Glossary

 

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ABSORPTION COSTING: Determining costs by adding all direct material, labor costs and a portion of overhead.

ACCELERATED DEPRECIATION: A method of calculating depreciation with larger amounts in the first year(s).

ACCOUNT: A record of all changes pertaining to a given asset, liability, owner's equity, revenue or expense.

ACCOUNTING: A system of measurement and reporting of economic events for the purpose of decision making.

ACCOUNTING CYCLE: The sequence of steps in preparing the financial statements for a given period. ACCOUNTING EQUATION: Assets = Liabilities + Owner's Equity

ACCOUNTS PAYABLE: Liabilities resulting from a purchases on credit.
ACCOUNTS RECEIVABLE: Assets representing claims against customers for sales on credit.
ACCOUNTS RECEIVABLE TURNOVER: The number of times average accounts receivables go into net sales.
ACCRUAL: The recognition of a revenue or expense as it occurs and irrespective of when the cash payment takes place.
ACCRUAL BASIS: An accounting method using accruals.
ACCRUED EXPENSE: The accumulated recognized expenses as they have incurred in a given period.
ACCRUED REVENUE: The accumulated revenue as they have been recognized over a given period.
ACCUMULATED DEPRECIATION: The sum of all annual depreciation amounts pertaining to an asset to date.
ACID-TEST RATIO: Cash, accounts receivables and marketable securities divided by current liabilities.
ADEQUATE DISCLOSURE: Sufficient information in footnotes, as well as financial statements, indicative of a firm's financial status.
ADJUSTING ENTRY: End of year entries to assign all items of revenue and expense to the proper period and account.
AGING OF RECEIVABLES: Grouping outstanding balances by length of time outstanding in order to determine potential bad debt.
AICPA: American Institute of Certified Public Accountants: the national organization of U.S. CPA's.
ALLOWANCE FOR DOUBTFUL ACCOUNTS: A reserve for potential bad debt.
AMORTIZATION: An expense representing the decrease in value of an intangible or the time allocation of a bond premium.
ANNUITY: A series of periodic equal amounts.
APPROPRIATION OF RETAINED EARNINGS: Restriction of a portion of retained earning for a specific purpose.
ARTICLES OF PARTNERSHIP: The contract creating a partnership.
ASSET: Property owned by a firm.
AUDITING: Examination of accounts and financial statements by outside accountant.
AUTHORIZATION OF STOCK: A provision in a corporate charter giving permission to issue stock.
AVERAGE COST METHOD: Using a weighted average cost for items in inventory rather than actual cost for each specific item.

 

BAD DEBT EXPENSE: Recognition of uncollectible receivables.
BALANCE SHEET: Financial statement reporting the assets, liabilities and owner's equity of a firm.
BANK COLLECTION: Collection of a check by the bank on behalf of a depositor.
BANK RECONCILIATION: Method of reconciling the balance in the ledger with the balance on the bank statement by explaining the difference.
BANK STATEMENT: Statement reporting all transactions in the checking account.
BOND: A commonly used form of long term debt.
BOND DISCOUNT: Excess of a bond face value over issued price.
BOND INDENTURE: Title specifying all the obligations of the issuing company to the bondholder.
BOND PREMIUM: Excess of the issue price over the face value of the bond.
BOND SINKING FUND: Provision to repay a bond.
BONUS: Remuneration over and above regular salary.
BOOKKEEPING: Recording of business transactions.
BOOK VALUE: Initial cost less accumulation depreciation.
BREAK-EVEN POINT: Sales volume at which revenues equal expenses.
BUDGET: Statement of planned expenditures and performance.
BUDGET PERFORMANCE REPORT: Comparison of planned budget and actual performance.
BYLAWS: Provisions of corporate policies.
BY-PRODUCT: Joint product with main activity, usually of lesser value.

