The Portable MBA in Finance and Accounting, 4th Edition

Glossary

 

 

 

 

Accrual accounting: An accounting method that recognizes revenues as they are earned and expenses as they are incurred. The timing of revenue and expense recognition is not tied to the timing of the inflow and outflow of cash. Accrual accounting is seen as essential in order to develop reliable measures of periodic financial performance and is a core concept of generally accepted accounting principles (GAAP).

Acid test ratio: See Quick ratio.

Acquisition: The purchase—not necessarily for cash—of a controlling interest in a firm.

AICPA (The American Institute of Certified Public Accountants): This is the national professional association of certified public accountants (CPAs).

Amortization: The periodic, noncash charge used to reduce an intangible asset.

Amortization schedule: The portion of the total initial cost of an intangible asset expensed each period.

Amortize: To repay principal and interest toward an amount borrowed over time.

Annuity: Equal payments, at a specific time interval, for a specific time period.

Annuity due: An annuity that pays installments at the beginning of each time interval.

Arbitration: A form of alternative dispute resolution. Its purpose is to resolve disputes outside of the court system using a negotiator or arbitrator. There are various organizations that provide such service (e.g., JAMS and the American Arbitration Association). There are other professionals, usually attorneys or retired judges, who perform these services.

Asset: An ...