FINANCE ACCOUNTING COACH | Free Online Accountant Reference Site

[ U ]

Understandability

o         Information provided in financial statements has the quality of understandability when is comprehensible to users who have a [...]

[ T ]

Tangible asset

o a physical asset

Times interest earned

o the number of times that loan interest is covered by profits, ie earnings(profits) before tax and interest divided by the interest charge. It indicates how safe creditors interest charges are.

Thin capitalization

a thinly capitalized company is one where its capital structure consists of very high debt/gearing level.
many countries [...]

[ S ]

Sale and leaseback transaction

The sale of an asset and the leasing back of the same asset. The lease payment and the sale price are usually interdependent because they are negotiated as a package.

Sarbanes-Oxley

• The Sarbanes Oxley(SOX) Act of 2002 is a piece of US legislation
• It was introduced in response to high profile financial scandals like the Enron and WorldCom
• It aims to protect shareholders and the general public from accounting errors and fraudulent practises
• it is administered by the Securities and Exchange Commission(SEC)
• The Act defines what company records must be stored and for how long. It set rules for the certification of financial reports by CEOs and CFOs, who are then personally responsible for the statements made, in addition to a number of other provisions.

Solvency

The availability of cash over the longer term to meet financial commitments as they fall due.

Subsidiary

An entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent).

Substance over form

The principle that transactions and other events are accounted for and presented in accordance with their substance and economic reality and not merely their legal form.

Continue reading Glossary Of Accounting & Finance Terms-Alphabet S

[ R ]

Realisable value

o         The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal.

Recognition

o         The process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition:

a.       it is probable that any future economic benefit associated with the item will flow to or from the entity; and

b.       the item has a cost or value that can be measured with reliability. Continue reading Glossary Of Accounting & Finance Terms-Alphabet R

[ Q ]

Quick assets

o         see liquid [...]