Remeasurement
remeasurement - Uses a variety of exchange rates to convert assets and liabilities of a foreign affiliate to the reporting currency; adjustment may impact op...
2 min read
financial reporting
accounting fundamentals
Financial Reporting
Residual Income
residual income - An internal assessment technique that adjusts income for a presumed cost of capital (or other threshold rate of return); operating income -...
2 min read
financial reporting
cost accounting
+1
Restatement
restatement - The financial statements of prior periods are redone to reflect the correct amounts
2 min read
financial reporting
Retained Earnings
retained earnings - The excess of a corporation's income over its dividends
2 min read
financial reporting
Retrospective Adjustment
retrospective adjustment - Revision of the financial statements for prior periods to reflect the application of a current change in accounting method
2 min read
financial reporting
Return on Assets Ratio
return on assets ratio - A ratio comparing income (net income plus interest) to the average total assets
2 min read
financial reporting
accounting fundamentals
Return on Equity Ratio
return on equity ratio - A ratio comparing income (net income minus preferred dividends) to the average total equity
2 min read
financial reporting
accounting fundamentals
Return on Investment
return on investment - ROI: A model consisting of a margin component (Operating Income/Sales) and turnover component (Sales/Average Assets); reduces to Opera...
2 min read
financial reporting
accounting fundamentals
Segment
segment - A business unit for which separate financial information is evaluated by an operating decision maker who allocates resources and judges performance...
2 min read
financial reporting
Single-step Income Statement
single-step income statement - A simple income statement with a section for all revenues and another for all expenses; there is no direct association between...
2 min read
financial reporting
Statement of Cash Flows
statement of cash flows - A financial statement that summarizes the cash flows relating to operating, investing, financing, and noncash investing/financing a...
2 min read
financial reporting
Statement of Retained Earnings
statement of retained earnings - A financial statement that discloses changes in retained earnings during a designated period of time; those changes usually ...
2 min read
financial reporting
Statement of Stockholders' Equity
statement of stockholders' equity - A financial statement that is often presented in lieu of a statement of retained earnings and other disclosures about equ...
2 min read
financial reporting
accounting fundamentals
Target Income
target income - A level of income that is to be obtained; CVP projects activity levels necessary to achieve this benchmark
2 min read
financial reporting
Translation
translation - Uses prevailing exchange rates to convert assets and liabilities of a foreign affiliate to the reporting currency; adjustment may impact other ...
2 min read
financial reporting
accounting fundamentals
Variable Costing
variable costing - A costing method where inventory absorbs direct costs and variable factory overhead; the income statement identifies the contribution margin
2 min read
financial reporting
cost accounting
W-2
W-2 - An annual statement provided to employees stating the amount of earnings and withholdings; assists employee in preparing their own tax returns
2 min read
financial reporting
taxation
W-4
W-4 - A form filled out by an employee stating the amount of exemptions to which they are entitled for tax purposes; such exemptions bear on the amount of in...
2 min read
financial reporting
taxation
Multiple-step Income Statement
multiple-step income statement - A complex income statement with sections that segregate cost of goods sold calculations and other components of income and e...
2 min read
financial reporting
cost accounting
Net Income
net income - Income from continuing operations plus/minus discontinued operations, but before items of “other comprehensive income”
2 min read
financial reporting
Operating Activities
operating activities - A cash flow category; generally related to transactions that enter into the determination of income -- items that are not investing or...
2 min read
financial reporting
Other Assets
other assets - The category of a classified balance sheet for reporting assets that are not logically attached to one of the other specific sections
2 min read
financial reporting
accounting fundamentals
Other Comprehensive Income
other comprehensive income - An account for changes in value of available for sale securities; not part of net income but is included in the broader concept ...
2 min read
financial reporting
Post-closing Trial Balance
post-closing trial balance - Reveals the balance of accounts after the closing process, and consists of balance sheet accounts only
2 min read
financial reporting
Prior Period Adjustment
prior period adjustment - To correct errors from prior years; prior financial statements are retroactively changed to make them correct
2 min read
financial reporting
Pro Forma Financial Statements
pro forma financial statements - "As if" budgeted financial statements
2 min read
financial reporting
financial planning
Prospectus
prospectus - The documentation describing financial and business aspects of an initial public offering
2 min read
financial reporting
Direct Approach
direct approach - The preferred method for preparing the statement of cash flows; operating cash flows are presented according to their direct source (e.g., ...
2 min read
financial reporting
Discontinued Operations
discontinued operations - The special income statement reporting of the impact of disposing or abandoning of a component of a business
2 min read
financial reporting
Earnings
earnings - A concept that relates to income from continuing operations plus/minus discontinued operations
2 min read
financial reporting
Earnings per Share
Earnings per share - EPS; generally understood as the amount of income for each share of stock, but is actually better refined as basic and diluted EPS (see ...
