• gross profit (or) gross margin

    This is the remainder after subtracting the cost of goods sold from net sales.

    gross profit (or) gross margin

    This is the remainder after subtracting the cost of goods sold from net sales.

  • current assets

    This is defined as a company’s cash and other resources that are expected to turn to cash within one year of the balance sheet date (or within the operating cycle if the operating cycle is longer than one year).

    current assets

    This is defined as a company’s cash and other resources that are expected to turn to cash within one year of the balance sheet date (or within the operating cycle if the operating cycle is longer than one year).

  • book value (or) carrying value

    This amount is an asset’s cost minus its accumulated depreciation. It is also the face value of bonds minus its unamortized discount (or plus its unamortized premium). It is also the amount of a corporation’s stockholders’ equity.

    book value (or) carrying value

    This amount is an asset’s cost minus its accumulated depreciation. It is also the face value of bonds minus its unamortized discount (or plus its unamortized premium). It is also the amount of a corporation’s stockholders’ equity.

  • earnings per share (or) EPS

    This amount is required to appear on the income statement of a publicly traded corporation. It uses the weighted average number of shares of common stock outstanding.

    earnings per share (or) EPS

    This amount is required to appear on the income statement of a publicly traded corporation. It uses the weighted average number of shares of common stock outstanding.

  • chart of accounts

    This listing of the general ledger accounts does not include the account balances or other amounts.

    chart of accounts

    This listing of the general ledger accounts does not include the account balances or other amounts.

  • cash flow statement (or) statement of cash flows

    This financial statement reports the major changes in a corporation’s cash and cash equivalents. Amounts are grouped according to operating, investing, and financing activities.

    cash flow statement (or) statement of cash flows

    This financial statement reports the major changes in a corporation’s cash and cash equivalents. Amounts are grouped according to operating, investing, and financing activities.

  • double-entry accounting (or) double-entry bookkeeping

    Under this system every transaction will result in an amount recorded in at least two general ledger accounts. It also requires that the amounts recorded as debits must be equal to the amounts recorded as credits.

    double-entry accounting (or) double-entry bookkeeping

    Under this system every transaction will result in an amount recorded in at least two general ledger accounts. It also requires that the amounts recorded as debits must be equal to the amounts recorded as credits.

  • credit

    This term indicates the right side of a general ledger account. It is also the normal balance for liability, stockholders’ equity, revenue, and gain accounts.

    credit

    This term indicates the right side of a general ledger account. It is also the normal balance for liability, stockholders’ equity, revenue, and gain accounts.

  • debit

    This term indicates the left side of a general ledger account. It is also the normal balance for asset, expense, and loss accounts.

    debit

    This term indicates the left side of a general ledger account. It is also the normal balance for asset, expense, and loss accounts.

  • accounting equation (or) bookkeeping equation

    This algebraic expression is assets = liabilities + owner’s (or stockholders’) equity. It should remain in balance under the double-entry system.

    accounting equation (or) bookkeeping equation

    This algebraic expression is assets = liabilities + owner’s (or stockholders’) equity. It should remain in balance under the double-entry system.

  • stockholders' equity (or) shareholders' equity

    The total amount for this section of a corporation’s balance sheet is the amount of assets minus liabilities. It reports the corporation’s paid-in capital, retained earnings, and any deduction for treasury stock. It is also the total amount of the corporation’s book value.

    stockholders' equity (or) shareholders' equity

    The total amount for this section of a corporation’s balance sheet is the amount of assets minus liabilities. It reports the corporation’s paid-in capital, retained earnings, and any deduction for treasury stock. It is also the total amount of the corporation’s book value.

  • liabilities

    These are the obligations of a company and are one of the main elements of the balance sheet and accounting equation. Deferred revenues are one of these.

    liabilities

    These are the obligations of a company and are one of the main elements of the balance sheet and accounting equation. Deferred revenues are one of these.

