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Definition of Contra-asset account
An offset to an asset account that reduces the balance of the asset account.
Refers to accounts receivable from credit sales to customers
An explanation or report in financial terms about the transactions of an organization.
The sum of all the interest options in your policy, including interest.
The process of satisfying stakeholders in the organization that managers have acted in the best interests of the stakeholders, a result of the stewardship function of managers, which takes place through accounting.
A collection of systems and processes used to record, report and interpret business transactions.
A broad, all-inclusive term that refers to the methods and procedures
Administrative proceedings or litigation releases that entail an accounting or auditing-related violation of the securities laws.
An alteration in the accounting methodology or estimates used in
Earnings of a firm as reported on its income statement.
A business for which a separate set of accounting records is being
The representation of the double-entry system of accounting such that assets are equal to liabilities plus capital.
The formula assets = Liabilities + Equity.
An equation that reflects the two-sided nature of a
Unintentional mistakes in financial statements. accounted for by restating
The change in the value of a firm's foreign currency denominated accounts due to a
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on
Intentional misstatements or omissions of amounts or disclosures in
The ease and quickness with which assets can be converted to cash.
The period of time for which financial statements are produced – see also financial year.
The principles, bases, conventions, rules and procedures adopted by management in preparing and presenting financial statements.
Accounting rate of return (ARR)
A method of investment appraisal that measures
accounting rate of return (ARR)
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
A set of accounts that summarize the transactions of a business that have been recorded on source documents.
‘Buckets’ within the ledger, part of the accounting system. Each account contains similar transactions (line items) that are used for the production of financial statements. Or commonly used as an abbreviation for financial statements.
Money owed to suppliers.
Amounts a company owes to creditors.
Amounts owed by the company for goods and services that have been received, but have not yet been paid for. Usually accounts payable involves the receipt of an invoice from the company providing the services or goods.
Short-term, non-interest-bearing liabilities of a business
Acurrent liability on the balance sheet, representing short-term obligations
Amounts due to vendors for purchases on open account, that is, not evidenced
Accounts Payable Days (A/P Days)
The number of days it would take to pay the ending balance
Money owed by customers.
Amounts owed to a company by customers that it sold to on credit. Total accounts receivable are usually reduced by an allowance for doubtful accounts.
Amounts owed to the company, generally for sales that it has made.
Short-term, non-interest-bearing debts owed to a
A current asset on the balance sheet, representing short-term
Amounts due from customers for sales on open account, not evidenced
Money owed to a business for merchandise or services sold on open account.
Accounts Receivable Days (A/R Days)
The number of days it would take to collect the ending
Accounts receivable turnover
The ratio of net credit sales to average accounts receivable, a measure of how
accounts receivable turnover ratio
A ratio computed by dividing annual
The recording of revenue when earned and expenses when
Well, frankly, accrual is not a good descriptive
A method of accounting in which profit is calculated as the difference between income when it is earned and expenses when they are incurred.
Acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firm's assets.
A forceful and intentional choice and application of accounting principles
Allowance for doubtful accounts
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
Allowance for Doubtful Accounts
An estimate of the uncollectible portion of accounts receivable
Any possession that has value in an exchange.
A resource, recorded through a transaction, that is expected to yield a benefit to a
Something that is owned; a financial claim or a piece of property that is a store of value.
Probable future economic benefit that is obtained or controlled by an entity as a result of
Anything owned by, or owed to, an individual or business which has commercial or exchange value (e.g., cash, property, etc.).
All things of value owned by an individual or organization.
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Bond or note secured by assets of company.
A security that is collateralized by loans, leases, receivables, or installment contracts
Methods of financing in which lenders and equity investors look principally to the
Loans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender.
Categories of assets, such as stocks, bonds, real estate and foreign securities.
Extent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The ratio of total assets to stockholder equity.
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another
Also called surplus management, the task of managing funds of a financial
The weighting of assets in an investment portfolio among different asset classes (e.g. shares, bonds, property, cash, overseas investments.
Asset pricing model
A model for determining the required rate of return on an asset.
Asset pricing model
A model, such as the Capital asset Pricing Model (CAPM), that determines the required
The amount of total risk that can be eliminated by diversification by
A firm's investing in assets that are riskier than those that the debtholders expected.
Asset substitution problem
Arises when the stockholders substitute riskier assets for the firm's existing
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
The ratio of net sales to total assets.
a ratio measuring asset productivity and showing the number of sales dollars generated by each dollar of assets
asset turnover ratio
A broad-gauge ratio computed by dividing annual
A firm's productive resources.
Anything of value that a company owns.
Things that the business owns.
Items owned by the company or expenses that have been paid for but have not been used up.
A common element of a financial plan that describes projected capital spending and the
Average accounting return
The average project earnings after taxes and depreciation divided by the average
Average age of accounts receivable
The weighted-average age of all of the firm's outstanding invoices.
Balance of Payments Accounts
A statement of a country's transactions with other countries.
A guaranteed investment contract purchased with a single (one-shot) premium. Related:
Net result of public and private international investment and lending activities.
That part of the balance of payments accounts that records demands for and supplies of a currency arising from purchases or sales of assets.
an asset used to generate revenues or cost savings
A fixed asset, something that is expected to have long-term usage within
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
Capital Asset Pricing Model (CAPM)
A model for estimating equilibrium rates of return and values of
capital asset pricing model (CAPM)
Theory of the relationship between risk and return which states that the expected risk
Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against
A method of accounting in which profit is calculated as the difference between income
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
Certified Management Accountant (CMA)
a professional designation in the area of management accounting that
Change in Accounting Estimate
A change in accounting that occurs as the result of new information
Change in Accounting Estimate
A change in the implementation of an existing accounting
Change in Accounting Principle
A change from one generally accepted accounting principle to another generally accepted accounting principle—for example, a change from capitalizing expenditures
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