2 min read
financial reporting
Financial Accounting Standards Board
Financial Accounting Standards Board - An organization charged with producing standards for financial reporting in the USA
2 min read
financial reporting
Financial Statements
financial statements - Core financial reports that are prepared to represent the financial position and results of operations of a company
2 min read
financial reporting
Full Disclosure Principle
full disclosure principle - All relevant facts that would influence investors' and creditors' judgments about the company are disclosed in the financial stat...
2 min read
financial reporting
General Ledger
general ledger - A record of the accounts comprising financial statements, and their respective balances
2 min read
financial reporting
Income Statement
income statement - A financial statement that summarizes the revenues, expenses, and results of operations for a specified period of time
2 min read
financial reporting
Income Summary
income summary - A non-financial statement account used only to facilitate the closing process by summarizing and zeroing-out the revenue and expense accounts
2 min read
financial reporting
Income Taxes
income taxes - Taxes that are based on the amount income; for employees such amounts must be withheld by employers and remitted to the government
2 min read
financial reporting
taxation
Indirect Approach
indirect approach - An alternative method for preparing the statement of cash flows; operating cash flows are presented as a reconciliation of income to cash...
2 min read
financial reporting
Intraperiod Tax Allocation
intraperiod tax allocation - Separately reported items like discontinued operations, prior period adjustments, and other comprehensive income, are to reporte...
2 min read
financial reporting
taxation
Issue Price
issue price - The amount a company receives in exchange for the initial issue of debt or other financial instrument
2 min read
financial reporting
Consolidation
consolidation - To prepare financial reports for a parent and subsidiary company as a single economic unit
2 min read
financial reporting
Current Operating Approach
current operating approach - A concept of income where income is limited to transactions related to central ongoing operations; not an acceptable approach fo...
2 min read
financial reporting
Cash Equivalents
cash equivalents - Short-term interest-earning financial instruments that are deemed to be highly secure and will convert back into cash within 90 days
2 min read
financial reporting
Certified Financial Manager
Certified Financial Manager - (CFM) a professional designation of competency in the field of financial management that is issued by the Institute of Manageme...
2 min read
financial reporting
Comprehensive Income
comprehensive income - Net income plus items of other comprehensive income (e.g., market value adjustments of available for sale securities)
2 min read
financial reporting
Conservatism
conservatism - A general principle of accounting measurement; when in doubt, understate assets and income and overstate liabilities
2 min read
financial reporting
accounting fundamentals
Accounting
accounting - A set of concepts and techniques that are used to measure and report financial information about an economic unit
2 min read
financial reporting
Accounting Cycle
accounting cycle - The procedures needed to process transactions through an accounting system; including journalization, posting, adjusting, and preparing fi...
2 min read
financial reporting
Accounting Equation
accounting equation - A financial relationship at the heart of the accounting model: Assets = Liabilities + Owners' Equity
2 min read
financial reporting
accounting fundamentals
Accounting Rate of Return
accounting rate of return - A project evaluation tool that focuses on accounting income rather than cash flows; average annual increase in income by the amou...
2 min read
financial reporting
Accounting Standards Update (ASU)
Accounting Standards Update (ASU) - The official notification issued by the Financial Accounting Standards Board of a new or modified accounting rule
2 min read
financial reporting
All-inclusive Approach
all-inclusive approach - A concept of income by which virtually all nonequity-based transactions and events are captured and reported in the income statement...
2 min read
financial reporting
accounting fundamentals
Auditing
auditing - The examination of transactions and systems that underlie an organization's financial statements with the goal or reporting thereon
2 min read
financial reporting
Available-for-sale Securities
available-for-sale securities - Investments in debt that are neither "held-to-maturity" or "trading;" a default category that is accounted for at fair value ...
2 min read
financial reporting
Balance Sheet
balance sheet - A financial statement that presents a firm's assets, liabilities, and owners' equity at a particular point in time
2 min read
financial reporting
accounting fundamentals
Balanced Scorecard
balanced scorecard - A set of performance measures that are congruent with assessing improvement in financial, customer, and business process outcomes
2 min read
financial reporting
Book Value
book value - Cost minus accumulated depreciation; the net amount at which an asset is reported on the balance sheet
2 min read
financial reporting
cost accounting
+1
Break-even Point
break-even point - The level of activity where revenues equal total expenses, producing a zero net income; also the point where the contribution margin is sa...
2 min read
financial reporting
cost accounting
Budget
budget - A planning tool that outlines the financial plans for an organization; there are various types of budgets -- operating, capital, and financial
2 min read
financial reporting
financial planning