  • assets

    These are a company’s resources that have future economic value which can be measured in the company’s currency. Prepaid expenses are one of these.

    assets

    These are a company’s resources that have future economic value which can be measured in the company’s currency. Prepaid expenses are one of these.

  • expenses

    Under the accrual method, these costs are reported on the income statement when they have been used up in the process of earning revenues.

    expenses

    Under the accrual method, these costs are reported on the income statement when they have been used up in the process of earning revenues.

  • revenues

    Under the accrual method, these are reported on the income statement when they are earned. Sales and fees earned are examples.

    revenues

    Under the accrual method, these are reported on the income statement when they are earned. Sales and fees earned are examples.

  • cost principle (or) historical cost principle

    This basic underlying principle requires a transaction to be recorded at its cash value at the time of the transaction. It also prevents reporting the increases in the market value of property.

    cost principle (or) historical cost principle

    This basic underlying principle requires a transaction to be recorded at its cash value at the time of the transaction. It also prevents reporting the increases in the market value of property.

  • income statement (or) statement of earnings (or) statement of operations

    This financial statement reports a corporation’s profitability for a specified period of time. It reports revenues, expenses, gains, losses, and the resulting net income. Also referred to as the P&L.

    income statement (or) statement of earnings (or) statement of operations

    This financial statement reports a corporation’s profitability for a specified period of time. It reports revenues, expenses, gains, losses, and the resulting net income. Also referred to as the P&L.

  • land

    This asset is part of property, plant and equipment but it is not depreciated.

    land

    This asset is part of property, plant and equipment but it is not depreciated.

  • balance sheet (or) statement of financial position

    This financial statement reports a company’s financial position as of a moment of time. It reports the assets, liabilities and stockholders’ (or owner’s) equity.

    balance sheet (or) statement of financial position

    This financial statement reports a company’s financial position as of a moment of time. It reports the assets, liabilities and stockholders’ (or owner’s) equity.

  • depreciation

    This is the allocation of a plant asset’s cost to expense over the asset’s useful life. The purpose is to match the asset’s cost to the years that benefit from its use.

    depreciation

    This is the allocation of a plant asset’s cost to expense over the asset’s useful life. The purpose is to match the asset’s cost to the years that benefit from its use.

  • accrual method of accounting (or) accrual basis of accounting

    This method reports revenues when they are earned (as opposed to when the cash is received) and reports expenses when they occur (as opposed to when they are paid).

    accrual method of accounting (or) accrual basis of accounting

    This method reports revenues when they are earned (as opposed to when the cash is received) and reports expenses when they occur (as opposed to when they are paid).

  • cash method of accounting (or) cash basis of accounting

    This method reports revenues when cash is received (as opposed to when the revenues are earned) and reports expenses when they are paid (as opposed to when they occur).

    cash method of accounting (or) cash basis of accounting

    This method reports revenues when cash is received (as opposed to when the revenues are earned) and reports expenses when they are paid (as opposed to when they occur).

  • SG&A (or) selling, general and administrative

    These are a company’s operating expenses other than the cost of goods sold. They are also period costs (as opposed to product costs).

    SG&A (or) selling, general and administrative

    These are a company’s operating expenses other than the cost of goods sold. They are also period costs (as opposed to product costs).

  • matching principle

    This basic underlying accounting principle requires that some expenses and liabilities be accrued or deferred.

    matching principle

    This basic underlying accounting principle requires that some expenses and liabilities be accrued or deferred.

  • inventory

    This current asset is the cost of a merchant’s or manufacturer’s goods held for sale.

    inventory

    This current asset is the cost of a merchant’s or manufacturer’s goods held for sale.

  • notes to the financial statements

    These are an integral part of the financial statements and are required by the full disclosure principle. They include the company’s significant accounting policies.

    notes to the financial statements

    These are an integral part of the financial statements and are required by the full disclosure principle. They include the company’s significant accounting policies.

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