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ACC 201 Chapter 5
Vocabulary
32
Accounting
Undergraduate 2
10/25/2011

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Term
corporate governance
Definition
refers to the procedures designed to ensure that the company is managed in the interests of the shareholders
Term
board of directors
Definition
elected by the stockholders to represents their interest, is responsible for maintaing the integrity of the company's financial reports
Term
unqualified audit opinion
Definition
is an auditors statement that the financial statements are fair presentations in all material respects in conformity with GAAP
Term
institutional investors
Definition
are managers of pension, mutual, endowment, and other funds that invest on the behalf of others
Term
private investors
Definition
include individuals who purchase shares in companies
Term
lenders (creditors)
Definition
include suppliers and financial institutions that lend money to companies
Term
cost benefit constraint
Definition
suggests that the benefits of accounting for the reporting information should outweigh the costs
Term
relevant information
Definition
can influence a decision; it is timely and has predictive and or feedback value
Term
reliable information
Definition
accurate, unbiased, and verifiable
Term
consistent information
Definition
can be compared over time because similar accounting methods have been applied
Term
comparable information
Definition
allows comparisons across businesses because similar accounting methods have been applied
Term
material amounts
Definition
are the amounts that are large enough to influence a user's decision
Term
conservatism
Definition
suggest that care should be taken not overstate assets and revenues or understate liabilities and expenses
Term
press release
Definition
a written public news announcement normally distributed to major news services
Term
Form 10-K
Definition
is the annual report that publicly traded companies must file with the SEC
Term
Form 10-Q
Definition
the quarterly report that publicly traded companies must file with the SEC
Term
Form 8-K
Definition
is used by publicly traded companies to disclose any material event not previously reported that is important to investors
Term
Par Value
Definition
a legal amount per share established by the board of directors; it establishes the minimum amount a stockholder must contribute and has no relationship to the market price of the stock
Term
Additional paid-in-cash
Definition
is the amount of contributed capital less the par value of the stock
Term
Gross Profit
Definition
is net sales less cost of goods sold
Term
Income from operations
Definition
equals net sales less cost of goods sold and other operating expenses
Term
income before income taxes
Definition
is revenues minus all expenses except income tax expense
Term
Discontinued operations
Definition
result from the disposal of a major component of the business and are reported net of income tax effects
Term
extraordinary items
Definition
are gains and losses that are both unusual in nature and infrequent; they are reported net of tax on the income statement
Term
Book value
Definition
Same as carrying value; cost less accumulated depreciation to date
Term
Current Assets
Definition
Assets expected to be collected in cash within one year or the operating cycle if longer.
Term
Liquidity
Definition
Nearness of assets to cash (in time)
Term
Shares Outstanding
Definition
Balance of the common stock account divided by the par value per share
Term
Normal Operating Cycle
Definition
The average cash-to-cash time involved in the operations of the business
Term
Intangible Assets
Definition
Assets that do not have physical substance
Term
Capital in excess of par
Definition
Amount of the contributed capital less the par value of the stock
Term
Contra Asset
Definition
Asset offset account (subtracted from an asset)
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