Chapter 4 Flashcards
(23 cards)
Accrual Accouting
the process that accountants raw transaction data into refined measures of a firm’s economic performance
Comprehensive Income
the number used to reflect an overall measure of the change in a company’ wealth during the period
Cost of Goods Sold
when a business sells good to customers, the cost of the goods sold is recorded as an expense
Discontinued Operations
report the Hughes results in a separate category called income from discontinued operations
Earnings Per Share (EPS)
the amount of net income associated with each share of stock
Economic Value Added
a system of earnings-based compensation
Expanded Accounting Equation
Assets = Liabilities + Paid-in-Capital + (Revenues - Expenses - Dividends)
Expenses
the value of resources used in generating the reported revenue
Extraordinary Items
gains and losses that result from transactions that are both unusual in nature and infrequent in occurrence
Financial Capital Maintenance
the approach that accountants typically use in computing a company’s income is the first option described above in which inflation is ignored and a company is said to have income when its financial increase
Gain
the amount of a company makes money on activities that are peripheral to its primary options
Gross Profit
the difference between the selling price of the product and the cost of the product
Income From Continuing Operations
the segments of a company’s business that it considers to be normal, and expects to operate in for the foreseeable future
Loss
the of a company loses money on activities that are peripheral to its primary operation
Matching
the concept typically used in practice to determine when an expense should be recognized
Multiple-Step Income Statement
the multi-step income statement includes multiple sub-totals within the income statement
Net Income
the accountant’s attempt to summarize in one number the overall economic performance of a company for a given period
Operating Income
the performance of the fundamental business operations conducted by a company
Physical Capital Maintenance
income is earned only when one experiences an increase in actual physical resources
Restructuring Changes
the fact that companies have exercised considerable discretion in determining the amount and timing of a restructuring charge
Revenue
the value of the goods and services provided by a company in its business operations
Revenue Recognition
a cornerstone of accrual accounting together with matching principle. They both determine the accounting period, in which revenues and expenses are recognized
Single-Step Income Statement
with this format, all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between total revenues and total expenses
