Balance Sheet - a position statement that presents an organized list of assets, liabilities, and equity at a
particular point in time
Book Value - assets minus liabilities as shown in the balance sheet
Liquidity - period of time before an asset is converted to cash or until a liability is paid
Long Term Solvency - the riskiness of a company with regard to the amount of liabilities in its capital
structure
Operating Cycle - period of time necessary to convert cash to raw materials, raw materials to finished
product, the finished product to receivables, and then finally receivables back to cash
Cash Equivalents - certain negotiable items such as commercial paper, money market funds, and U.S.
Treasury bills that are highly liquid investments quickly convertible to cash
Short-Term Investments - investments not classified as cash equivalents that will be liquidated in the
coming year or operating cycle, whichever is longer
Accounts Receivable - receivables resulting from the sale of goods or services on account
Notes Receivable - receivables supported by a formal agreement or note that specifies payment terms
Inventories - goods awaiting sale (finished goods), goods in the course of production (work in progress),
and goods to be consumed directly or indirectly in production (raw materials)
Prepaid Expense - represents an asset recorded when an expense is paid in advance, creating benefits
beyond the current period
, Investments - assets not used directly in operations
Property, Plant, and Equipment - land, buildings, equipment, machinery, autos, and trucks; tangible,
long-lived assets used in the operations of the business
Intangible Assets - generally represent exclusive rights that a company can use to generate future
revenues
Current Assets - include cash and all other assets expected to become cash or be consumed within one
year or the operating cycle, whichever is longer
Assets - probable future economic benefits obtained or controlled by a particular entity as a result of
past transactions or events
Liabilities - probable future sacrifices of economic benefits arising from present obligations of a
particular entity to transfer assets or provide services to other entities in the future as a result of past
transactions or events
Current Liabilities - usually include accounts & notes payable, unearned revenues, accrued liabilities, and
the current maturities of long-term debt
Current Liabilities - expected to require current assets and usually are payable within one year
Notes Payable - promissory note that obligates the issuing corporation to repay a stated amount at or by
a specified maturity date and to pay interest to the lender between the issue date and maturity
Accounts Payable - obligations to suppliers of merchandise or of services purchased on an open account
Unearned Revenues - cash received from a customer in one period for goods or services that are to be
provided in a future period
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