| A | B |
|---|
| Retained Earnings | An amount earned by a corporation and not yet distributed to stockholders. |
| Business Entity | All corporation’s financial records must be kept separate from the financial records of its owners |
| Board of Directors | A group of persons elected by the stockholders to manage a corporation. |
| Declaring a Dividend | Action by a board of directors to distribute corporate earnings to stockholders. |
| Merchandise Inventory | The amount of goods on hand for sale to customers |
| Uncollectible Accounts | Accounts receivable that cannot be collected |
| Allowance Method | Crediting the estimated value of uncollectible accounts to contra accounts |
| Book Value | The difference between an asset’s account balance and its related contra account balance. |
| Book Value of Accounts Receivable | Accounts receivable – Allowance for uncollectible accounts. |
| Current Assets | Cash or assets expected to be exchanged for cash or consumed within the year |
| Plant assets | Assets that will be used for a number of years in the operation of a business |
| Depreciation Expense | The portion of plant asset’s cost that is transferred to an expense account in each fiscal period during a plant asset’s useful life |
| Salvage Value | The amount an owner expects to receive when a plant asset is removed from use |
| Straight-line Method of Depreciation | Charging an equal amount of depreciation expense for a plant asset in each year of useful life. |
| Accumulated Depreciation | The total amount of depreciation expense that has been recorded since the purchase of a plant asset |
| Book Value of a Plant Asset | The original cost of a plant asset minus accumulated depreciation |
| Matching Expenses with Revenue | Accurate financial reporting requires that expenses be recorded in the fiscal period in which the expenses contribute to earning revenue |
| Adequate Disclosure | Financial statements contain all the information necessary to understand a business’s financial condition |
| Dividends | Earnings distributed to stockholders. Normal balance of the account is a debit. |
