Financial Statements by Lessambo

Financial Statements by Lessambo is the Financial Statements: Analysis and Reporting textbook authored by Felix I. Lessambo, Central Connecticut State University, and branded as algrave Macmillan, stating that "this Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG."

• Accelerated depreciation. Method that records greater depreciation than straight-line depreciation in the early years and less depreciation than straight-line in the later years of an asset's holding period.
• Accounting. Recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the financial statements.
• Accounting cycle. The sequence of steps followed in the accounting process to measure business transactions and transform the measurements into financial statements for a specific period.
• Accrual accounting. The attempt to record the financial effects of transactions and other events in the periods in which those transactions or events occur rather than only in the periods in which cash is received or paid by the business, using all the techniques developed by accountants to apply the matching principle.
• Adjusted trial balance. A trial balance prepared after all adjusting entries have been recorded and posted to the accounts. Should have equal credit and debit totals.
• Adjusting event. An event after the reporting period that provides further evidence of conditions that existed at the end of the reporting period, including an event that indicates that the going concern assumption in relation to the whole or part of the enterprise is not appropriate.
• Amortization. Gradual and periodic reduction of any amount, such as the periodic write-down of a bond premium, the cost of an intangible asset or periodic payment of mortgages or other debt.
• Asset. An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events.
• Balance sheet. Is a statement of a company's financial position at a particular moment in time. It shows the two sides of a company's financial situation: what it owns and what it owes.
• Carrying value. Amount, net or contra account balances, that an asset or liability shows on the balance sheet of a company.
• Cash basis. Method of bookkeeping by which revenues and expenditures are recorded when they are received and paid.
• Cost of goods sold. Figure representing the cost of buying raw materials and producing finished goods.
• Current asset. Asset that one can reasonably expect to convert into cash, sell, or consume in operations within a single operating cycle, or within a year if more than one cycle is completed each year.
• Current liability. Obligation whose liquidation is expected to require the use of existing resources classified as current assets, or the creation of other current liabilities.
• Deferred income taxes. Assets or liabilities that arise from timing or measurement differences between tax and accounting principles.
• Dilution. A reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.
• Dividends. Distribution of earnings to owners of a corporation in cash, other assets of the corporation, or the corporation's capital stock.
• Double-Declining-Balance Depreciation Method (DDB). Method of accelerated depreciation, approved by the Internal Revenue Service permitting twice the rate of annual depreciation as the straight-line depreciation method.
• Ending inventory. Merchandise on hand at the end of an accounting period.
• Equity account. Account in the equity section of the balance sheet. Includes capital stock, additional paid-in-capital, and retained earnings.
• Equity instrument. Any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
• Event after the reporting period. An event, which could be favorable or unfavorable, that occurs between the end of the reporting period and the date that the financial statements are authorized for issue.
• Expense. Something spent on a specific item or for a particular purpose.
• Extraordinary items. Events and transactions distinguished by their unusual nature and by the infrequency of their occurrence. Extraordinary items are reported separately, less applicable income taxes, in the entity's statement of income or operations.
• Factoring. Selling a receivable at a discounted value to a third party for cash.
• Fair value. The amount for which an asset is exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.
• Financial Accounting Standards Board (FASB). Independent, private, non-governmental authority for the establishment of accounting principles in the United States.
• Financial instrument. A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
• Financial statements. Presentation of financial data including balance sheets, income statements, and statements of cash flow, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for a period then ended.
• Foreign currency. A currency other than the functional currency of the entity being referred to (for example, the dollar could be a foreign currency for a foreign entity). Composites of currencies, such as the Special Drawing Rights, used to set prices or denominate amounts of loans, and so forth, have the characteristics of foreign currency.
• Foreign currency statements. Financial statements that employ as the unit of measure a functional currency that is not the reporting currency of the reporting entity.
• Foreign currency translation. The process of expressing in the reporting currency of the reporting entity those amounts that are denominated or measured in a different currency.
• Functional currency. An entity's functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment in which an entity primarily generates and expends cash.
• Full disclosure. Requirement to disclose all material facts relevant to a transaction.
• General ledger. Collection of all asset, liability, owners' equity, revenue, and expense accounts.
• Goodwill. Premium paid in the acquisition of an entity over the fair value of its identifiable tangible and intangible assets less liabilities assumed.
• Held-to-maturity security. A debt security that management intends to hold to its maturity or payment date and whose cash value is not needed until that date.
• Historical Cost. Original cost of an asset to an entity.
• Impairment. An accounting principle that describes a permanent reduction in the value of a company's asset, normally a fixed asset.
• Income statement. Summary of the effect of revenues and expenses over a period of time.
• Intangible asset. Asset having no physical existence such as trademarks and patents.
• Interim financial statements. Financial statements that report the operations of an entity for less than one year.
• Interim period. A financial reporting period shorter than a full financial year (most typically a quarter or half-year).
• Inventory. Tangible property held for sale, or materials used in a production process to make a product.
• Investment securities. Generally, an instrument that provides an ownership position in a corporation (a stock), a creditor relationship with a corporation or governmental body (a bond), rights to contractual cash flows backed by pools of financial assets or rights to ownership such as those represented by options, subscription rights and subscription warrants.