 

CALLABLE BOND: A bond the issuer has the right to pay off at issuer's discretion.
CAPITAL: Equity of owner(s).
CAPITAL BUDGETING: Process of planning, selection and appropriation of major new capital expenditures.
CAPITAL EXPENDITURE BUDGET: A statement of the planned purchases of property, plant and equipment.
CAPITAL GAIN: The excess of selling price over purchase price, which may be
given special treatment for tax purposes provided the sale takes place more than a given number of months after purchase.
CAPITAL LEASE: A lease which has clauses such that the property is treated as if it had been purchased by the lessee.
CAPITAL LOSS: The excess of purchase price over selling price when the assets have been held for more than a certain period of time and which is given a special treatment for tax purposes.
CAPITAL RATIONING: Restrictions put of the amount planned for new expenditures.
CAPITAL STOCK: Share of ownership of a corporation.
CASH: Any form of payment unconditionally accepted.
CASH-BASIS ACCOUNTING: A method of accounting in which transactions are recorded only if they are evidenced by a cash payment.
CASH DISCOUNT: Deduction allowed on invoice amount if paid within a specified number of days.
CASH DISBURSEMENTS/PAYMENTS JOURNAL: Journal recording all disbursements (or payments).
CASH DIVIDEND: Payment of earnings to shareholders.
CASHFLOW: Revenues and disbursements as they affect cash rather than when they are recorded.
CASH RECEIPTS JOURNAL: Journal for recording all cash receipts.
CERTIFIED PUBLIC ACCOUNTANT: Accountant licensed to practice public accounting.
CHAIRPERSON OF THE BOARD: Head of the board of directors of a corporation, and generally considered as head of the firm.
CHART OF ACCOUNTS: List of accounts with their numbers.
CHARTER: Document of corporation organization.
CHECK: Document instructing bank to pay to designated payee from the account of the account holder.
CHECK REGISTER: Journal for recording payments by check.
CLOSING ENTRIES: Entries to close temporary accounts (revenue and expenses) to capital accounts.
CLOSING ACCOUNT: Determining the balance of an account and posting an entry to offset such balance.
COMMISSION: Remuneration proportional to sales volume.
COMMON-SIZE STATEMENT: Statement (balance sheet or income statement) where each item is a percentage of the total.
COMMON STOCK: Ordinary form of corporate shares.
COMPLETED-CONTRACT METHOD: Method of recording revenue only at the completion of a project.
CONSERVATISM: Effort to avoid inspiring overly optimistic expectations.
CONSIGNMENT: Possession of property on someone's behalf for the purpose of selling it.
CONSISTENCY: Effort to keep same procedures and presentation in financial statements.
CONSOLIDATED STATEMENT: Financial statement combining several affiliated firms in one single statement.
CONSTANT DOLLAR: Dollar amount adjusted for inflation.
CONSTRAINT: Limiting factor to business activity.
CONTINGENT LIABILITY: Liability subject to some future event.
CONTINUOUS BUDGETING: Budgeting method adding periodically a new month or quarter to an annual budget.
CONTRA ACCOUNT: Account offsetting another account.
CONTRACT RATE OF INTEREST: The interest rate specified in a contract.
CONTRIBUTION MARGIN: Excess of sales revenue over variable cost.
CONTROL: Process of directing operations to achieve a goal.
CONTROL ACCOUNT: Account grouping related account balances in a subsidiary ledger.
CONVERTIBLE BONDS: Bond which can be converted into shares at the option of the bondholder.
CONVERTIBLE PREFERRED STOCK: Preferred stock which can be converted into common stock at the option of the holder of the preferred stock.
COPYRIGHT: Legal protection to exploit works of art or written material.
CORPORATION: Form of business organization owned by shareholders and created by a state as a person separate from the owners.
COST ACCOUNTING: Branch of accounting dealing with determination of costs.
COST ALLOCATION: Assigning general and administrative costs to separate departments.
COST CENTER: Department which costs are under the responsibility of an appointed manager.
COST OF GOODS SOLD: The portion of the inventory cost corresponding to the goods sold during the period.
COST PRINCIPLE: Recording property and services on the basis of original cost.
COUPON BONDS: Bonds with interest payment obligation evidenced by a separate title called coupon.
CREDIT: Entry on right side of account.
CREDIT MEMORANDUM: Document informing debtor that the account receivable was credited.
CREDITOR: Holder of a claim against firm.
CUMULATIVE PREFERRED STOCK: Preferred stock which gives holder a right to dividends if they have not been paid in a given year.
CURRENT ASSET: Assets which would normally be consumed within a year.
CURRENT COST: Cost which would be incurred for replacement of an asset .
CURRENT LIABILITY: Debt due within a year.
CURRENT RATIO: Current assets divided by current liabilities.

