Accounting Terminology Master’s in Accounting at DePaul

An alternative to formal litigation which includes techniques such as arbitration, mediation, and a non-binding summary jury trial. Amounts paid for stock in excess of its PAR VALUE or STATED VALUE. Also, other amounts paid by stockholders and charged to EQUITY ACCOUNTS other than CAPITAL STOCK. Mathematician employed by an insurance company to calculate PREMIUMS, RESERVES, DIVIDENDS, and insurance, PENSION, and ANNUITY rates, using risk factors obtained from experience tables. Amount owed to a CREDITOR for delivered goods or completed services.

These are the most common basic accounting terms used in reference with this reporting tool. A fixed cost (or fixed expense) is a cost that stays the same regardless of increases or decreases in a company’s output or revenues. Examples include rent, employee compensation, and property taxes.

Double-Entry Accounting

A measurement of PROFITABILITY that relates the amount earned by a business to the stockholders’ investments in the business. PROFIT on a securities or capital INVESTMENT, usually expressed as an annual percentage rate. Accumulated undistributed earnings of a company retained for future needs or for future distribution to its owners. Restructuring may occur in the form of changing the components of CAPITAL, renegotiating the terms of DEBT agreements, etc. ACCOUNT used to earmark a portion of EQUITY or fund  balance to indicate that it is not available for expenditure.

Business owners enter each transaction in a journal called a “cash book.” It’s similar to managing a cash register. Also called a profit-and-loss statement, an income statement is a report that shows how much money your business made and how much money it spent in a period of time. It reveals your profits and losses (defined below) within a given period. The COGS is usually a business’s largest business expense and is included on your profit-and-loss statement.

Settlement Method

Or, what current sum is needed to equal a target amount in the future, using an estimated rate of return. The wages, salaries, and other compensation owed to an organization’s employees. Additional money paid to a creditor in return for a loan, based on a set percentage of the principal (the original amount of money borrowed). Payments a corporation makes from its profits to its shareholders. These are usually paid as cash, but can sometimes take the form of stock.

The costs of organizing a trade or business or for profit activity before it begins active business. A taxpayer may elect to amortize such expenses for a tern no less than 60 months. If the election is not made then the expenses are not deductible and may only be recovered when the business ceases operation or is sold. Its members are 143 professional accounting bodies in 104 countries. The total amount of sales for cash and on credit accumulated during a specific accounting period.

Corporate Bond

Someone trained to properly keep, report, and inspect financial records and transactions. However, the simplest definition of accounting is that it is understanding, recording, and analyzing financial transactions. For a deeper look into accounting, check out our accounting eBook for beginners.

• This guide includes accounting definitions, alternative word uses, explanations of related terms, and the importance of particular words or concepts to the accounting profession as a whole.
• An annual financial statement summarizes a company’s performance and financial position by showing revenue, costs, profitability and expenses over a defined period.
• Inventory is usually classified as finished goods (which are ready for sale), work-in progress goods (that require assembly) and raw materials (that will become other goods in time).
• The period communicates the span of time that is reported in the statements.
• Profits that are not paid out as DIVIDENDS but are instead added to the company’s capital base.

A multicolumn journal used to record business transactions involving the receipt of CASH from other individuals or businesses. Brokerage firm account whose transactions are settled on a cash basis. ASSET account on a balance sheet representing paper currency and coins, negotiable money orders and checks, bank balances, and certain short-term government securities. Legal process, governed by federal statute, whereby the DEBTS of an insolvent person are liquidated after being satisfied to the greatest extent possible by the DEBTOR’S ASSETS.

International Accounting Standards Committee (IASC)

Single-entry systems account exclusively for revenues and expenses. Double-entry systems add assets, liabilities, and equity to the organization’s financial tracking. In corporate accounting, dividends represent portions of the company’s profits voluntarily paid out to investors. what the cost principle is and why you need to know it Investors are often paid in cash, but may also be issued stock, real property, or liquidation proceeds. In most cases, dividends follow a regular monthly, quarterly, or annual payment schedule. However, they can also be offered as exceptional one-time bonuses.

Bill prepared by a seller of goods or services and submitted to the purchaser. Income from SECURITIES and other non-business investments; such as DIVIDENDS, INTEREST, etc. Firm, acting as underwriter or agent, that serves as intermediary between an issuer of SECURITIES and the investing public. FINANCIAL STATEMENTS that report the operations of an entity for less than one year. A way of measuring the degree of protection that a CREDITOR has from a DEBTOR’s DEFAULT on interestpayments.