Chapters 16 - 20

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  • Amortization expense

    16. The amount of an intangible asset used up during the period.

    Depletion expense

    16. The amount of a natural resource used up during the period.

    Full amortized

    16. When an intangible asset is fully amortized, all of its cost will have been allocated to past fiscal periods, and its book value will be zero.

    Intangeible assets

    16. Assets with no physical form, yet they offer value to a business for more than one year.


    16. Intangible asset - exclusive right to produce and sell an invention.


    16. Intangible asset - the exclusive right to publish, perform, or reproduce msic, art, film, books or software.

    Trademarks, trade names

    16. Intangible asset - Special identifications that are protected against infringment.


    16. Intangible asset - The extra cost a business pays for another business for being unusually profitable.

    Franchises and licenses

    16. Intangible asset - contracts or government grants that give the owner special rights.

    Research and Development

    16. The cost a company pays to create and develop a product. It is never an intangible asset, but instead is expensed each year.


    17. Recognize revenues or expenses on the accounting books even though no cash changes hand.

    Adjusting entry

    17. A non-cash journal entry at the end of a period that adjusts a balance sheet account.

    Amortization schedule

    17. A schedule showing the principal, interest, and remaining balance for each payment on a loan.

    Interest payable

    17. The account that reflects interest accrued on business debts.


    17. The amount borrowed; this is the non-interest portion paid back when making loan payments.

    Reversing entries

    17. Entries made on the first day of a new period taht switch the debits and credits of the adjusting entries made on the last day of the previous period.

    Wages payable

    17. The account that reflects wages earned as of the end of the period but not yet paid.


    17. A promise by a business to pay for future expenses of a product sold.

    Warranties payable

    17. An account that shows the estimated amount owed on the warranties a business offers.


    18. Certificates that corporations (and governments) issue to borrow large amounts of money from a large number of people. The certificates call for periodic cash payments each year with a lump sum payment on the maturity date.

    Bond book value

    18. The true value of the bond liability.


    18. The investor who currently owns the bond certificates.

    Contra-liability account

    18. A negative liability, such as a bond discount.

    Deferred credit/Deferred revenue

    18. A section of the liability section fo the balance sheet. These liabilities result from receiving cash before earning it.


    18. When lenders pay less for a bond than the face amount, the difference between what the lenders pay and the face amount is the discount.

    Face (of a bond)

    18. The frontside of the bond certificate.

    Face amount

    18. The amount written on the face of a bond that represents the lump sum payment the borrowing corporation promises to pay on the maturity date.

    Face rate

    18. The percentage written on the face of a bond used to calculate the periodic cash payment.

    Interest payment dates

    18. The dates (usually semiannual or quarterly) each year on which the borrowing corporation promises to make the perodic cash payments.

    Market interest rate

    18. The rate that most lenders can immediately get for ther money

    Maturity date

    18. The day the borrowing corporation promises to pay the lump sum payment required by the bond.

    Periodic cash payments

    18. The semiannual or quarterly payments a bond requires the borrowing corporation to make.


    18. The amount that lenders pay for a bond in excess of the face amount.


    18. A company with plenty of cash that buys an entire offering of bonds with the hope of reselling them for a profit.

    Authorized shares

    19. Maximum shares that a corporation may legally issue.

    Cash dividend

    19. A share of the profits distributed to stockholders in the form of cash.

    Common stock

    19. They type of stock that represens the basic ownership of a corporation.


    19. An artificial "person" created by the laws of a state that has the right to do business.

    Date of record

    19. Usually a week or two after the declaration date. Whoever owns corporate stock on the date of record gets the dividend.

    Declaration date

    19. The date on which the corporate board of directors declares a dividend.

    Guaranteed payment

    19. Money partners receive for some reason other than splitting profits by some ratio.


    19. To become a corporation

    Issued shares

    19. The number of shares of a corporation that the corporation has issued to investors.

    No-par stock

    19. Corporate shares with no dollar amount written on the stock certificate.

    Outstanding shares

    19. The number of issued shares of a corporation less any treasury stock repurchased.

    Par value

    19. A dollar amount written on a stock certificate.

    Preemptive right

    19. The right to buy a portion of each new issuance of stock in order to maintain the same ownership percentage.

    Preferred stock

    19. Stock in a corporation with certain special privileges.

    Retained earnings

    19. The equity account in a corporation that contains all the earnings the corporation has ever earned but not yet distributed to stockholders.

    Sharing ratio

    19. The method of splitting partnership profits after making guaranteed payments.

    Stated value

    19. An accounting value, the equivalent to par value, given to stock with no par value written on the stock certificate.

    Stock certificate

    19. A document evidencing ownership in a corporation.

    Stock dividend

    19. A distribution of a small amount of stock proportionally to all stockholders.

    Stock split

    19. A large distribution (2-for-1) of new stock in which stockholders turn in old certificates and receive new stock certificates.

    Treasury stock

    19. A corporation's investment in its own stock.


    20. Used when a company compares its financial statements with those of similar companies.

    Closely held corporation

    20. A corporation with few (Usually less than 10) stockholdrs.

    Continuing operations

    20. Income from normal operations that are expected to continue in the coming years. Normal operations + Gains and losses from sale of business asset or investments.

    Cumulative effect of a change in accounting method

    20. A single number on an income statement, net of tax, which shows the total effect of a change in accounting method as if the method had been used since day one fof the business.

    Discontinued operations

    20. If a business segment has discontinued or been sold, all the associated income, expenses, gains, and losses are combined, net of tax, and reported as a single number on the income statement.

    Extraordinary gains and losses

    20. Those which are both unusual and infrequent.

    Horizontal analysis

    20. Used when a company compares its current results with those from a previous year.

    Net income

    20. In a corporation, net income equals all revenues minus all expenses except "other comprehensive income."

    Net of tax

    20. The number shown represents income or loss after a reduction for income taxes.

    Other comprehensive income

    20. Two final types of income shown at the bottom of an income statement. They have their own cumulative equity accounts. The two are foreign currency adjustments and Unrealized gains on available-for-sale investments.

    Operating revenue

    20. Corporate net income from all sources except six specific items.

    Other gains and losses

    20. A section on the income statement showing gains from the normal process of selling assets and investments

    Ratio analysis

    20. Used when a company computes a ratio from various numbers on the financial statements in order to analyze results.

    Vertical analysis

    20. Used when a company compares all the numbers of a financial report with a key number from the report.

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