| A | B |
|---|
| administrative expenses | Costs related to the management of a business (for example office expenses) |
| base period | A period that is used for comparison in financial statement analysis. |
| Capital Stock | The account that represents the total amount of investment in the corporation by its stockholders (owners). |
| cash inflows | Receipts of cash. |
| cash outflows | Payments of cash |
| comparability | Accounting characteristic that allows the financial information to be compared from one period to another period; also allows the comparison of financial information between businesses. |
| financing activities | Business activities involving debt and equity transactions. |
| full disclosure | Accounting principle requiring a financial report to include enough information so that it is complete. |
| gross profit on sales | The amount of profit made during the fiscal period before expenses are deducted; it is found by subtracting the cost of merchandise sold from net sales. |
| horizontal analysis | The comparison of the same item(s) on financial statements for two or more accounting periods or dates; used to determine changes from one period to another. |
| investing activities | Business activities involving investments and plant assets. |
| materiality | An accounting guideline stating that information considered important (relative to the other information) should be included in financial reports. |
| net purchases | The total cost of all merchandise purchased during a period, less any purchases discounts, returns, and discounts. |
| net sales | The amount of sales for the period less any sales discounts, returns, and allowances. |
| operating activities | Business activities involving normal business operations. |
| operating expenses | The cash spent or assets consumed to earn revenue for a business; operating expenses do not include federal income tax expense. |
| operating income | The excess of gross profit over operating expenses; taxable income |
| relevance | An accounting characteristic requiring that all information that would affect the decisions of financial statement users be disclosed in the financial reports. |
| reliability | A characteristic requiring that accounting information be reasonably free of bias and error. |
| retained earnings | A corporation's accumulated net income that is not distributed to stockholders. |
| selling expenses | Expenses a business incurs to sell or market its merchandise or services. |
| statement of retained earnings | A financial statement that reports changes in the Retained Earnings account during the period. |
| stockholders' equity | The value of the stockholders' claims to the corporation. |
| vertical analysis | A method of analysis that expresses financial statement items as percentages of a base amount. |
