Amounts owed to creditors for goods and services bought on credit; generally must be paid within 90 days.
Amounts due a business from customers for goods and services sold on credit; generally must be paid within 90 days.
Accrual method of accounting
Method of accounting that recognizes revenue when earned and expenses when incurred in order to appropriately match income with expenses in an accounting period.
The obligation to pay business expenses that were incurred, but not paid, during an accounting period.
A deduction from intangible assets to show the total amount of periodic charges to income over the estimated useful lives of those assets (aka Reserve for Amortization)
A deduction from fixed assets to show the total amount of periodic charges to income over the estimated useful lives of those assets. (aka Reserve for Depreciation)
Additional paid-in capital
The total excess of the sharefholers’ investment in the company over the par or stated value of its common and preferred stock. (aka paid-in capital)
American institute of certified public accountants (AICPA)
The major professional public accounting group that sets standards of practice for cert. public accountants.
Allowance for doubtful accountants
Amounts deducted from the total accounts receivable balance to recognize that some customers will not pay what they owe. (aka Provision for doubtful accounts, reserve for doubtful accounts, bad debt reserve)
Periodic charges to income to recognize the distribution of the cost of the company’s intangible assets over the estimated useful lives of those assets.
Antidilution (to earnings per common share)
An increase in earnings (or decrease in loss) per common share that assumes that convertible securities were converted, stock options and warrants were exercised or other shares were issued upon satisfaction of certain conditions. When antidilution occurs, the per share amount that it produces is not used as the reported per share amount.
Examination of potential common shares by order of most dilutive to least dilutive. If the security lowers earnings per share relative to the base earnings per share, calculate the earnings per share assuming the conversion of the security. Securities that are antidilutive are not included in the diluted earnings per share calculation.
Something owned by and having continuing value to its owner or a business.
Liabilities + shareholders equity = assets
Audit (of financial statements)
A systematic examination of a company’s financial statements to determine if the amounts and disclosures in the reports are fairly stated and follow generally accepted accounting principles.
Available for sale securities
Securities not classified as held-to-maturity or trading. They are carried at fair market value, with any changes in the value (less applicable taxes) reported in shareholders’ equity in the balance sheet. When sold, any gain or loss will be realized and reported in the income statement.
A report showing the financial position or condition of a business at a given date. Also called statement of financial position or statement of financial condition.
Basic earnings per common share
Income available to common shareholders for the period divided by the weighted-average number of common shares outstanding for the period.
Formal, secured or unsecured debt obligations specifying interest and repayment terms.
Book value per share
The adjusted shareholders equity for each class of stock divided by the number of shares of each such class.
The relationship that each security (debt or equity) bears to total debt and equity, less intangible assets, expressed as a ratio.
Cash and cash equivalents
Bank accounts and currency on hand, and short term highly liquid securities with a maturity under 90 days, such as U.S. treasury bills.
Cash flows, statement of
A report showing cash receipts and disbursements compiled and totaled by operating, investing and/or financing activities.
Certified public accountant (CPA)
Professional title granted to people who pass a comprehensive test on accounting, auditing and business law. CPA’s usually perform audits of a company’s financial statements.
Changes in shareholders’ equity, statement of
A report providing the details, by category, of all activity in all components of shareholders equity, for the period covered by the report.
Common dividend yield
Dividends paid on each share of common stock expressed as a percentage of the market price of those shares.
The par or stated value of the common stock (the basic ownership interest in a corporation) issued by a company as reported in its balance sheet.
Common stock ratio
The percentage that common stockholders’ equity reduced by intangible assets bears to total tangible capitalization (the sum of shareholders’ equity and long-term debt reduced by intangibles).
Contingently issuable shares
Shares of stock, the issuance of which depends on the occurrence of certain events.
A debt or equity security that may under certain circumstances be exchanged for or converted into another security, generally common stock.
Cost of sales/ cost of goods sold
The total cost to purchase and/or manufacture all the company’s products sold during a period.
Cash or other assets that’ll be converted into cash or consumed within the normal operating cycle, generally one year.
A liability that must be paid within the normal operating cycle, generally one year.
Current portion of long-term debt
The portion of long-term debt that’s due within one year of the balance sheet date.
The relationship of current assets to current liabilities, expressed as a ratio.
Formal, unsecured debt obligations (bonds or notes) that are backed only by the general credit of the issuer rather than certain of its assets.
The practice of adjusting the original cost of a debt instrument as principal payments are received and any purchase discount or premium is written off to income over the life of the instrument.
The ratio of total debt (liabilities) to total shareholders’ equity.
Expenditures for items that will benefit future periods beyond one year from the balance-sheet date.
Deferred income taxes
The obligation to pay income taxes in future years generally arising from transaction involving noncurrent assets and/or liabilities.
The process of recognizing by a charge against income, the reduction in the cost of a natural resource (minerals, oil, gas) due to its withdrawal and use or sale.
Periodic charges to income to recognize the cost of “wear and tear” of a company’s fixed assets over the estimated useful lives of those assets.
Diluted earnings per common share
The amount of current earnings or loss per share reflecting the maximum dilution (the negative impact) assuming the issuance of all potentially dilutive common shares.
The reduction in common earnings per share (increase in loss) if convertible securities are converted, stock options and warrants are exercised or other shares are issued.
Dividend payout percentage
Dividends per share divided by earnings per share, expressed as a percentage.
Payments, generally declared by the Board of Directors, from retained earnings to shareholders to compensate them for their investment.
Earnings per common share
Net income reduced by preferred dividends and divided by the average outstanding number of common shares during the accounting period.
Estimated useful life
The period of time over which the owner of an asset (physical or intangible) estimates that the asset will continue to be of productive use or have continuing value.
Non-operating items that are both unusual and occur infrequently.
Fair market value
The amount at which an item could be exchanged between willing unrelated parties, other than in a forced liquidation. It is usually the quoted market price when a market exists for the item.
Financial accounting standards
The independent, private sector organization designated to establish standards for financial accounting and reporting. Generally the body that issues GAAP (generally accepted accounting principles).
First in, fist out
An inventory-costing method that states inventory as its most current cost while charging the cost of sales in the order the inventory was accumulated.
Financial statement ratio
A mathematical relationship between two or more amounts reported in financial statements. Financial statement ratios can provide relative measures of, and insights into, the health, condition and performance of a company.
Another term for the property, plant, or equipment used in the operation of a business.
Additional details and disclosures about the figures and information contained in a company’s financial statements.
Foreign currency translation
The cumulative adjustment, reported in the Equity section of the balance sheet, resulting from the translation of a foreign subsidiary’s local currency financial statements into the currency of the parent company.
Generally accepted accounting principles
The rules and standards followed in recording transactions and in preparing financial statements.