Accounting 5

account form

Presentation in a classified balance sheet that lists assets by sections on the left side and liabilities and stockholders' equity by sections on the right side.

adjunct account

An account that increases either an asset, liability, or owners' equity account

available-for-sale securities

Debt securities not classified as held-to-maturity or trading securities.

balance sheet

Financial statement that shows the financial condition of a company at the end of a period by reporting its assets, liabilities, and stockholders' equity

cash debt coverage ratio

Measure of solvency that indicates a company's ability to repay its liabilities from cash generated from operations (without having to liquidate productive assets).


Material events with an uncertain future

contra account

An account that reduces either an asset, liability, or owners' equity account.

current assets

Cash and other assets a company expects to convert into cash, sell, or consume either in one year or in the operating cycle, whichever is longer.

current cash debt coverage ratio

Measure of liquidity that indicates a company's ability to pay its short-term debts.

current liabilities

The obligations that a company reasonably expects to liquidate either through the use of current assets or the creation of other current liabilities.

financial flexibility

The ability of a company to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities.

financial instruments

Assets consisting of cash, accounts receivable, an ownership interest, or a contractual right to receive or obligation to deliver cash or another financial instrument.

financing activities

Cash flow activities that include (1) obtaining cash from issuing debt and repaying the amounts borrowed, and (2) obtaining cash from stockholders and paying them dividends

free cash flow

Measure of the cash remaining from operating activities after adjusting for capital expenditures and dividends paid.

held-to-maturity securities

Debt securities that a company has the positive intent and ability to hold to maturity

intangible assets

Assets that lack physical substance and that are not financial instruments.

investing activities

Cash flow activities that include (1) purchasing and disposing of investments and productive long-lived assets using cash, and (2) lending money and collecting the loans

long-term investments

Investments that companies expect to hold for many years.

long-term liabilities

Obligations that a company expects to pay at some date beyond the normal operating cycle.

operating activities

Cash flow activities include the cash effects of transactions that create revenues and expenses, and thus enter into the determination of net income.

owners' (stockholders') equity

The ownership claim on a company's total assets.

property, plant, and equipment

Assets of a durable nature used in the regular operations of the business.

report form

Presentation in a classified balance sheet that lists liabilities and stockholders' equity directly below assets on the same page

statement of cash flows

A basic financial statement that provides information about cash receipts, cash payments, and the net change in cash resulting from the operating, investing, and financing activities of a company during the period, in a format that reconciles the beginnin

trading securities

Debt and equity securities bought and held primarily for sale in the near term to generate income on short-term price differences.

working capital

The excess of total current assets over total current liabilities; represents the net amount of a company's relatively liquid resources.