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Unformatted text preview: APPENDIX A Glossary Accounts payable: The value of purchased services and materials that are being used but have not been paid. Accounts receivable: Credit extended to customers usually on a 30-day basis. Cash is set aside to account for the fact that some customers may not pay their bills. Administrative expense: Includes administrative and offices salaries, rent, auditing, legal, engineering, etc. expenses. Amortization: Often used interchangeably with depreciation but there is a slight technical difference depending on whether or not the life of an asset is known. If the period of time is definitively known, the annual expense is called amortization . If the life is estimated, it is called depreciation . Annual net sales: Pounds of product sold times the net selling price. Annual report: The report of management to stockholders and other interested parties at the end of a year of operation showing the status of the company, its funds, profits, income, expenses, and other information. Assets: The list of money on hand, marketable securities, monies due, investments, plants, properties, patents, inventory, etc. at cost or market value whichever is smaller. These are the items a company or a person owns. Balance sheet: This is a tabulation of the assets, liabilities, and stockholders’ equity for a company. The assets must equal the liabilities plus the stockholders’ equity. Bonds: When one purchases a bond, this person acquires an interest in debt and becomes a creditor of a company. The purchaser receives the right to receive regular interest payments and the subsequent repayment of the principal. Book value of common stock: This is the net worth of a firm divided by the number of shares of common stock issued at the time of a report. Book value: The original investment minus the accumulated depreciation. Break-even chart: This is an economic production chart depicting the point at which the total revenue equals the total cost of production. By-product: A production item made as a consequence of the production of a main product. The by-product may have value in itself or as a raw material for another use. Capital ratio: The ratio of capital investment to sales dollars; it is the reciprocal of capital turnover. Capital turnover: The ratio of sales dollars to capital investment; it is the reciprocal of the capital ratio. Cash: Money that must be on hand to pay for monthly operating expenses, e.g., wages, salaries, raw materials, etc. Cash ﬂow: Net income after taxes plus depreciation (and depletion) is the cash ﬂow into a company’s treasury. Common stock: Money paid into a corporation for the purchase of shares of common stock that becomes the permanent capital of the firm. Common stockholders have the right to transfer ownership and may sell the stock to individuals or firms. Common stockholders have the right to vote at annual meetings or by proxy....
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This note was uploaded on 10/27/2008 for the course NNNNNNNN nnnnnnnn taught by Professor Nnnnnn during the Spring '08 term at Punjab Engineering College.
- Spring '08