BUS 251 Final Exam Review

Flashcards covering key vocabulary for BUS 251 final exam preparation.

PP&E

Property, Plant, and Equipment; long-term assets providing long-term benefits that cannot be quickly converted into cash.

Capitalize

To record a cost as an asset, to be depreciated over time, rather than expensed immediately.

Expense

To record a cost as an immediate expense on the income statement rather than capitalizing it.

Net Book Value

The value of an asset after depreciation; calculated as Purchase Price minus Accumulated Depreciation.

Useful Life

The estimated duration an asset is expected to be used before it can no longer provide economic benefits.

Salvage Value

The estimated amount that an asset will be worth at the end of its useful life.

Depreciation

The allocation of the cost of an asset over its useful life, reflecting its consumption and obsolescence.

Straight-Line Depreciation

A method of depreciation where an equal amount is expensed each period over the useful life of the asset.

Units of Production Depreciation

A method that bases depreciation expense on actual usage or production of the asset.

Diminishing Balance Depreciation

A method of depreciation where the asset loses more value as it ages, with a higher expense in the earlier years.

Goodwill

An intangible asset representing the premium paid for a company above its identifiable assets minus liabilities.

Contingent Liabilities

Potential liabilities that may occur depending on the outcome of a future event.

Current Liabilities

Obligations that a company is expected to settle within one year.

Dividends

Payments made by a corporation to its shareholders, usually from profits.

Cumulative Preferred Shares

Preferred shares that accumulate unpaid dividends which must be paid in the future.

Cash Flow Statement

A financial statement that shows the inflows and outflows of cash during a specific period.

Liquidity

The ability of a firm to meet its short-term obligations as they come due.

Profitability Ratios

Financial metrics used to assess a company's ability to generate income relative to sales, assets, or equity.

Debt to Equity Ratio

A solvency measure that compares a company's total liabilities to its shareholders' equity.