short-Term Investments | Investments not classified as cash equivalents that company has the ability and intent to sell within 1 year, or operating cycle if longer |
| Accounts Receivable | Amounts to be received from sale of goods/services on account |
| Notes Receivable | Receivables supported by formal agreements or note that specifies payment term |
| Net Amount of Receivables | Total receivables - allowance for estimate of uncollectible amounts |
| Inventory | Goods awaiting sale (finished goods), goods in course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials) |
| Prepaid Expenses | Costs of assets acquired in 1 period and expensed in a future period |
| Long-Term Assets | Include assets that are expected to be converted to cash or consumed in more than 1 year, or operating cycle if longer |
| Investments | Assets not used directly in operations |
| Property, Plant, Equipment | Tangible, long-lived assets used in operations of business, net amount = original cost - accumulated depreciation |
| Operating Leases | Lease where lessor retains risks and benefits of ownership, and lessee pays for right to use asset temporarily |
| Intangible Assets | Operational assets that lack physical substance and often involve an exclusive right to company to provide product/service, purchase price - accumulated depreciation |
| Goodwill | Intangible asset equal to fair value of consideration given to acquire a company (acquisition price) - fair value of acquired company's identifiable net assets |
| Other Long-Term Assets | Deferred charges |
| Current Liabilities | Expected to require use of current assets for payment, usually are payable within 1 year from balance sheet date, or operating cycle if longer |
| Accounts Payable | Obligations to suppliers of merchandise or of services purchased on account |
| Notes Payable | Promissory notes that obligate issuing corporation to repay a stated amount at or by a specified maturity date and to pay interest to lender between issue date and maturity |
| Deferred Revenue | Cash received from a customer for goods/services to be provided in a future period |
| Accrued Liabilities | Expenses already incurred but not yet paid (accrued expenses) |
| Current Maturities of Long-Term Debt | Portion of long-term notes, loans, mortgages, and bonds payable that is payable within next year or operating cycle if longer |
| Long-Term Liabilities | Obligations that are due to be settled or have a contractual right by borrowing company to be settled in more than 1 year or operating cycle if longer |
| Paid-In Capital | Invested capital consisting primarily of amounts invested by shareholders when they purchase shares of stock from corporation |
| Retained Earnings | Amounts earned by corporation on behalf of its shareholders and not (yet) distributed to them as dividends or accumulated deficit |
| Accumulated Other Comprehensive Income | Component of shareholders' equity that represents sum of all other comprehensive income reported in current and prior periods |
| Disclosure Note | For allowance for uncollectible accounts and info about common stock. Supporting discussion, calculations, and schedules in notes following financial statements |
| Summary of Significant Accounting Policies | Principles of Consolidation, Cash & Cash Equivalents, Inventories, PPE, Revenue Recognition |
| Paid-In Capital | Invested capital consisting primarily of amounts invested by shareholders when they purchase shares of stock from corporation |
| Subsequent Event | Significant development that takes place after company's fiscal year-end but before financial statements are issued |
| Retained Earnings | Amounts earned by corporation on behalf of its shareholders and not (yet) distributed to them as dividends or accumulated deficit |
| Related-Party Transactions | Transactions with owners, management, families of owners or management, affiliated companies, and other parties that can significantly influence or be influenced by company |
| Fraud | Intentional act by one or more individuals among management, those charged with governance, employers, or third parties, involving use of deception that results in misstatement in financial statements that are subject of an audit |
| Summary of Significant Accounting Policies | Principles of Consolidation, Cash & Cash Equivalents, Inventories, PPE, Revenue Recognition |
| Subsequent Event | Significant development that takes place after company's fiscal year-end but before financial statements are issued |
| Related-Party Transactions | Transactions with owners, management, families of owners or management, affiliated companies, and other parties that can significantly influence or be influenced by company |
| Fraud | Intentional act by one or more individuals among management, those charged with governance, employers, or third parties, involving use of deception that results in misstatement in financial statements that are subject of an audit |
| Illegal Acts | Violations of laws, such as bribes, kickbacks, and illegal contributions to political candidates |
| Management's Discussion and Analysis | Provides a biased but informed perspective of company's operations, liquidity, capital resources, off-balance sheet arrangements, and critical accounting estimates |
| Proxy Statement | Provides disclosure on content of executive pay packages to help shareholders and others better understand commitments of company |
| Environmental, Social, & Governance Disclosures | Shareholders can use these to assess factors affecting company's financial performance, resource efficiency, and operating risks. Stakeholders can better understand their unique relationship with company and impact of company on society in general |
| Environmental Disclosures | Company's environmental impact, greenhouse gas emissions |
| Social Disclosures | Focuses on issues of interest to broad stakeholders and society at large |
| Governance Disclosures | Company's actions and policies related to division of power within company |
| International Sustainability Standards Board | Independent organization that sets reporting standards around sustainability reporting |
| Auditors | Independent professionals who render an opinion about whether financial statements fairly present company's financial position, performance, and cash flows in compliance with GAAP |
| Auditor's Report | Report issued by CPAs who audit financial statements that informs users of audit findings, 4 basic types: unqualified, unqualified with explanatory/emphasis paragraph, qualified, or adverse/disclaimer |
| Default Risk | Company's ability to pay its obligations when they come due |
| Operational Risk | How adept company is at withstanding various events and circumstances that might impair its ability to earn profits |
| Comparative Financial Statements | Corresponding financial statements from previous years accompanying issued financial statements |
| Horizontal Analysis | Comparison by expressing each item as a percentage of that same item in financial statements of another year (base amount) in order to more easily see year-to-year changes |
| Vertical Analysis | Expression of each item in financial statements as a percentage of appropriate corresponding total, or base amount, but within same year |
| Ratio Analysis | Comparison of accounting numbers to evaluate performance and risk of firm |
| Current Ratio | Measure of company's liquidity, Current Assets / Current Liabilities |
| Working Capital | Differences between current assets and current liabilities |
| Acid-Test Ratio | Measure of company's liquidity, Quick Assets / Current Liabilities |
| Quick Assets | Unrestricted cash, short-term investments, and accounts receivable |
| Debt to Equity Ratio | Compares resources provided by creditors with resources provided by owners, Total Liabilities / Shareholders' Equity |
| Capital Structure | Mixture of liabilities and shareholders' equity in a company |
| Times Interest Earned | Way to gauge ability of company to satisfy its fixed debt obligations, (Net Income + Interest Expense + Income Tax Expense) / Interest Expense |
| Financial Leverage | By earning a return on borrowed funds that exceeds cost of borrowing funds, company can provide its shareholders with total return higher than it could achieve by employing equity funds alone |
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MOWGaming04
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