Accounts Receivable current assets the amount collectible from customers from the sale of goods and services Accumulated Other Comprehensive Income Loss cumulative amount of items reported as other comprehensive income separate category in the stockholders equity section of the balance sheet Acid Test Ratio ratio of sum of cash plus short term investments net current receivables to total current liabilities tells whether firm can pay liabilities immediately Aging of Receivables way to estimate bad debts by analyzing individual accounts receivable according to the length of time they have been receivable from the customer Allowance Method Allowance of Doubtful Accounts method of recording collection losses based on estimates of how much money the business will not collect from its customers Allowance for Uncollectable Accounts estimated amount of collection losses Available for Sale Securities debt or equity securities that are not classified as either trading or held to maturity held with the intent of selling them some time in the future Average Cost Method Weighed Average Method based on avg cost of inventory during the period Bad debt expense Another name for uncollectible account expense Collateral the borrower gives the lender permission to claim certain assets if the borrower fails to pay the amount due Creditor Lender party to which the money is owed Consignment inventory arrangement where the seller sells inventory that belongs to another party does not include consigned merch on hand in its balance sheet because seller does not own its inventory Consolidated Financial Statements parent company s financial statements plus those of more than 50 owned subsidiaries as if the combination were a single legal entity Controlling majority Interest ownership of more than 50 of an investee company s voting stock Cost of Goods Sold cost of inventory the business has sold to customers Day s Sales in Receivables day s sales outstanding DSO tells a company how long it takes to collect its average level of receivables Debtor Borrower or Maker of Note party that borrowed and owes money on the note Debit Memorandum document issued to the seller when an item of inventory that is unwanted damaged is returned Direct Write Off Method method of accounting for bad debts in which the company waits until a customer s account receivable proves uncollectible and then debits uncollectible account Expense and credits the customer s accounts receivable Disclosure Principle business s financial statements must report enough info for outsiders to make knowledgeable decisions about the business company should report faithful info about its economic affairs Doubtful account Expense Another name for uncollectable account expense Estimated Useful Life length of service that a business expects to get from an asset may be expressed in years units etc Equity Method sued to account for investments in which the investor has 20 50 of the investee s voting stock and can significantly influence the decisions of the investee Factor another business that earns revenue by paying a discounted price for the receivable and then hopefully collecting the full amount from the customer Fair Value an asset s estimated market value at a particular date First In First Out Inventory costing method by which the first costs into inventory are the first costs out to cost of goods sold FOB Acronym for free on board used in quoting shipping terms Goodwill excess of cost of acquired company over the sum of the market values of its net assets Foreign Currency Exchange rate the measure of one country s currency against another country s currency Future Value Measures the future sum of money that a given current investment is worth at a specified time in the future assuming a certain interest rate Gross Profit Method Gross margin method way to estimate inventory based on rearrangement of cost of goods sold model Gross Profit Gross margin Sales revenue minus cost of goods sold Held to Maturity Investments Bonds and notes that an investor intends to hold until maturity Held to Maturity Securities debt securities bonds notes etc in which the investor has the intent and ability to hold until a maturity date stated on the face of a security Impairment condition when the carrying amount of long lived asset exceeds the amount of future cash flows from the asset Intangible Asset asset w no physical form special right to current expected future benefits Interest borrower s cost of borrowing money stated in annual percentage rate Inventory merchandise that a company sells to customers Inventory Turnover ratio of cost of goods sold to avg inventory indicates how rapidly inventory is sold Last in First out inventory costing method by which the last costs into inventory are the first costs out to cost of goods sold leaves oldest costs in ending inventory Long Term Investments any investment that does not meet the criteria of a short term investment any investment that is expected to hold longer than a year or that is not readily marketable Lower of Cost or Market LCM requires an asset be reported in financial statements at whichever is lower historical or market value Maturity Date date on which the debtor must pay the note Maturity Value sum of principal and interest on the note Modified Accelerated Cost Recovery System MACRS special depreciation method used only for income tax purposes Noncontrolling minority Interest A subsidiary company s equity that is held by stockholders other than the parent company Notes Receivable formal contracts than accounts receivable Other Comprehensive Income Loss certain types of revenue gains and losses that are allowed to bypass the income statement reported either in separate statement or a combine statement Other Receivables miscellaneous category for all receivables other than accounts receivable notes receivable Parent Company investor company that owns more than 50 of the voting stock Parent Value value on a given date of a future payment or series of future payments discounted to reflect the time value of money Patent federal gov grant giving the holder exclusive right to 20years to produce sell an invention Periodic Inventory System the business does not keep a continuous record of the inventory on hand and instead makes a physical count Perpetual Inventory system the business keeps a continuous record for each inventory item to show it on hand at all times Percent of Sales Method computes uncollectible