Finance Ch. 2

Finance Ch. 2 - Term Definition accrual-basis approach used...

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Term: accrual-basis approach Definition: used by accountants to construct financial statement Term: cash flow approah Definition: focuses on current and prospective inflows and outflows of cash; used by financial professionals Term: marketable securities Definition: represent liquid short-term investments Term: deferred taxes Definition: a long-term liability that reflects the difference between the taxes that firms actually pay and the tax liabilities they report on their public financial statements Term: preferred stock Definition: the form of ownership that has preference over common stock when the firm distribute income and assets
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Term: common stock Definition: = (number of outstanding common shares) X (par value per share) Term: paid-in-capital in excess of par Definition: = (number of shares outstanding) X (original selling price of the shares) Term: gross profit Definition: amount by which sale revenue exceeds the cost of goods sold Term: dividend payout ratio Definition: the fraction of current earnings
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