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Accounting Definitions > E Accounting Definitions > Flashcards

E Accounting Definitions Flashcards

1
Q

<p>Earnings</p>

A

<p>The excess of revenue over expenses for an accounting period. Sometimes used synonymously with net earnings, net income, or income. (IMA)</p>

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2
Q

<p>Earnings at Risk</p>

A

<p>A probabilistic estimate of the sensitivity of earnings; how forecasted earnings might be affected by changes in certain risk factors and other variables. (IMA)</p>

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3
Q

<p>Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)</p>

A

<p>A metric used to evaluate profitability; it eliminates the effects of financing and accounting decisions. (IMA)</p>

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4
Q

<p>Earnings Coverage</p>

A

<p>The availability of a company's cash flows to service its debt. (IMA)</p>

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5
Q

<p>Earnings Distribution</p>

A

<p>A probabilistic distribution of earnings outcome such that one can estimate the probability of obtaining a certain level of earnings. Used in risk management. (IMA)</p>

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6
Q

<p>Earnings Per Share (EPS)</p>

A

<p>Net income available to common shareholders on a per share basis. (IMA)</p>

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7
Q

<p>Earnings Persistence</p>

A

<p>The stability of earnings over time for a company. Persistent earnings are consistent earnings from one period to the next. (HOCK)</p>

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8
Q

<p>Earnings Quality</p>

A

<p>The extent that net income is a realistic portrayal of operating performance (i.e., that reported results have not been intentionally overstated or understated by management). (IMA)</p>

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9
Q

<p>Earnings Trend</p>

A

<p>The trend of the company's earnings over time. (HOCK)</p>

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10
Q

<p>Earnings Variability</p>

A

<p>The fluctuation in earnings from one period to the next. (HOCK)</p>

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11
Q

<p>Earnings Yield</p>

A

<p>Earnings per share for the most recent 12 months as a proportion of the current price per share. (IMA)</p>

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12
Q

<p>Earnings-Based Valuation</p>

A

<p>Techniques used to value a share of stock or entity based on earnings expected to be generated by the item or entity. Generally involves present value models. (IMA)</p>

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13
Q

<p>Economic Order Quantity (EOQ)</p>

A

<p>The optimal amount of an item to order when inventory is reduced to the reorder point. (Also called Optimal Lot Size.) (IMA)</p>

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14
Q

<p>Economic Profit</p>

A

<p>A return to investors that exceeds the opportunity cost of financial capital. (IMA)</p>

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15
Q

<p>Economies of Scale</p>

A

<p>Reduction in an entity's per unit cost associated with production processes that produce large volumes of output. (IMA)</p>

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16
Q

<p>Effective Interest Rate</p>

A

<p>The internal rate of return or yield to maturity of a bond at the time of issue. (IMA)</p>

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17
Q

<p>Effectiveness</p>

A

<p>Whether or not a specific goal or objective was accomplished. (HOCK)</p>

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18
Q

<p>Efficiency</p>

A

<p>The attempt to fulfill the objectives of the company while using the least amount of inputs. (HOCK)</p>

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19
Q

<p>Efficiency (Usage) Variances</p>

A

<p>The difference between the actual quantity of input used and the budgeted quantity of input, multiplied by the budgeted price. (IMA)</p>

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20
Q

<p>Efficient Market Hypothesis</p>

A

<p>The hypothesis that security prices always fully reflect all publicly avail­able information concerning traded securities. (IMA)</p>

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21
Q

<p>Elasticity</p>

A

<p>A measure of the degree to which a price change for an item results in a unit change in supply or a unit change in demand. (IMA)</p>

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22
Q

<p>Elasticity of Demand</p>

A

<p>A measure of consumer response to a change in the price of a product or service. Calculated as the percent change in quantity demanded divided by a percent change in price. Depending on the response, the product or service is called either elastic or inelastic. (IMA)</p>

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23
Q

<p>Electronic Eavesdropping</p>

A

<p>Occurs when a computer user is able to observe transmissions intended for someone else. (HOCK)</p>

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24
Q

<p>Embedded Audit Routines</p>

A

<p>Modifying a regular production program by building special auditing routines into it so that a specific transaction or type of transaction data can be analyzed. (HOCK)</p>

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25
Q

<p>Employee Benefit Statement</p>

A

<p>A statement that outlines all of the employee related costs. In addition to salary, it might include pension costs, employer taxes and any other costs that the company needs to pay as the result of having an employee. (HOCK)</p>

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26
Q

<p>Encryption</p>

A

<p>A procedure that transforms information, using an algorithm, to make it unreadable to anyone who does not have the key to decode the message. (IMA)</p>

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27
Q

<p>Engineered Costs</p>

A

<p>Costs that have a definite physical relationship to the activity base or measure. They result from activities that have well defined cause and effect relationships between inputs and outputs and between costs and benefits. (HOCK)</p>

28
Q

<p>Enterprise Resource Planning (ERP)</p>

A

<p>ERP systems integrate (or attempt to integrate) the data and processes of an organization into a single unified system. (IMA)</p>

29
Q

<p>Enterprise Risk Management (ERM)</p>

A

<p>A process applied across the enterprise designed to 1. Identify potential events that, if they occur, could negatively impact the enterprise; and 2. Manage this risk to provide reasonable assurance to management and the Board of Directors. (IMA)</p>

30
Q

<p>Enterprise-Wide</p>

A

<p>Used to describe systems and processes in use throughout an organization. (IMA)</p>

31
Q

<p>Entity</p>

A

<p>A person, partnership, corporation, or other separate identifiable unit. (IMA)</p>

