Glossary Of Common Terminology For Balance Sheet Accounts

Capital investment decisions are among the most important decisions created by companies. They determine the firm’s capacity for providing services and commit the firm’s cash for an extended period of time. Interviews with key financial officers of leading health care systems reveal capital investment strategies that generally follow the recommendations of modern fund theory. Still, there are substantial deviation in capital budgeting techniques, ways of risk modification, and the importance of qualitative considerations in investment decision making. Addititionally there is variance in the delegation of investment decision making to working devices and methods of performance evaluation. Health care systems face the same challenges as other organizations in developing and implementing capital investment strategies that use consistent options for evaluation of projects that have inconsistent aims and outcomes.

Accumulated Earnings or Accumulated Income – This identifies the cumulative profits lodged in the maintained earnings account, as they stay intact and have not been distributed or declared as dividends. This glossary of basic accounting conditions for balance sheet accounts & transactions is continued on another page. Acquisition Cost – This denotes the purchase price paid in trade for goods or services that becomes the historical cost of a secured asset.

This may include the incidental costs related to its purchase or delivery to make possible the physical, practical, and legal ownership over the house. Additional Paid-in Capital – This is actually the capital account used for recording the surplus amount realized after selling the company’s shares of stock at a cost higher than the par value.

Aging of Accounts Receivable – This is actually the procedure performed to determine the length of time or the period that the receivable accounts have remained uncollected. It is used as a tool for measuring the credit and collection efficiency of the ongoing company. Its importance is likewise related in identifying the underlying quality of the company’s assets or net worth. Allowance for DEBT – The total amount set-up to recognize the possibility of a certain portion of the business entity’s accounts receivable will never be recovered or gathered.

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  • 2016 -18.9% -9.8%
  • 2005 THE BRAND NEW York Stock Exchange became a general public entity
  • Gold or gold
  • Property typically not at the mercy of depreciation or depletion, such as land
  • Less than 100% – expenditures consuming less than available income

Appraisal Value- This refers to the valuation of a real property at its current fair market value or for purposes of identifying the price that a willing buyer would choose the property if set up for sale. Arrears – The word put on denote defaulted amortizations or obligations, linked to long-term borrowings often.

Assessment – This is actually the term used to judge the worthy of an asset or responsibility used for determining the true financial condition of an organization in terms of liquidity. For taxation purposes, the action of the assessment concerns the IRS’s dedication if the taxable income reported as the basis for tax thanks was properly computed. Asset/Assets – Refers to the tangible and intangible resources actually owned by the business that is used for sustaining the whole functions and transactions of the business in its quest to generate income. At Par – Purchased or quoted based on the amount mentioned on the facial skin of the security or commodity that was traded.

Audit – This refers to the organized review and study of the accounting source documents and the techniques applied for saving and summarizing them. The objective of the audit is to determine if all methods used were in accordance with the generally accepted accounting principles and the internal control policies of the business. Audit Trail – This terminology refers to the traceability of past accounting activities, from the accounts amounts reflected on the financial reviews to its original access in the books of accounts back again.

Balance – The net debit and net credit amounts reflected as the residual amounts of the general ledger accounts. Bank or investment company Statement – The regular report of all credit and debit transactions taken-up by the bank against the company’s current or checking account, used as a basis for the bank or investment company reconciliation methods.

Bankruptcy – This is actually the term used to describe the financial condition of a person or an entity that no more gets the resources or capacity to pay its maturing bad debts. Base Period – This denotes the word or inclusive schedules used as a basis for calculations or comparisons or as a guide for a cut-off period when performing a specific accounting function. Bearer Bond – They are investments referred to as such because the bonds kept as proofs of ownership are not signed up under any name and whoever presents them for payment or negotiates the musical instruments will be presumed the owner.