Accounting Chapter 9 Vocabulary

What classification of ratios is defined as a measure of a firm's financial leverage and ability to meet its long-term obligations? – Solvency Ratio
Current liabilities – Creditors control short term
Profitability Ratios – measure potential earnings
Capital – Get count used to summarize the owners equity in the business
Notes to Financial Statements – The notes to the financial statements begin with the financial accounting principles followed by the company
reternal ratio – befektetési ráta
Earnings Per Share – Net Income-dividends on preferred stock/Average Shares of common stock outstanding
Fixed asset – Property of a relatively permanent nature used in the operation of a business & not intended for resale is called
How is the current ratio calculated? How is it used to evaluate a company? – b.
Which of the following is NOT a function of the strong hydrochloric acid present in the gastric juice?
Common stock – The most basic form of capital stock.
Source document – Cash Receipts: Evidenced that a cash inflow has occurred.
Cheque butt: Evidence that a cash outflow has occurred.
Invoice: Evidenced that a credit transaction has occurred. (Either a credit sale or credit purchase.
Memo: Evidence of transaction between the business and owner or if there are no other documents available.
In a periodic inventory system, companies keep detailed inventory records of the goods on hand throughout the period.
A. True
B. False – False
Credit memoradum – A form prepared by the vendor showing the amountdeducted for returns and allowances is called a credit memordaum
Which оf the fоllоwing is NOT а function of the strong hydrochloric аcid present in the gаstric juice?
Asset recognition criteria!!!!!!! – Asset recognition criteria:
1. The firm owns or controls the right to use the item
2. The right to use is due to a past transaction or exchange
3. Future benefit can be reliable quantified
10 K – the annual form that publicly traded companies must file with the SEC
Compound interest – Computed on original principal and interest payments
Materiality – A company-specific aspect of relevance, an item is said to be material if its inclusion or omission would influence or change the judgment of a reasonable person; it is immaterial, and

therefore irrelevant, if it would have no impact on a decision-maker.

The point involved is one of relative size and importance; that is, both quantitative and qualitative factors should be considered. Pg.49

Stock Splits – Distribution of additional shares of stock to stockholders according to their present ownership

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