|Cumulative Effect of a Change in Accounting Principle|
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Definition of Cumulative Effect of a Change in Accounting Principle
Cumulative Effect of a Change in Accounting Principle
The change in earnings of previous years
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.
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.
A forceful and intentional choice and application of accounting principles
American Stock Exchange (AMEX)
The second-largest stock exchange in the United States. It trades
Result of a transaction that increases earnings per common share (e.g. by decreasing the
Average accounting return
The average project earnings after taxes and depreciation divided by the average
Bill of exchange
General term for a document demanding payment.
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
The tendency of stocks to perform differently at different times, including such anomalies as
CARs (cumulative abnormal returns)
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
A method of accounting in which profit is calculated as the difference between income
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
Change in Reporting Entity
A change in the scope of the entities included in a set of, typically, consolidated financial statements.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
The grouping of investors who have a preference that the firm follow a particular financing
Refers to the fact that the merger of two firms decreases the probability of default on
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
Constant dollar accounting
A method for restating financial statements by reducing or
Method of accounting for sales or service agreements where completion
This is the principle which specifies the factors that must be taken into account when calculating dividends. At Canada Life, the key factors are: interest earnings, mortality, and operating expense.
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
a discipline that focuses on techniques or
Cost Accounting Standards Board (CASB)
a body established by Congress in 1970 to promulgate cost accounting
Creative Accounting Practices
Any and all steps used to play the financial numbers game, including
Creative Acquisition Accounting
The allocation to expense of a greater portion of the price
Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the
Cumulative dividend feature
A requirement that any missed preferred or preference stock dividends be paid
The cumulative, after-tax, prior-year effect of a change in accounting
Cumulative Effect of Accounting Change
The change in earnings of previous years assuming
Cumulative preferred stock
Preferred stock whose dividends accrue, should the issuer not make timely
Cumulative probability distribution
A function that shows the probability that the random variable will
Cumulative Translation Adjustment (CTA) account
An entry in a translated balance sheet in which gains
A system of voting for directors of a corporation in which shareholder's total number of
Voting system in which all the votes one shareholder is allowed to cast can be cast for one candidate for the board of directors.
Result of a transaction that decreases earnings per common share.
See accrual-basis accounting.
Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of
effective annual interest rate
Interest rate that is annualized using compound interest.
Effective annual yield
Annualized interest rate on a security computed using compound interest techniques.
Effective Annual Yield
Annualized rate of return on a security computed using compound
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
The convexity of a bond calculated with cash flows that change with yields.
In an interest rate swap, the date the swap begins accruing interest.
The duration calculated using the approximate duration formula for a bond with an
Effective Exchange Rate
The weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country.
Effective Interest Rate
The rate of interest actually earned on an investment. It is
Effective margin (EM)
Used with SAT performance measures, the amount equaling the net earned spread, or
A measure of the time value of money that fully reflects the effects of compounding.
The gross underwriting spread adjusted for the impact of the announcement of the common
Effective Tax Rate
The total tax provision divided by pretax book income from continuing
a measure of how well an organization’s goals
Electronic data interchange (EDI)
The exchange of information electronically, directly from one firm's
electronic data interchange (EDI)
the computer-to-computer transfer of information in virtual real time using standardized formats developed by the American National Standards Institute
Embodied Technical Change
Technical change that can be used only when new capital embodying this technical change is produced.
A change to a product’s specifications as issued by the engineering
engineering change order (ECO)
a business mandate that changes the way in which a product is manufactured or a
Equation of Exchange
The quantity theory equation Mv = PQ.
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices
Governmental restrictions on the purchase of foreign currencies by domestic citizens or
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The price of one country's currency expressed in another country's currency.
Amount of one currency needed to purchase one unit of another.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange Rate, Nominal
The price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar.
Exchange Rate, Real
The nominal exchange rate corrected for price level differences.
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Security that grants the security holder the right to exchange the security for the
expectations theory of exchange rates
Theory that expected spot exchange rate equals the forward rate.
The production of financial statements, primarily for those interested parties who are external to the business.
a discipline in which historical, monetary
A theory that nominal interest rates in two or more countries should be equal to the required real
A country's decision to tie the value of its currency to another country's currency, gold
Fixed Exchange Rate
An exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market.
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