 

DATE OF RECORD: Date which determines which shareholders receive dividends.
DAYS SALES OUTSTANDING: Ratio calculated as sales divided by accounts receivables.
DEBIT: Entry on left side of an account.
DEBENTURE: Unsecured bond.
DEBTOR: Party against who one has a claim.
DEBIT MEMORANDUM: Document stating that a buyer no longer owes a given amount.
DECLINING-BALANCE DEPRECIATION: Accelerated depreciation calculated at twice the rate of straight-line depreciation. (Also double-declining-balance).
DEFAULT: Failure to make a payment are required.
DEFERRAL: Postponement of recognition of revenue or expense.
DEFICIT: A negative balance.
DEPLETION: Portion of natural resources used during period.
DEPOSIT IN TRANSIT: Bank account deposit not yet posted by the bank.
DEPRECIATION: Spreading cost over useful file to reflect usage and decrease in
value.
DIRECT EXPENSE: Expense which can be assigned to a specific department or
product.
DIRECT LABOR: Salary and wages of employees who convert materials in finished goods.
DIRECT MATERIAL: Material which can be assigned to a single product or process.
DIRECT WRITE-OFF METHOD: Method of recognition of uncollectible accounts only when known to be such.
DISCLOSURE PRINCIPLE: Requirement to provide sufficient information for decision
making by an average reader.
DISCOUNT: Decrease in value (often due to interest to be earned).
DISCOUNT RATE: Interest rate used to calculate present value.
DISCOUNTED CASH FLOW METHOD: Budgeting method for project evaluation and selection.
DISCOUNTING: Selling accounts receivable to bank.
DISHONORED NOTE: Note on which debtor has defaulted.
DISSOLUTION: Termination of a business organization.
DIVIDEND: Portion of earnings paid to shareholders.
DOUBLE-DECLINING-BALANCE DEPRECIATION: See declining-balance depreciation.
DRAWING ACCOUNT: Account of sole proprietor.

 

EARNINGS PER SHARE: Profits divided by number of shares outstanding.
ECONOMIC ORDER QUANTITY: Optimum quantity to be ordered given ordering cost, inventory cost and usage rate.
EFFECTIVE DATE OF INTEREST: Market rate at time of a debt issue.
ELECTRONIC FUNDS TRANSFER: Payment executed through computers.
ENCUMBRANCE: Restriction put on the use of funds.
ENDING INVENTORY: Inventory at the end of fiscal period.
ENTITY: The totality of a business organization.
EQUITY: Right to the assets of the firm.
EQUITY METHOD: Recording investments with adjustment for a share of profits
earned.
EQUIVALENT UNITS OF PRODUCTION: Number of units which could have been produced during period.
EXCHANGE RATE: Rate at which one currency is exchanged for another.
EXPENSE: Amount of assets or services used during a period.
EXTRAORDINARY ITEM: Unusual and infrequent event or transaction.

 

FACTORY OVERHEAD: Costs of operating a factory which cannot be assigned to a
specific department or product.
FICA TAX: Federal Insurance (i.e. Social Security) contributions.
FIFO: Inventory costing method which assumes items in inventory received first are also those which are used first.
FINANCIAL ACCOUNTING: Branch of accounting aimed at the preparation of financial
statement used by outsiders.
FINANCIAL ACCOUNTING STANDARDS BOARD: FASB: Professional organization which develops accounting principles.
FINISHED GOODS: Portion of goods in inventory which are available for sale.
FIXED COST: Costs which do not vary with the volume of production.
FLEXIBLE BUDGET: Budget which has more than one level of activity.
FOB: Free-on-board: specifies at what point freight and merchandise are the responsibility of the buyer.
FUND: Amount of monetary property.
FRANCHISE: Arrangement giving right to sell a product or service.