• Journal. Any book containing original entries of daily financial transactions.
• Journal entry. A notation in the general journal. It records a single transaction.
• Lease. Conveyance of land, buildings, equipment or other assets from one person (lessor) to another (lessee) for a specific period of time for monetary or other consideration, usually in the form of rent.
• Liability. Debts or obligations owed by one entity to another entity payable in money, goods, or services.
• LIFO liquidation. The reduction of inventory levels at year's end below beginning-of-the-year levels for businesses using the LIFO inventory method.
• Mark-to-market. Method of valuing assets that results in adjustment of an asset's carrying amount to its market value.
• MD&A. SEC requirement in financial reporting for an explanation by management of significant changes in operations, assets, and liquidity.
• Net interest margin. A measure of the yield on interest earning assets relative to total interest expense. It is the amount of interest income less interest expense, divided by average interest earning assets.
• Net operating income. Represents operating income less operating expenses for owned real estate properties.
• Non-adjusting event. An event after the reporting period that is indicative of a condition that arose after the end of the reporting period.
• Non-controlling interest. Portion of shareowners' equity in a subsidiary that is not attributable a parent company.
• Operating cycle. Period of time between the acquisition of goods and services involved in the manufacturing process and the final cash realization resulting from sales and subsequent collections.
• Operating expense. An expense other than COGS that is incurred in running a business.
• Operating profit (or operating loss). The difference between the revenues of a business and the related costs and expenses, excluding income derived from a sources other than its regular activities and before income deductions.
• Other comprehensive income. Changes in assets and liabilities that do not result from transactions with shareowners and are not included in net income but are recognized in a separate component of shareowners' equity. Other comprehensive income includes the Investment securities; currency translation adjustments; cash flow hedges; recognized assets, liabilities or forecasted transactions that are attributable to a specific risk; benefit plans.
• Periodic inventory system. A system for determining inventory on hand by a physical count that is taken at the end of an accounting period.
• Perpetual inventory system. A system that requires a continuous record of all receipts and withdrawals of each item of inventory.
• Pro forma. Presentation of financial information that gives effect to an assumed event.
• Puttable instrument. A financial instrument that gives the holder the right to put the instrument back to the issuer for cash or another financial asset or is automatically put back to the issuer on occurrence of an uncertain future event or the death or retirement of the instrument holder.
• Receivables. Amounts of money due from customers or other debtors.
• Re-measurement. Is a process to measure financial statement amounts that are denominated or stated in another currency into the functional currency of the reporting entity. Re-measurement affects earnings.
• Reporting currency. The currency in which a reporting entity prepares its financial statements.
• Reporting entity. An entity or group whose financial statements are being referred to.
• Retained earnings. Accumulated undistributed earnings of a company retained for future needs or for future distribution to its owners.
• Revenues. Sales of products, merchandise, and services; and earnings from interest, dividend, rent, etc.
• Salvage value. Selling price assigned to retired fixed assets or merchandise unsalable through usual channels.
• Securitization. A process whereby loans or other receivables are packaged, underwritten and sold to investors. In a typical transaction, assets are sold to a special purpose entity, which purchases the assets with cash raised through issuance of beneficial interests (usually debt instruments) to third-party investors. Whether or not credit risk associated with the securitized assets is retained by the seller depends on the structure of the securitization.
• Statement of cash flows. One of the basic financial statements that is required as part of a complete set of financial statements prepared in conformity with GAAP. It categorizes net cash provided or used during a period as operating, investing and financing activities, and reconciles beginning and ending cash and cash equivalents.
• Straight-line depreciation. Account method that reflects an equal amount of wear and tear during each period of an asset's useful life.
• Taxable income. Taxable income is generally equal to a taxpayer's adjusted gross income during the tax year less any allowable exemptions and deductions.
• Transaction. The act of transacting, especially a business agreement or exchange; event or condition recognized by an entry in the book account.
• Translation. Is the process used for expressing the financial results of a separate entity so that it may be included in the parent entity's consolidated financial statements when the separate entity's functional currency is different from the parent's. Translation affects equity.
• Unearned income. Payments received for services which have not yet been performed.
• Valuation. The process of determining the present value of a bond based on the current market interest rate.
• Variable Interest Entity (VIE). An entity that must be consolidated by its primary beneficiary, the party that holds a controlling financial interest. A variable interest entity has one or both of the following characteristics: (1) its equity at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (2) as a group, the equity investors lack one or more of the following characteristics: (a) the power to direct the activities that most significantly affect the economic performance of the entity, (b) obligation to absorb expected losses, or (c) right to receive expected residual returns.
• Weighted-average-cost method. An average-cost method procedure for determining the cost of ending inventory under the periodic inventory system.
• Work in progress. Inventory account consisting of partially completed goods awaiting completion and transfer to finished inventory.
• Working capital. Excess of current assets over current liabilities.
• Write-offs. Describes a reduction in recognized value. In accounting terminology, it refers to recognition of the reduced or zero value of an asset.
• Yield to maturity. Rate of return on a security to its maturity, giving effect to the stated interest rate, accrual of discount, or amortization of premium.