AJAX progress indicator
  • accounting changes
    Changes from one acceptable method of accounting to another acceptable method; like straight-line depreciation to a declining balance approach
  • Accounting Principles Board
    The private sector group charged with developing accounting standards from 1959 to 1973; primary authoritative pronouncements were known as "opinions"
  • Accounting Standards Codification
    Research tool deemed to be the primary authoritative source and reference guide on accounting standards
  • Accounting Standards Update (ASU)
    The official notification issued by the Financial Accounting Standards Board of a new or modified accounting rule
  • American Institute of Certified Public Accountants
    (AICPA) an organization whose members are CPAs interested in advancing the accounting profession
  • basic EPS
    The simplest earnings per share number; earnings available to common shares divided by weighted average shares, without factoring in potential dilution
  • book value per share
    Common stockholders' equity divided by common shares outstanding, to indicate stockholders' equity per share
  • comparability
    An enhancing quality of accounting such that even though different companies may use different accounting methods, there is still sufficient basis for valid comparison
  • complex capital structure
    Companies with options, warrants, or convertible bonds and stocks that may result in the issuance of additional shares
  • comprehensive income
    Net income plus items of other comprehensive income (e.g., market value adjustments of available for sale securities)
  • consistency
    An enhancing quality of accounting such that deviations in outcomes from period to period should be the result of deviations in underlying performance (not accounting quirks)
  • diluted EPS
    An earnings per share number; adjusted to reflect the potential effect of dilutive securities
  • dilutive securities
    Options, warrants, convertible bonds, convertible stocks, and other items that have the potential to increase the number of shares outstanding
  • discontinued operations
    The special income statement reporting of the impact of disposing or abandoning of a component of a business
  • dividend payout ratio
    Dividend per share divided by earnings per share
  • dividend rate
    Dividend per share divided by stock price; also called dividend yield
  • earnings
    A concept that relates to income from continuing operations plus/minus discontinued operations
  • Earnings per share
    EPS; generally understood as the amount of income for each share of stock, but is actually better refined as basic and diluted EPS (see those definitions)
  • EBIT
    An analyst's calculation to reflect "earnings before interest and taxes"
  • EBITDA
    An analyst's calculation to reflect "earnings before interest, taxes, depreciation, and amortization"
  • entity assumption
    Accounting information should be presented for circumscribed distinct economic units
  • faithful representation
    A fundamental quality of accounting such that information must be truthful; complete, neutral, and free from error
  • GAAP
    Generally accepted accounting principles -- encompass the rules, practices, and procedures that define the proper execution of accounting
  • going-concern assumption
    In the absence of evidence to the contrary, accountants assume that a business will continue to operate well into the future
  • International Financial Reporting Standards (IFRS)
    The specific accounting rules developed by the International Accounting Standards Board
  • intraperiod tax allocation
    Separately reported items like discontinued operations, prior period adjustments, and other comprehensive income, are to reported net of their specifically related tax effects
  • monetary unit assumption
    Accounting measures transactions and events in units of money, in contrast to some other unit of measure (e.g., acres of land)
  • net income
    Income from continuing operations plus/minus discontinued operations, but before items of “other comprehensive income”
  • PCAOB
    Public Company Accounting Oversight Board -- a private-sector, non-profit corporation charged with overseeing the auditors of public companies
  • price earnings ratio
    The per share market value of a stock divided by its earnings per share
  • principles-based
    The idea that accounting standards should articulate broad-based principles rather than specific and detailed rules
  • prior period adjustment
    To correct errors from prior years; prior financial statements are retroactively changed to make them correct
  • relevancy
    A fundamental quality of accounting such that information should be timely and bear on the decision-making process by possessing predictive or confirmatory (feedback) value
  • remeasurement
    Uses a variety of exchange rates to convert assets and liabilities of a foreign affiliate to the reporting currency; adjustment may impact operating income.
  • restatement
    The financial statements of prior periods are redone to reflect the correct amounts
  • retrospective adjustment
    Revision of the financial statements for prior periods to reflect the application of a current change in accounting method
  • return on assets ratio
    A ratio comparing income (net income plus interest) to the average total assets
  • return on equity ratio
    A ratio comparing income (net income minus preferred dividends) to the average total equity
  • rules-based
    The idea that accounting standards must be very specific to provide adequate guidance and drive consistency in reporting
  • Sarbanes-Oxley Act
    "SOX" -- Legislation that imposes stringent controls over reporting and auditing; created the Public Accounting Oversight Board
  • Securities and Exchange Commission
    "SEC" -- regulatory body with which public companies must file and report
  • stable currency assumption
    An accounting assumption that presumes the currency is not impacted over time by inflation
  • timeliness
    An enhancing quality of accounting such that information is available in sufficient time to be capable of influence
  • translation
    Uses prevailing exchange rates to convert assets and liabilities of a foreign affiliate to the reporting currency; adjustment may impact other comprehensive income.
  • understandability
    An enhancing quality of accounting such that information is clear and concise to those with reasonable business knowledge
  • verifiability
    An enhancing quality of accounting such that different knowledgeable and independent observers reach similar conclusions