 

GENERAL EXPENSE: Expanse not connected with any department.
GENERAL JOURNAL: Record of entries which do not belong to any specific journal.
GENERAL LEDGER: Record of all account entries.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES: Principles used by public accountants in financial statements preparation.
GOING-CONCERN: Proposition that the firm will continue to operate.
GOODWILL: Excess of price over assets of acquire company representing expected additional revenues from clients.
GROSS INCOME: Total income less exclusions reported for tax purposes.
GROSS MARGIN: Revenue minus cost of goods sold, divided by revenue.
GROSS PAY: Employee salary before tax and other deductions.
GROSS PROFIT: Revenue minus cost of goods sold.
GROSS PROFIT METHOD: Inventory estimate based on gross margin.

 

HORIZONTAL ANALYSIS: Analysis of changes in financial statements item by item.

 

INCOME FROM OPERATIONS: Gross profit minus operating expenses.
INCOME STATEMENT: List of all revenue and expenses determining net results from
operations.
INCOME SUMMARY ACCOUNT: Account used in closing of accounts to summarize revenues and expense.
INCOME TAX: Tax calculated as a proportion of income.
INCORPORATION: Process of forming a corporation.
INDIRECT EXPENSE: Expense which is not controlled by or assigned to a department.
INFLATION: General increase in prices.
INFORMATION SYSTEM DESIGN: Determination of records needed to adequately handle all transactions of a firm.
INSTALLMENT METHOD: Method of periodical recognition of revenue tied to collections.
INTANGIBLE ASSET: Assets without physical qualities such as patents, trademarks,
copyrights and goodwill.
INTEREST: Periodic payment for the usage of borrowed funds.
INTERIM STATEMENT: Financial statement issued other than at the end of a period.
INTERNAL CONTROLS: Procedures to safeguard assets and avoid fraudulent employee
actions.
INTERNAL REVENUE SERVICE: Tax collecting agency of the federal government.
INVENTORY COST: Cost associated with the carrying of goods in inventory.
INVENTORY REORDER POINT: Level of inventory at which a new order must be placed.
INVENTORY TURNOVER: Cost of goods sold divided by average inventory.
INVESTMENT: Long tern commitment of assets for the purpose of deriving income.
INVOICE: Statement given to buyer which specifies the terms of the sale.
ITEMIZED DEDUCTION: Deductions from income subject to income taxes, which are
subdivided by type.

 

JOB COST RECORD: Record of all costs associated with specific job.
JOB ORDER COST METHOD: Method of assigning costs.
JOINT COST: Cost associated with two or more products.
JOINT PRODUCT: Product manufactured in conjunction with another product.
JOURNAL: Chronological record of transactions.

 

LAST-IN FIRST-OUT: Inventory costing method which assumes that items received most recently are those which are used first.
LEAD TIME: Time necessary for receipt of ordered merchandise.
LEASE: Contract allowing lessee to use property owned by lessor.
LEDGER: Group of accounts.
LESSEE: User of leased property.
LESSOR: Owner of leased property.
LEVERAGE: Ability to borrow in order to increase assets and profits.
LIABILITY: Debt of the firm.
LIMITED LIABILITY: Liability of owner of a firm, which does not exceed the monetary contribution made to the firm.
LIQUIDATION: Distribution of assets when a business ceases to operate.
LIQUIDITY: Readily accepted assets, cash in particular.
LONG-TERM INVESTMENT: Investment commitment of more than one year.
LONG-TERM LIABILITY: Debt obligation maturing in more than one year.
LOSS: Decrease in wealth of owners.
LOWER-OF-COST-OR-MARKET: Method of inventory costing with adjustment for decrease in inventory value.

