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Accounting Terms
Definitions pt 3
26
Accounting
Undergraduate 1
02/22/2009

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Term
current liability
Definition
debt that must be paid within one year
Term
accounts payable
Definition
current liability consisting of bills owed to suppliers, plus wages and taxes due within the coming year
Term
long-term liability
Definition
debt that is not due for at least one year
Term
paid-in capital
Definition
money that is invested in a company by its owners
Term
retained earnings
Definition
earnings retained by a firm for its use rather than paid out as dividends
Term
income statement (profit and loss statement)
Definition
financial statement listing a firm's annual revenues and expenses so that a bottom line shows annual profit or loss
Term
revenues
Definition
funds that flow into a business from the sale of goods or services
Term
cost of revenues
Definition
costs that a company incurs to obtain revenues from other companies
Term
cost of goods sold
Definition
costs of obtaining materials for making the products sold by a firm during the year
Term
gross profit
Definition
a perliminary, quick to calculate profit figure calculated from the firm's revenues minus its cost of revenues (the direct costs of getting the revenues)
Term
operating expenses
Definition
costs, other than the cost of revenues, incurred in producing a good or service
Term
operating income
Definition
gross profit minus operating expenses
Term
net income (net profit, net earnings)
Definition
gross profit minus operating expenses and income taxes
Term
statement of cash flows
Definition
financial statement describing a firm's yearly cash reciepts and cash payments
Term
budget
Definition
detailed statement of estimated receipts and expenditures for a future period of time
Term
revenue recognition
Definition
formal recording and reporting of revenues at the appropriate time
Term
full disclosure
Definition
guideline that financial statements shold not include just nmbers but should also furnish management's interpretations and explanations of those numbers
Term
solvency ratio
Definition
financial ratio, either short or long-term, for estimating the borrower's ability to repay debt
Term
profitabilty ratio
Definition
financial ratio for measuring a firm's potential earnings
Term
activity ratio
Definition
financial ratio for evaluating management's efficiency in using a firm's assets
Term
short-term solvency ratio
Definition
financial ratio for measuring a company's ability to pay immediate debts
Term
current ratio
Definition
financial ratio for measuring a company's ability to pay current debts out of current assets
Term
debt
Definition
a company's total liablities
Term
leverage
Definition
ablitity to finance an investment through borrowed funds
Term
earnings per share
Definition
profitability ratio measruing the net profit that the company earns for each share of outstanding stock
Term
code of professional conduct
Definition
the code of ethics for CPAs as maintained and enforced by the AICPA
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