32
Q

<p>Entity-Level Controls</p>

A

<p>Controls that relate to the control environment in the company, management override, risk assessment processes, centralized processing controls and any other control that is relevant to the organization as a whole. (HOCK)</p>

33
Q

<p>Equilibrium</p>

A

<p>In economics the state of a market for a product or service where there is a balance of supply and demand</p>

34
Q

<p>Equity</p>

A

<p>The residual amount after deducting an entity's liabilities from its assets. The amount that shareholders own in a corporation. (IMA)</p>

35
Q

<p>Equity Carve-Out</p>

A

<p>When a parent company sells a minority (usually 20% or less) stake in a subsidiary for an IPO. (Also called partial spin-off.) (IMA)</p>

36
Q

<p>Equity Multiplier</p>

A

<p>Total assets as a proportion of common equity. (Also called Financial Leverage Ratio.) (IMA)</p>

37
Q

<p>Equivalent Units</p>

A

<p>A measure of the physical quantities of inputs necessary to produce output of one fully complete unit. (IMA)</p>

38
Q

<p>Error Term</p>

A

<p>The distance between the regression line and any particular data point. (HOCK)</p>

39
Q

<p>Ethics Code</p>

A

<p>A list of principles and/or standards governing the conduct of individuals within an organization. (IMA)</p>

40
Q

<p>Ethics Help-Line</p>

A

<p>A resource for obtaining guidance on ethical dilemmas; generally in the form of an exclusive telephone number that connects to an ethics counselor. (IMA)</p>

41
Q

<p>Eurodollars</p>

A

<p>Deposits denominated in U.S. Dollars at financial institutions outside the United States. (IMA)</p>

42
Q

<p>European Option</p>

A

<p>An option that gives the owner the right to buy or sell an asset, but it is exercisable only on the maturity date. (HOCK)</p>

43
Q

<p>Event Identification</p>

A

<p>The process undertaken by management in which the look to identify events. An event is an incident or occurrence emanating from internal or external sources that affects implementation of the organization's strategy or achievement of its objectives. Events may have positive or negative impact, or both. (HOCK)</p>

44
Q

<p>Everyday Low Pricing</p>

A

<p>A pricing strategy used at the retail level to charge an everyday low price with few temporary price reductions. (HOCK)</p>

45
Q

<p>Exception Reporting</p>

A

<p>Reporting that alerts management by focusing on significant deviations from planned performance. (IMA)</p>

46
Q

<p>Exchange Rate</p>

A

<p>The price of one country's currency in terms of another country's cur­rency. (IMA)</p>

47
Q

<p>Exchange Rate Risk</p>

A

<p>The risk that the value of a cash flow will decline due to a change in exchange rates. (IMA)</p>

48
Q

<p>Exercise Price</p>

A

<p>Price at which a call option or put option may be exercised (carrying out terms of agreement). (Also called Strike Price.) (IMA)</p>

49
Q

<p>Expected Costs</p>

A

<p>A level of costs that would be challenging to attain, but attainable under normal conditions . (HOCK)</p>

50
Q

<p>Expected Loss</p>

A

<p>The amount that management expects to be lost to a given risk on average in one year. Because it is expected, the business should budget to cover it. (HOCK)</p>

51
Q

<p>Expected Value</p>

A

<p>The weighted average of the outcomes of an action, in which the values of the possible outcomes are weighted by their probabilities. (IMA)</p>

52
Q

<p>Expenditure</p>

A

<p>Payment for goods or services received that may be made at either the time the goods or services are received or a later time. (IMA)</p>

53
Q

<p>Expense</p>

A

<p>Cost of goods and services used in the current accounting period. (IMA)</p>

54
Q

<p>Expense Recognition</p>

A

<p>The recording in the accounting system of a cost. (IMA)</p>

55
Q

<p>Expiration Date</p>

A

<p>The date on which the option to purchase (or sell) expires. (HOCK)</p>

56
Q

<p>Explicit Cost</p>

A

<p>A cost that can be identified and accounted for. Explicit costs represent obvious cash outflows from a business. (HOCK)</p>

57
Q

<p>Exploiting (Or Accepting) A Risk</p>

A

<p>One of the four responses to risk, exploiting a risk is the strategic process by which a firm deliberately exposes itself to risk because its management believes they can take advantage of a situation and generate value for shareholders. (HOCK)</p>

58
Q

<p>Exponential Smoothing</p>

A

<p>A methodology used to produce a smoothed time series which assigns exponentially decreasing weights as the observation get older. (IMA)</p>

59
Q

<p>Expropriation Risk</p>

A

<p>The risk of a foreign government seizing the private property of a company. (IMA)</p>

60
Q

<p>Extension</p>

A

<p>A voluntary agreement in which creditors agree to postpone the maturities of their obligations to allow the debtor to have a better chance to repay the debt. (HOCK)</p>

61
Q

<p>External Factors</p>

A

<p>Factors beyond the control of an entity that influence overall economic conditions or the market for its product. (IMA)</p>

62
Q

<p>External Failure Costs</p>

A

<p>Costs that an entity incurs when it detects nonconforming products or services after delivering them to customers (e.g., warranty repairs and product liability). (IMA)</p>

63
Q

<p>External Financial Reporting</p>

A

<p>The reporting of financial information focused on an external audience (lenders, investors, and the general public). (IMA)</p>

64
Q

<p>External Funds</p>

A

<p>Sources of financing raised outside the company through the issuance of debt and/or equity securities. (HOCK)</p>

65
Q
A

Accounting Definitions (15 decks)

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