 

MAJORITY INTEREST: Rights of the controlling owners.
MAKER OF NOTE: One who promises to pay.
MANAGERIAL ACCOUNTING: Branch of accounting intended to provide information for
managerial decision.
MARGIN: Excess of revenue over cost.
MARKET VALUE: Currently prevailing price in recent transactions.
MARKETABLE SECURITY: Securities readily resold and not held for long term investment.
MASTER BUDGET: Comprehensive budget which includes sales, operating, capital
expenditure and financing budgets.
MATCHING PRINCIPLE: Process of associating revenue with corresponding costs.
MATERIALITY: Principle of ignoring insignificant events and transactions.
MATERIALS: Goods used in manufacturing products.
MATERIALS REQUISITION: Record of an order for materials
MATURITY VALUE: Future value of a debt at the maturity date
MERGER: Combination of two or more entities into one business organization.
MINORITY INTEREST: Rights of non-controlling owners.
MIXED COST: Cost assignable to several products.
MONETARY ASSET/LIABILITY: Asset or liability which is stated in a fixed $amount.
MORTGAGE: Collateral asset pledged in connection with a debt.
MULTIPLE-STEP INCOME STATEMENT: Income statement made of several sections.

 

NET INCOME: Revenue minus all expenses (including interest and taxes).
NET LOSS: Excess of total expenses over revenue.
NET PAY: Salary minus all deductions.
NET PRESENT VALUE: Sum of discounted cash flows expected in future from project
minus outlays.
NET PROFIT: Same as net income.
NET PURCHASES: Purchases minus discounts, returns and allowances.
NET REALIZABLE VALUE: Selling price minus costs of selling.
NET SALES: Sales minus discounts, returns and allowances.
NET WORTH: Total assets minus liabilities, also equal to owner's equity.
NOMINAL ACCOUNT: Revenue or expense account closed at the end of the period.
NOTES PAYABLE: Debts of firm evidenced by promissory notes.
NOTES RECEIVABLE: Claims against clients evidenced by promissory notes.

 

OBJECTIVITY PRINCIPLE: Requirement to provide information only base on
facts.
OFF-BALANCE-SHEET: Assets or liabilities of the firm not appearing on the balance sheet.
OPERATING BUDGET: Planned revenues and expenses.
OPERATING EXPENSES: Expense related to the major operation of the firm, but not
assignable to any specific product.
OPERATING INCOME: Revenue less expenses associated with major line of business.
OPERATING LEASE: Contract to use lessor's property for a fee, usually short-term
and cancellable.
OPPORTUNITY COST: Foregone potential income or alternative cost.
ORGANIZATION COST: Cost related to the formation of the business.
OTHER EXPENSE: Expense not associated with normal operations.
OTHER INCOME: Income not associated with normal operations.
OUTSTANDING CHECK: Check not yet collected by bank nor shown as such in bank
statement.
OUTSTANDING STOCK: Authorized issued shares of stock nor repurchased by corporation.
OVERAPPLIED OVERHEAD: Excess of applied overhead over actual overhead in a standard cost system.
OWNER'S EQUITY: Owner's right to the assets of the firm. (Net worth).

 

