Chapter 17,18,19 Flashcards
An activity ratio that measures profitability because it relates a company’s ability to generate sales to the amount of assets that the company uses
Asset turnover ratio
Income that reflects all changes in owner’s equity during the period except those resulting from investments by, or distributions to, owners and those resulting from errors made in previous periods
Comprehensive income
A center that is responsible for controlling costs and providing a good or service in an efficient manner
Cost Center
Earnings per share that reflect the amount of change in earnings per share that would occur as a result of activities like conversions and the exercise of stock options
Diluted earnings per share
The results of a company selling or disposing of a segment of its business
Discontinued operations
A combination of return on sales ratio (a profitability measure) and asset turnover ratio (an activity measure)
Du Pont method of return on investment
Income from continuing operations; consisting of revenues minus expenses and also gains minus losses
Earnings
A common-size measure of a company’s earnings performance; the reported net income of the company less preferred dividends for the period divided by the weighted-average number of common shares outstanding
Earnings per share
A center that is responsible for using assets in an effective and efficient manner to generate profits
Investment center
An income measure that includes both the operating and other nonowner activities that caused changes in retained earnings during the period
Net income
Specific-purpose internal reports designed to provide more detailed information than general-purpose income statements regarding the results of operations for a product line or company division
Product line (divisional) income reports
A center that is responsible for making a profit; it must effectively generate revenues and efficiently control costs
Profit center
A center that is responsible for generating revenues and promoting the company’s products and services effectively
Revenue center
A method of determining profits in which only direct materials are included in cost of goods sold and all other production costs are expensed as incurred
Throughput costing method
A method of determining profits in which only costs that vary with production are included in cost of goods sold and facility-sustaining overhead costs are expensed as incurred
Variable costing method
A minimum cash balance that the depositor (company) must maintain either to continue to earn interest on the amount deposited in the bank account or to avoid certain fees, such as service charges
Compensating balance
Events that could create negative financial results for a company; required to be recorded when the event is probable and estimable in terms of its monetary effects
Contingent liabilities
Long-term prepayments frequently found in the other assets classification that companies amortize over various lengths of time, depending on how long the company will benefit from the expenditures; also called deferrals
Deferred charges
Incurring financial obligations without having to record the liability on the balance sheet
Off-balance-sheet financing
A correction of a previously undetected material error that affected the net income or loss of a previous accounting period
Prior period adjustment
Indicates the cash generated by operating activities on a per share (common-size) basis
Cash flow per share ratio
Accounts representing operating obligations
Current operating liabilities
Shows the actual cash inflows and outflows from each operating activity reported on the income statement
Direct format
Shows the differences between accrual-based net income and cash flows from operations
Indirect format
Noncash accounts that represent operating activities
Noncash current operating assets
