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AccountingTerms
Vocab from Fundamentals of Accounting
| Question | Answer |
|---|---|
| Amortization | writing off the cost of intangible assets (goodwill, patents, copyrights, etc.) |
| Available for Sale | Investments in other corp.'s stock, where the intent of the company is to hold these securities for the long run, and not trade them. |
| Average cost | A cost flow assumption that requires calculating average cost per unit |
| Bond indenture | The agreement that covers all the rights and obligations of the issuing company and the bondholder. |
| Book value | The value of an asset or liability reported on the balance sheet. |
| Capital Leases | A lease that transfers most of the rights and obligations of ownership to the lessee. |
| Capitalize | Recording something as an asset that will eventually be recorded as an expense in the form of depreciation. |
| Cash equivalents | Balance sheet classification |
| Chart of Accounts | A list of all the accounts being used by a business. |
| Convertible Bond | A bond that can be turned into stock. |
| Copyright | gives the exclusive right to produce and sell something |
| Debenture | unsecured bond, not backed by anything. |
| Declining Balance | Accelerated depreciation method. |
| Depreciation | The allocation of the cost of an asset over its useful life |
| Discount | When a bond is sold at less than face value. |
| Dividend | money paid to stockholders which represents a distribution of the earnings. |
| FIFO | Oldest good are the first sold. |
| FOB Destination | Seller pays the freight. |
| FOB Shipping Point | Buyer pays the freight the whole way. |
| Franchises | granted to permit operation of a specific business |
| Gains | when a business sells and makes a profit off of something that it is not in the business of selling. (i.e., a company truck) |
| Going concern | assuming that the business is going to continue for the long run |
| Goodwill | a good location, etc. |
| Historical Cost | The rule that you account for something at actual purchase price. |
| Liabilities | Amounts owed to other entities. |
| LIFO | Last units purchased are the first units sold. |
| Lower of cost or market | requires companies to write down inventory that has lost value. |
| Market (effective) Rate | the going rate of interest in the market for bonds of a specific risk profile (the rate investors could get for similar risk) |
| Matching | Matching revenue and expenses |
| Maturity Date | the day when the bond holder will receive repayment of the principal amount plus any accrued interest. |
| Mortgage bond | A bond that is backed up by something that can be sold to payy off the bond. |
| Operating Lease | like a short-term rental |
| Patent | Gives the holder exclusive rights to sell a specific product or service |
| Periodic | done at the end of a period |
| Perpetual | keeps track of inventory coming in and out |
| Petty Cash | money kept on hand to pay for small incidental expenses |
| Premium | A bond offered at more than face value |
| Relevance | meaning it will have an impact on a decision |
| Reliability | meaning you can count on it |
| Revenues | increase in net assets resulting from selling goods or services |
| Serial Bonds | long-term liability. part of the bond is due each year. |
| Stated (coupon) rate | interest the company must pay on a bond |
| Straight line | a method for allocating the cost of an asset over its useful life. cost - salvage value / life |
| Sum of the years' digits | Accelerated method of depreciation. (cost - salvage value) * (n(n-1)/2) |
| Term bonds | a bond where the entire amount is due at the end of the term |
| Trademark | words or symbols that distinguish the products of a specific company. |
| Trading Securities | investments in other company's stock, where the intent of the company is to actively trade these securities and make a profit. |
| Treasury Bills | consists of the company's own shares of stock that the company has repurchased |
| Trial balance | ensures that debits equal credits |
| Units of Activity | Same as straight line method, only the life of the asset is expressed in units of activity |
Created by:
hnmead
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