PAID-IN CAPITAL: Total amount of capital contributed by owners.
PAR VALUE: Face value indicated on a share of stock.
PARENT COMPANY: Firm which owns most of the stock of another firm.
PARTICIPATING PREFERRED STOCK: Preferred stock giving right to additional dividends when profits are high (over and above normal fixed preferred stock dividends).
PARTNERSHIP: Form of business organization which is owned and managed by two
or more persons.
PATENT: Government granted exclusive right to exploit an invention.
PAYBACK METHOD: Method of selecting projects based on the time it takes to cover
the initial outlay with future cash flows.
PAYEE OF NOTE: One who will receive the payment.
PAYROLL: Total salaries paid by firm.
PAYROLL REGISTER: Record of all employee compensations and deductions.
PERCENTAGE-OF-COMPLETION METHOD: Method of recognition of revenue from a project based on actual performance.
PERIOD COST: General operating cost not assigned to specific products.
PERIODIC INVENTORY SYSTEM: Inventory system requiring a physical inventory to be taken at the end of each period.
PERMANENT ACCOUNTS: Balance sheet accounts, not closed at the end of a year.
PERPETUAL INVENTORY SYSTEM: Inventory system which maintains up-to-date quantities on hand at all times.
PETTY CASH: Small amounts of cash for minor purchases.
PHYSICAL INVENTORY: Counting all the merchandise on hand at a given date.
PLANNING: Determining and setting goals for future operation.
PLANT ASSET: Major permanent assets of the firms such as buildings.
POINT OF SALE METHOD: Recognizing revenue when buyer takes title to property.
POOLING OF INTEREST: Form of merger where the merging companies are of comparable size.
POSTCLOSING TRIAL BALANCE: Trial balance prepared after all temporary accounts have been closed.
POSTING: Transfer of debits and credits from journals to accounts.
PREEMPTIVE RIGHT: Shareholder's right to new issues (ahead of any outsider) to
maintain fractional ownership of corporation.
PREFERRED STOCK: Stock given preferential rights consisting usually of fixed
dividends and prior claim in liquidation.
PREMIUM: Excess of price paid or received over face value.
PREPAID EXPENSE: Payments for assets or services which will normally be used up in the coming period.
PRESENT VALUE: Today's equivalent worth of an amount received in the future.
PRESIDENT: Chief officer responsible for day-to-day operations of a
corporation.
PRICE-EARNING RATIO: Market value of stock divided by earnings per share.
PRINCIPAL AMOUNT: The sum borrowed or loaned.
PRIOR PERIOD ADJUSTMENT: Correction of material error pertaining to prior year(s) not affecting current year income or loss.
PROCESS COST SYSTEM: Cost method accumulating costs associated with specific project.
PRO FORMA STATEMENT: Financial statements presenting forecasted future operations.
PROFIT: Excess of revenue over expenses.
PROFIT CENTER: Department which has autonomous responsibility for revenue and
expenses.
PROFIT MARGIN: Profit divided by revenue.
PROMISSORY NOTE: Written contract stating debtor's obligation to pay.
PROPRIETORSHIP: Form of business organization with a single owner.
PUBLIC ACCOUNTANT: Accountant who renders services for a fees, who is not employed by any firm, and who expresses an opinion on the financial
statements of businesses.
PURCHASE DISCOUNT: Reduction in invoiced amount to encourage prompt payment.
PURCHASES JOURNAL: Record of all acquisitions.
PURCHASES RETURNS AND ALLOWANCES: Reduction in purchases due to returned or defective merchandise.

 

QUICK RATIO: Cash, accounts receivable plus inventory, divided by current
liabilities.

 

RATE OF RETURN: Net earnings divided by assets or investment associated with
earnings.
REAL ACCOUNT: Permanent or balance sheet account.
REALIZE: To sell an asset and derive funds from the sale.
RECEIVABLE: Claim usually resulting from a sale.
RECEIVING REPORT: Record of merchandise which has been processed by the receiving department.
REDEMPTION VALUE: Amount which the holder of a bond or stock is entitled to
receive from the issuer.
REGISTERED BOND/STOCK: Bond or stock whose owner's name must appear in a register.
RELIABILITY PRINCIPLE: Requirement that data presented in financial statements in free of errors or distortions, and can be traced to transactions.
REPORT FORM OF BALANCE SHEET: Balance sheet where assets are on the top and liabilities on the bottom.
RESIDUAL: Remaining assets after all creditors have been satisfied.
RETAIL INVENTORY METHOD: Inventory costing estimate base on retail price of goods less average mark-up.
RETAINED EARNINGS: Accumulated net income from prior periods.
RETAINED EARNINGS STATEMENT: Summary of adjustments to retained earnings account in light of the current period results of operations.
RETURN ON ASSETS: Net income divided by total assets.
RETURN ON EQUITY: Net income divided by owner's equity.
REVENUE: Increase in assets of firm resulting from sales or services
rendered to customers.
REVENUE EXPENDITURE: Expenditure intended to permit current year operations.
REVERSING ENTRY: Entry in the opposite direction of a closing entry performed at
the beginning of a new period.

