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AccountingTerms

Vocab from Fundamentals of Accounting

QuestionAnswer
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