会计概念英文名词解释

会计概念英文名词解释会计概念英文名词解释PAGE会计概念英文名词解释Session1DefinitionsandElementsofFinancialStatementsYouwillneedtolearntheseunderlinedtermsforthemidterm!Incomestatement–“video”ofrevenues,expenses,gains,lossesoveraperiodoftimeBasicdefinitions:Revenue–increaseinequity(andassociatedincreaseinassetsand/ordecreaseinliabilities)earnedfromthesaleofgoodsorprovisionofservicestocustomers;itismeasuredonagrossbasisastheamountofassetstobereceived.Expense–decreaseinequity(andassociateddecreaseinassetsand/orincreaseinliabilities)createdbysaleofgoods,renderingofservicesorpassageoftime;itismeasuredonagrossbasisastheamountofassetsconsumed.Gain–increaseinequityresultingfromsellingassetsorrecognizingtheincreaseinvalueofassets(ordecreaseinvalueofliabilities);itismeasuredonanetbasisasthepositivedifferencebetweencurrentvalueandamountrecordedonthebalancesheet.Loss–decreaseinequityresultingfromsellingassetsordecreaseinvalueofassets(orincreaseinvalueofliabilities);itismeasuredonanetbasisasthenegativedifferencebetweencurrentvalueandamountrecordedonthebalancesheet.Accountingperiod-thetimeperiodbetweenconsecutivebalancesheetsforwhichafirmpreparesanincomestatementandstatementofcashflows.,anannualreporthasa12-monthaccountingperiodandaquarterlystatementhasa3-monthaccountingperiod).Elements:Sales-revenuefromsellinggoodsorprovidingservicestocustomers,whichisreportedasthetoplineontheincomestatement.CostofGoodsSoldorCostofSaleslabor,material,andoverheadcostsdirectlyrelatedtoprovidinggoodsorservices.GrossProfitisthedifferencebetweenSalesRevenueandCostofGoodsSold,whichrepresentstheprofitthatisavailabletocoveralloftheotherexpensesontheincomestatement.OperatingExpensesareexpensesrelatedtotheordinaryoperatingactivitiesofthefirmofprovidinggoodsorservicestocustomersorgainsandlossesrelatedtooperatingassetslikePPE.OperatingProfitorIncomeequalsgrossprofitminusoperatingexpenses.OtherNonoperatingRevenueandExpenseareitemsrelatedtoFINANCINGactivities.,interestexpense)andINVESTINGactivities.,interestincomeandgainsandlossesoninvestments).IncomeBeforeTaxequalsoperatingprofitminusotherincomeandexpense.TaxexpenseequalsaGAAPbasedmeasureofthegovernmentchargesonincome.NetIncomeequalsincomebeforetaxminustaxexpense.IncomestatementaccountsarecalledTEMPORARYACCOUNTSbecauseamountsaccumulateforadefinedperiodoftimeandarethenzeroedoutwhenthebalanceistransferredtoretainedearnings.Annualincomestatementamountsrepresentthetotalrevenuesorexpensesfora12monthperiodcalledthefiscalyear.Balancesheet–“snapshot”ofassets,liabilities,stockholders’equityatapointintimeBasicDefinitionsOperatingcycle-averagetimeittakestogofromcashtogoodsandservicessoldtocustomersandthenbacktocashcollectedfromcustomers.Elements:Asset:resourcethefirmcontrolsbecauseofapasttransactionoreventthatprovidesexpectedfuturebenefits.Currentasset:assetafirmexpectstoconverttocash,sell,orconsumewithinthelongerofoneyearoranoperatingcycle.Noncurrentasset:assetnotclassifiedascurrent.Liability:creditor’sclaimsorobligationthatrepresentsaprobablefutureeconomicsacrificeofassetsorservicesbasedonapasttransactionorevent.Currentliability:obligationafirmexpectstopaywithinthelongerofoneyearoranoperatingcycle.Noncurrentliability:liabilitynotclassifiedascurrent.Shareholders’equity:measureoffinancingprovidedbyownersofthefirmthatcapturesowners’residualclaimonassetsofthefirmaftersatisfyingliabilities.Retainedearnings:cumulativenetincomeminusdividendsoverthelifeofthefirm.Retainedearningsareasourceoffinancing.Whenearningsexceedthedividendspaidouttoshareholders,itincreasesequityortheowner’sclaimonthefirm.ThereisNOTacorresponding“cashfund”intheassetsectionequaltothebalanceinretainedearnings.Changesinretainedearningsareafunctionofnetincomeanddividendsdeclared,whichmayormaynotcorrespondtochangesincash.Dividends:distributionofcashtotheownersofthefirm.BalancesheetaccountsarecalledPERMANENTACCOUNTSbecausetheamountsaccumulateyearafteryear.Theendingbalancefromthepreviousyearbecomesthebeginningbalanceforthenextyear.Forexample,endingcashamountin2011willbethebeginningcashamountin2014,thatisthenadjustedfor2014inflowsandoutflowstodeterminethe2014cashamount.Basicaccountingequation:ASSETS=LIABILITIES+STOCKHOLDERS'EQUITYThepowerfulimplicationisinvestmentsinassetscanbefinancedwitheitherDEBTorEQUITY!Assetsareresourcesandliabilitiesandequityrepresenttheclaimsonthoseresources.StatementofRetainedEarnings(includedinStatementofShareholders’Equity)presentsa“video”ofthechangeinretainedearningsfromnetincomeanddividendsduringtheperiod.StatementofCashFlows–“video”ofthesourcesandusesofcashoveraperiodoftimethatexplainsthechangeinthecashbalanceonthebalancesheet.Operating–coreoperationsanditemsrelatedtomeasurementofnetincomeInvesting-firmsINVESTinassetssoincludesassettransactions:buyandsellpropertyplantandequipmentbuyandsellinvestmentsFinancing-firmsFINANCEwithdebtandequitysoincludesdebtandequitytransactionsborrowandpaybacknonoperatingdebtissueandrepurchasestockpaydividendsFormat+NetOperatingCashFlow+NetInvestingCashFlow+NetFinancingCashFlow=ChangeinCashforthePeriodBeginningCashfromLastYear+/-ChangeinCashforthePeriod=EndingCashforThisYearBalanceSheetAccountNameDefinitionsAnaccountaccumulatestheincreasesanddecreasesthatoccurforasingleitem.GAAPdoesnotprovideanall-inclusivelistofacceptableaccountnamessotheirusagevariesbyfirm.Separateaccountsarereportediftheyare“material”orcrucialtounderstandingfirmperformance.Forexample,somefirmsdivideinterestrevenueandinterestexpenseintoseparateaccountswhileotherfirmscombinethemintoonenetaccount.Youwillreceivecreditinexamsaslongasthenameispotentiallyusedinpracticeandaccuratelydescribesandcorrectlyclassifiesanaccountasasset,liability,orshareholders’equity.Itisacceptable,butnotrequired,tousemorespecificaccountnameslikeprepaidrentforprepaidexpense.Thefollowinglistofaccountnamesarecommonlyused.Assets:Cash–currencyorbalancesincheckingaccounts,CDs,ormoneymarketaccountsavailabletomeetcurrentobligations.Highlyliquidshort-terminvestmentswithlessthan90daystomaturityandlittleriskofvaluechangesarecalled"cashequivalents"andincludedinthecashaccount.Short-terminvestmentormarketablesecurities–currentvalueofinvestmentsinanotherfirm’sdebtorequitysecuritiesthatcanbequicklysoldforcash.Accountsreceivable–amountduefromcustomersforgoodsandservicesalreadydelivered.Grossaccountsreceivableistheamountowed.Netaccountsreceivableistheamountexpectedtobecollectedaftersubtractinganallowanceforuncollectibleaccounts.Notesreceivable–amounttobereceivedfromanoutsideentityformalizedwithanoteorlendingagreementthatspecifiesinterestandpaymentterms.Inventory–rawmaterials,workinprocess(productsstartedbutnotfinished),andfinishedgoodsavailableforsaletocustomers.Prepaidexpenses–assetrecognizedwhencashpaidinadvanceofwhenfutureexpenseswillbeincurred.Long-terminvestments–investmentsinbondsorequitysecuritiesexpectedtobeheldforthelong-term.Property,plant,andequipment(gross)–originalcosttoobtainandputintoservicebuildings,land,andequipment.Accumulateddepreciation–acontraoroffsettingaccountwiththecumulativeamountofthecostofproperty,plantandequipmentassignedtodepreciationexpense.Property,plantandequipment(net)–originalcostminusaccumulateddepreciation.Intangibleassets–itemslikepatentsandcopyrightsthatprovidefuturebenefitbutdonothavephysicalsubstance.Intangibleassetsareonlyrecognizedwhentheyarepurchasedfromanoutsidesource.Forexample,ifafirmpurchasesapatentfromanothercompanythecostisshownasanasset.However,ifafirmdoesresearchthatresultsinapatent,thoseresearchcostsareincludedinR&Dexpenseandanassetisonlyrecognizedforthelegalandregistrationfeestoobtainthepatent.Goodwill–purchasepriceofanacquiredcompanyminusthemarketvalueoftheidentifiableassetsminusliabilitiesofthatcompany.Themarketvaluesofbothtangibleandintangibleassetsareconsideredinthecalculationofidentifiableassets.GoodwillisONLYrecognizedwhenonecompanypurchasesanothercompanyatapremiumforthingslikefuturepotential,marketpower,andqualityofworkforcethatarenotconsidered“identifiableassets.”Liabilities:Accountspayable–amountowedtosuppliersforinventoryorothergoodsorservicespurchasedoncredit.Otherpayablesoraccruedexpenses–amountsowedforexpensesthathavealreadybeenrecognizedlikeinterest,taxes,salaries,andrent.Short-termloanspayableornotespayable–obligationsformalizedwithanoteorlendingagreementthatspecifyinterestandpaymenttermsandareduewithinthenextyear.Currentmaturitiesoflong-termdebt-theportionoflong-termdebtexpectedtobepaidwithinthenextyear.Unearnedrevenueoradvancesfromcustomer–liabilityincurredbecausecashwasreceivedfromcustomersinadvanceofwhenrevenueisearnedsothefirmhasanobligationtodelivergoodsorservicestothecustomer.Long-termdebt(Notes,LoansBonds,orMortgagePayable)–obligationsformalizedwithanoteorlendingagreementexpectedtobepaidmorethan1yearlater.Shareholders’Equity:Commonstockatpar–parorstatedvalueoftotalstockissuedoverthelifeofthefirm.Commonstockhasvotingrights.Notethatparvaluehaslegalsignificancebutnorealeconomicsignificance.Forexample,insomelegaljurisdictionsparvaluecanplayaroleindistributionstostockholdersinthecaseofliquidation.However,parvaluedoesnotrelatetothemarketvalueofthestock.Somelegaljurisdictions,includingTexas,allownoparvaluestock.Additionalpaidincapital-totalamountofcashreceivedaboveparvaluewhenthestockwasissued,aggregatedoverthelifeofthefirm.Notethatsomefirmsincludetheparvalueandadditionalpaidincapitalinone“commonstock”account.Also,notethatadditionalpaidincapitalisreducedforcertainstockoptionandtreasurystocktransactions.Example:Issue10,000sharesof$1parvaluecommonstockfor$5pershare.Theshareholders'equitysectionwillappearasfollows:Commonstockatpar$10,000Additionalpaidincapital$40,000Preferredstock-amountofcashthefirmreceivedforstockgivingtheholderapreferencerelativetocommonshareholdersintermsofdividendsandcashreceivedifthefirmisliquidated.Treasurystock-repurchasepriceofstockthatwasissuedandthenrepurchasedbythefirmandheldinternally.Noticethattreasurystockreducesshareholders’equitybecauseitreducestheequityclaimedbyOUTSIDEshareholders.Retainedearnings–cumulativenetincomeminusdividendsoverthelifeofthefirm.AccumulatedOtherComprehensiveIncome-gainsandlossesthatbypasstheincomestatementandflowdirectlytotheshareholders’equity,accumulatedoverthelifeofthefirm.IncomeStatementAccountNameDefinitionsRevenueInterestincome–interestearnedondebtinvestments.ExpensesCostofgoodssoldorcostofsalesrevenue–labor,materialandoverheadcostsdirectlyrelatedtoprovidinggoodsandservices.Itisrecognizedonlyforthegoodsorservicesdeliveredduringtheperiod.Forexample,amanufacturingfirmincludesmanufacturingsalariesanddepreciationonmanufacturingequipmentintheinventoryaccountandthenincostofgoodssoldwhentheinventoryissoldtocustomers.AssumeTIhas20inventoryitemsavailableforsalethatcost$1000each,andtheysell5oftheseitemsfor$1600each.Theincomestatementwouldshowsalesrevenueof$8,000(5*$1,600)andcostofgoodssoldof$5,000(5*$1,000).Itisnotappropriatetoshowrevenuesminuscostofgoodssoldasonenetamountontheincomestatement.Withthisexample,theinventoryassetaccountonthebalancesheetcontain$15,000(15*$1,000).Nowassume,youknowthatbeginninginventoryis$12,000,purchaseswere$8,000,andendinginventoryis$15,000.CalculateCostofGoodsSoldwiththefollowingequation:BeginningInventory12,000+Purchases+8,000=CostofGoodsAvailableforSale$20,000-EndingInventory-$15,000=CostofGoodsSold=$5,000Depreciationexpense–costofPPEallocatedtoexpenseduringthecurrentperiod.Wageorsalaryexpense–amountofwagesemployeeshaveearnedduringtheperiod.Rentexpense–amountofrentincurredduringtheperiod.Advertisingexpense–amountofadvertisingcostsincurredduringtheperiod.Interestexpense–costincurredduringtheperiodformoneyborrowed.Insuranceexpense–amountofinsuranceusedduringtheperiod.Taxexpense–federal,state,andlocaltaxesmeasuredonincome.Selling,general,andadministrativeexpense–allcoststosellandmanageafirm(includessalesandmanagementsalariesanddepreciationrelatedtoheadquartersbuilding).Researchanddevelopment–allcoststocreateanddevelopnewproducts(includesR&Dsalariesanddepreciationonresearchfacilitiesandequipment).