Finance and Accounting

asset

(economic) resource held by a business

claim

obligation of a business to provide cash, or some other form of benefit, to an outside party. consists of equity and liability

equity

claim of owners against business; owner's capital

liabilities

claims of other parties aside from owners; involve an obligation to transfer economic resources (cash) due to past transactions; fancy word for debt

reporting period

A period of time over which financial events are recorded and reported.

current assets

short term assets, only held for less than one year

non-current (fixed) assets

resources owned by a business which will be used for a period longer than one year, for example buildings and machinery

liquidity ratio

total liquid assets divided by total current debts; measures the ability to pay current debts

accounting conventions

constraints used in preparing financial statements; rules that guide preparers and users of financial statements

goodwill

the value of all favorable attributes that relate to a company that are not attributable to any other specific asset

carrying amount

cost of asset - accumulated depreciation

fair value

the amount that a business could sell an asset for, or the amount that a business could pay to settle a liability

impairment loss

The write-down of a long-lived asset for the difference between its carrying amount less its fair value; net book value - fair value