In its most basic sense, accounting describes the process of tracking an individual or company’s monetary transactions. Accountants record and analyze these transactions to generate an overall picture of their employer’s financial health. Accountants calculate ROI by dividing the net profit of an investment by its cost, then multiplying by 100 to generate a percentage. For example, consider a person who invests $10,000 in a company’s stock, then sells that stock for $12,000. When an investor incurs a loss, the ROI is expressed as a negative number. It is essentially a way of adjusting future revenues, expenses, and debts for inflation.

• Formal agreement, also called a deed of trust, between an issuer of bonds and the BONDHOLDER covering certain considerations such as form of the BOND for example.
• (2) Requirement found in ethical codes that the person governed by the ethical rules exercise professional care in conducting his or her activities.
• In a POOLING OF INTERESTS, two entities merge through an exchange of COMMON STOCK and there is no change in the CARRYING VALUE of the assets or liabilities.
• Residual INTEREST in the ASSETS of an entity that remains after deducting its LIABILITIES.
• A useful measure of overall operational efficiency when compared with the prior periods or with other companies in the same line of business.
• General term referring to the organized trading of securities through the various EXCHANGES and the OVER-THE-COUNTER MARKET.
• Amount received from the sale or disposition of property, from a LOAN, or from the sale or issuance of securities after deduction of all costs incurred in the transaction.

Others include accrued costs (costs incurred but not resolved during a particular accounting period) and accrued expenses (expenses or liabilities incurred but not resolved during a particular accounting period). In each of the methods used above, there is a mismatch between the total values of assets and liabilities after conversion. While calculating income and net profit, variations in exchange rates can distort the amounts to a great extent, which is why accountants often use hedging to do away with this risk. The method translates monetary items such as cash and accounts receivable using the current exchange rate and translates nonmonetary assets and liabilities including inventories and property using the historical exchange rate. Companies that own assets in foreign countries, such as plants and equipment, must convert the value of those assets from the foreign currency to the home country’s currency for accounting purposes. In the U.S., this accounting translation is typically done on a quarterly and annual basis.

Allowance for Doubtful Accounts

Stocks and other negotiable instruments which can be easily bought and sold on either listed exchanges or over-the-counter markets. The price investors are willing to The Importance of Accurate Bookkeeping for Law Firms: A Comprehensive Guide pay for a share  of stock on the open market. Amount subtracted from the selling price, when a customer sells SECURITIES to a DEALER in the OVER-THE-COUNTER market.

A person who owns a BOND certificate issued by a government or CORPORATION. Individuals responsible for overseeing the affairs of an entity, including the election of its officers. The board of a CORPORATION that issues stock is elected by stockholders. Bid is the highest price a prospective buyer is prepared to pay at a particular time for a trading unit of a given SECURITY; asked is the lowest price acceptable to a prospective seller of the same security.

Average Days’ Sales Uncollected

Accountants track partial payments on debts and liabilities using the term « on credit » (or « on account »). Both versions of the term describe products or services sold to customers without receiving upfront payment. In accounting, liquidity describes the relative ease with which an asset can be sold for cash. Assets that can easily be converted into cash are known as liquid assets. Accounts receivable, securities, and money market instruments are all common examples of liquid assets. As used in accounting, inventory describes assets that a company intends to liquidate through sales operations.

Costs that remain constant within a defined range of activity, volume, or time period. Tangible LONG TERM ASSETS used in the continuing operation of a business that are unlikely to change for a long time. Time granted by a taxing authority, such as the INTERNAL REVENUE https://investrecords.com/the-importance-of-accurate-bookkeeping-for-law-firms-a-comprehensive-guide/ SERVICE (IRS), a state or city, which allows the taxpayer to file tax returns later than the original due date. Raising the money by issuing shares of COMMON STOCK or PREFERRED STOCK. Total income taxes expressed as a percentage of NET INCOME before taxes.

Taxable Earnings

The law of negligence is founded on reasonable conduct or reasonable care under all circumstances of particular care. Doctrine of negligence rests on duty of every person to exercise due care in his conduct toward others from which injury may result. Serves as a forum for the 54 State Boards of Accountancy, which administer the uniform CPA examination, license Certified Public Accountants and regulate the practice of public accountancy in the United States. Serves as a forum for the 54 State Boards of Accountancy, which administer the uniform CPA examination, license Certified Public Accountants and regulate the practice of public accountancy in the United States. Average of SECURITY or COMMODITY prices constructed on a period as short as a few days or as long as several years and showing trends for the latest interval. Legal instrument evidencing a security interest in ASSETS, usually real estate.