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Financial Terms | |
Direct-Method Format |
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Definition of Direct-Method FormatDirect-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities.
Related Terms:Indirect-Method FormatA format for the operating section of the cash-flow statement that algebraic methoda process of service department cost allocation Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. Asymmetric informationInformation that is known to some people but not to other people. Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Benefit Ratio MethodThe proportion of unemployment benefits paid to a company’s Benefit Wage Ratio MethodThe proportion of total taxable wages for laid off ![]() Bootstrapping, bootstrap methodAn arithmetic method for backing an Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Completed-Contract MethodA contract accounting method that recognizes contract revenue Current rate methodUnder this currency translation method, all foreign currency balance-sheet and income direct costa cost that is distinctly traceable to a particular cost object Direct costA cost that can be clearly associated with specific activities or products. direct costingsee variable costing Direct costingA costing methodology that only assigns direct labor and material costs Direct costsCosts that are readily traceable to particular products or services. ![]() Direct DepositThe direct transfer of payroll funds from the company bank account direct depositA system where funds are electronically credited to your account by a financial institution or a payroll service. For example, you can arrange with your employer to have your pay cheques automatically deposited into your no fee bank account. Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash direct laborthe time spent by individuals who work specifically Direct laborLabor that is specifically incurred to create a product. Direct leaseLease in which the lessor purchases new equipment from the manufacturer and leases it to the direct materiala readily identifiable part of a product; the cost of such a part Direct materials costThe cost of all materials used in a cost object, such as finished goods. Direct materials mix varianceThe variance between the budgeted and actual mixes of Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. direct methoda service department cost allocation approach Direct paperCommercial paper sold directly by the issuer to investors. Direct placementSelling a new issue not by offering it for sale publicly, but by placing it with one of several Direct quoteFor foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency. Direct-Response AdvertisingAdvertising designed to elicit sales to customers who can be Direct search marketBuyers and sellers seek each other directly and transact directly. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. DirectorA member of a company’s Board of directors. dividend growth methoda method of computing the cost Equity MethodAccounting method for an equity security in cases where the investor has sufficient Expected value of perfect informationThe expected value if the future uncertain outcomes could be known FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest First-In, First-Out (FIFO) Inventory MethodThe inventory cost-flow assumption that Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and Foreign direct investment (FDI)The acquisition abroad of physical assets such as plant and equipment, with Full-Cost MethodA method of accounting for petroleum exploration and development expenditures Future-Oriented Financial InformationInformation about prospective results of operations, financial position and/or changes in financial position, based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection. high-low methoda technique used to determine the fixed indirect costa cost that cannot be traced explicitly to a particular Indirect costA cost that is not directly associated with a single activity or event. Such Indirect costsCosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead. Indirect laborThe cost of any labor that supports the production process, but which is Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. Indirect quoteFor foreign exchange, the number of units of a foreign currency needed to buy one U.S.$. Indirect TaxesTaxes paid by consumers when they buy goods and services. A sales tax is an example. informationbits of knowledge or fact that have been carefully Information asymmetryA situation involving information that is known to some, but not all, participants. Information Coefficient (IC)The correlation between predicted and actual stock returns, sometimes used to Information-content effectThe rise in the stock price following the dividend signal. information content of dividendsDividend increases send good news about cash flow and earnings. Dividend cuts send bad news. Information costsTransaction costs that include the assessment of the investment merits of a financial asset. Information-motivated tradesTrades in which an investor believes he or she possesses pertinent Information servicesOrganizations that furnish investment and other types of information, such as Informational efficiencyThe speed and accuracy with which prices reflect new information. Informationless tradesTrades that are the result of either a reallocation of wealth or an implementation of an Insider informationRelevant information about a company that has not yet been made public. It is illegal for Interac® Direct PaymentInstead of paying with cash or a credit card, Interac direct Payment allows you to pay for your purchase with a debit card, such as your bank card. The amount of the purchase is electronically debited, or withdrawn, from your bank account (see debit card). judgmental method (of risk adjustment)an informal method of adjusting for risk that allows the decision maker Last-In, First-Out (LIFO) Inventory MethodThe inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the management information system (MIS)a structure of interrelated elements that collects, organizes, and communicates Medical Information BureauThis organization was established in 1902. The Medical Information Bureau (M.I.B.) is a non-profit association of life insurance companies. Its purpose is to detect and deter fraud by providing warnings called, alerts, to member companies. For example, if an insurance applicant advised one insurance company of a heart attack and then applied to another insurance company omitting this history, codes, reported by the first insurance company, indicating a heart attack would alert the second insurance company to the undisclosed history. It is a rarity, however, that the alert is the only notice of a specific medical impairement as most applicants completely disclose their history. method of least squaressee least squares regression analysis method of neglecta method of treating spoiled units in the modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Moving average inventory methodAn inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase. net present value methoda process that uses the discounted Net Present Value (NPV) MethodA method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment. Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Payback methodA capital budgeting analysis method that calculates the amount of Percentage-of-Completion MethodA contract accounting method that recognizes contract pre-authorized direct depositA system where funds are electronically credited to your account by a financial institution or a payroll service. Purchase methodAccounting for an acquisition using market value for the consolidation of the two entities' Purchase methodAn accounting method used to combine the financial statements of Residual methodA method of allocating the purchase price for the acquisition of another firm among the risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk Simple compound growth methodA method of calculating the growth rate by relating the terminal value to simplex methodan iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems six-sigma methoda high-performance, data-driven approach to analyzing and solving the root causes of business problems Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. step methoda process of service department cost allocation strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the Successful Efforts MethodA method of accounting for petroleum exploration and development Temporal methodUnder this currency translation method, the choice of exchange rate depends on the weighted average method (of process costing)the method of cost assignment that computes an average cost per Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |