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AccountsShort Definitions

1. Line of Credit: Availability of loan from the source in a continuous way.2. Bonus Shares: Free shares issued by the company to the existing shareholders.3. Capitalization of revenue: Revenue used as source of capital.4. Solvency: Ability of corporation to meet its debts at the time of maturity.5. Kinds of Bond: Serial Bonds, Registered Bonds, Coupon Bonds, Convertible Bonds.6. Contingent Liability: A liability which may or may not arise on the happening of unexpected events.7. Interim Dividend is paid: The Company pays the dividend at any time before the annual dividend.8. Internal Control: A system in which every activity is controls by itself through a particular procedure.9. Concept of Financial Reporting: The report submitted to the directors & shareholder about the income statement & balance sheet.10. Minority Interest: Share portion of ownership of subsidiary company presented in the balance sheet of holding company.11. Calculation of goodwill methods: Net Profit Basis, Super Profit Method, Capitalization of revenue method.12. Inventory Shrinkage: Reduction in the value of inventory due to Theft, Fire, & Pilferage.13. Contra Asset Account: Corresponding account of any account presented in the Balance Sheet or in Income Statement.14. Calculation of Inventory turnover: To know that how many times the

inventory converted into sale during physical year.15. Mark down Cancellation: Reduction in the value of sale but not less than the amount of Mark Down added in the value of Sale.16. Circumstances Stock Dividend paid: When the company wants to retain the available cash with herself. Or the number of outstanding share is sufficient, or to convert any revenue account in to capital.17. Why Cash flow Statement Prepared: To know that how much cash has been generated during the period through Financing, investing & operating activities.18. Purpose of maintaining the reserves & provisions: To meet the need of future events & for the expansion of business or to replace the assets with new one & to pay the difference amount from the provisions.19. In Which situation the inventories will be calculated by estimation procedure: When the financial period not completed or at any time when the financial statement is to be prepared before the end of financial period.20. Term “Lower of cost or market: Recording the value of ending inventory at cost or market, whichever is lower to minimize the profit recognition, & for the safety of organization not to bear the loss.21. Concept of present value: the value of a series of payment to be received in future & its current value through DCF technique.22. Stock Split: Bifurcation of stocks into much number of shares in order to increase the number of exiting shares.23. Bond Yield: Real return of the investment in bond in shape if interest.

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What stands for “Management Fraud: 24. Recurring Profit & non recurring profit: Profit from the operation of the business & the profit from the sale of assets or the item. Operating profit & non operating profit.25. Depletion & Amortization: Reduction in the value of natural assets & intangible assets.26. Common size Statement: Converting of financial statement horizontally or vertically in ratios.27. Quick & Liquid Assets: Those assets which are more near to cash. Cash, Marketable securities, A/R etc.28. Account Receivable Turnover Calculated: Total sale divided by average receivable.29. Half year convention: Calculation of depreciation in fractional period & half year of both the year is considered at the beginning & at the end of the year.30. Define Bond: Certificate issued by firm to get long term debt.31. Define Bonus Shares: share issued to existing shareholders from profit of the firm without any payment.32. What is right share: Shares issued to existing shareholders before outsides.33. What is fair commercial return: The percentage of profit determined by the firm before starting the business.34. Absorption: When one company purchases other business (Assets).35. Intrinsic value of share: Valuation of shares based on net assets of business according to last Balance Sheet.36. Intrinsic paid dividend: dividend paid before end of the year when company has sufficient pay.37. Minority interest: the amount available to minor shareholders in holding

company balance sheet.38. Methods of calculating goodwill: Yield basis Net Asset Capitalization basis.39. Liquidity: the ability of firm to pay its debts whenever they become due.40. Ratio Analysis: process of composing various items of balance sheet & income statement in order to evaluate the position of business.41. When stock dividend paid: when the firm has not sufficient cash or the firm does not want to disturb its working capital ratio.42. Why reserves & provisions maintained: To meet emergency situation in the business or to exp& the business or to replace fixed assets.43. Redemption of Bond: repayment of long term loan at time of its maturity.44. Bond yield: The return on the actual purchase price of the bond by investor.45. Recurring profit: profit from the operations in recurring profit.46. Non recurring profit: Profit from the sale of fixed assets is non recurring profit.47. Types of inventories: Raw Material, Goods in process & finished goods.48. Primary market: market where securities are sold for first time.49. Secondary market: market where sale or purchase of company’s trade of that instrument already exists in market.50. Marketing principal: the over liability of cash and its investment in M/s and vice versa.51. Compulsory liquidation: the liquidation of company by the orders of court.52. Capital Reserve: Reserve maintained by the firm from its shares.53. Working Capital: the difference between current assets and current

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liabilities.54. Indenture: securities attached when the firm get loan from any source.55. Sinking fund: fund maintained from the amount of interest to be used for future payment of debt.56. Purchase consideration: the amount paid by purchasing company in purchasing other company.57. Methods to pay purchase consideration: lump sum, Net Asset Basis, Payment per share, and Based on value of both company’s shares.58. Absorption: when one company purchase assets and liabilities of other company and later company go into liquidation.59. Quantities as cost and: Periodic System and Perpetual Inventory System.60. F.O.B Shipping: Title passes to buyer with the loading of goods at point of shipment.61. F.O.B Destination: No recognition of transaction until goods is received by buyer.62. Segregated Goods: When goods are prepared on special order and segregated for shipment title may pass with such segregated.63. Conditional & installment Sales: conditional sales & installment sale contract may provide intention of title by seller until sale price fully recovered.64. Trade Discount: Discount that convert a printed price list of price actually to be charged to particular buyer. So cost is list price less trade discount.65. Cash Discount: Reduction in price allowed only upon payment of invoice within limited period.66. FIFO: Cost charged out in which order it is in cussed.

67. Moving Average: Method in which successive arrange recalculation used.68. LIFO: latest cost should be first to be charged out.69. Base Stock or Normal Stock: assumes that maximum stock is normal and permanent requirement of business.70. Standard cost: predetermined cost based upon representative or normal conditions of efficiency & volume of operations.71. Joint Products: products manufactured simultaneously by a common process.72. by products: products of little value produced during manufacturing the primary products.73. Completed Contract Basis: Revenue is not realized until a sale is completed, revenue emerges from sale not production.74. Retail inventory Method: in this method, records of goods place in stock are maintained in terms of costs and also market retail price.75. Original Retail: the established sale price including original increase over cost variously referred to as mark on or initial mark up.76. Additional Markups: Increase that raise sales price above original retail.77. Markup Cancellations: Decrease in additional markups that do not reduce sale price below original retail. 78. Markdowns: decrease that reduces sales price below original retail.79. Markdown Cancellations: Decrease in the markdowns that do not raise the sales price above original retail.80. Retail life: it requires index numbers be applied to inventories stated at retail in assigning at the quantitative changes in

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inventories.