 

SAFETY STOCK: Minimum amount of inventory needed for normal operations.
SALES DISCOUNT: Reduction in invoiced amount to encourage early payment by
customers.
SALES JOURNAL: Record of all transactions related to sales.
SALES MIX: Composition of sales in terms of various products sold.
SALES RETURNS AND ALLOWANCES: Reduction in sales revenue due to returned or defective merchandise.
SALES REVENUE: Revenue derived from normal sales of the firm.
SALVAGE VALUE: Least amount which can be expected from the disposal of an asset.
SECURITY AND EXCHANGE COMMISSION: Agency overseeing issuance and transfer of corporate shares.
SELLING EXPENSE: Expense incurred specifically in connection with selling.
SERVICE CHARGE: Bank fees for check collections and deposits.
SINKING FUND: Assets set aside to pay off a bond.
SHAREHOLDER: Fractional owner of a corporation.
SHORTAGE: Missing or stolen merchandise.
SLIDE: Error in recording a number consisting in moving digits one space
over to right of left.
SOCIAL SECURITY CONTRIBUTIONS: Deductions from employee compensation.
SOLVENCY: Ability not to default on any obligation.
SOLE PROPRIETORSHIP: Form of business organization with a single owner.
SPECIFIC COST METHOD: Inventory costing method in which each cost is assigned to a product in inventory.
STANDARD COST: Product cost calculated on the basis of a given normal volume of operations allowing allocation of overhead expense.
STATEMENT OF CASH FLOWS: Statement of cash receipts and disbursements according to nature of purpose.
STATEMENT OF CHANGES IN FINANCIAL POSITION: Statement showing increases and decreases of each balance sheet item.
STATEMENT OF OWNER'S EQUITY: Summary of changes in owner's equity account.
STOCK: Capital invested by owners. Also title to such capital.
STOCK DIVIDEND: Distribution of shares of stock to current shareholder when the proportion is less than 1 for 5.
STOCK SPLIT: Distribution of shares of stock to shareholders in excess of 1 for 5.
STRAIGHT-LINE DEPRECIATION: Allocation of the cost of an asset with equal amount over the useful life of the asset.
SUBSIDIARY COMPANY: Company in which another company has a controlling interest.
SUBSIDIARY LEDGER: Group of common accounts.
SUM-OF-YEARS-DIGITS DEPRECIATION: Allocation of the cost of an asset with amounts declining over the useful file.
SUNK COST: Cost which has no bearing on future decisions.

 

T ACCOUNT: Account presented in the form of a T, used for pedagogical purpose.
TAX AVOIDANCE: Attempt to reduce tax liability by use of provision of the law.
TAX CREDIT: Reduction in tax liability dollar for dollar.
TAX-DEFERRED COMPENSATION: Employee compensation not taxable until some future date, such as retirement.
TAX EVASION: Attempt to reduce tax liability by use of illegal means.
TAX RETURN: Form filed with payment of tax and showing computation.
TAX-SHELTER: Arrangement permitting tax avoidance or tax deferments.
TAXABLE INCOME: Income subject to tax, to which the tax rate is applied.
TEMPORARY ACCOUNT: Revenue and expense accounts which are closed each period.
TIMES-INTEREST-EARNED RATIO: Earnings before interest and taxes divided by interest expense.
TRADE DISCOUNT: Reduction in price based on quantity.
TRADEMARKS: Exclusive right to a word or representation identifying a product
or a company.
TREASURY STOCK: Stock of the corporation which has been repurchased.
TRIAL BALANCE: Summary listing of all account balances.

 

UNCOLLECTIBLE ACCOUNT EXPENSE: Expense recording portion of claims against customers which are uncollectible.
UNDERAPPLIED FACTORY OVERHEAD: Excess of actual factory overhead over allocated factory overhead in a standard cost system.
UNDERWRITING: Selling newly issued stock with a guarantee that the stock will
be sold.
UNEARNED REVENUE: Revenue received in advance of performance by the firm.
UNIT-OF-PRODUCTION DEPRECIATION: Allocation of cost of an asset based on usage.

 

VARIABLE COST: Cost which changes with the volume of production.
VARIANCE: Difference between actual and standard (or budgeted) costs.
VERTICAL ANALYSIS: Analysis of a statement relating each item to the total.
VOUCHER: Document authorizing disbursement.
VOUCHER REGISTER: Record of all issued vouchers.
VOUCHER SYSTEM: Method of control of disbursements with use of vouchers.

 

WORK-IN-PROCESS INVENTORY: Cost of goods being manufactured.
WORKING CAPITAL: Current assets minus current liabilities.
WORK SHEET: Working papers used to prepare financial statements.