Principals of Accounting Chapter 15
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17 terms
Terms | Definitions |
|---|---|
 Available-for-Sale (AFS) securities | Investments in debt and equity securities that are not classified in trading securities or held-to-maturity securities. |
| Comprehensive income | Net change in equity for a period, excluding owner investments and distributions. |
| Consolidated financial statements | Financial statements that show all (combined) activities under the parent's control, including those of any subsidiaries. |
| Equity method | Accounting method used for long term investments when the investor has "significant influence" over the investee. |
| Equity securities with controlling influence | Long term investment when the investor is able to exert controlling influence over the investee; investors owning 50% or more of voting stock are presumed to exert controlling influence. |
| Equity securities with significant influence | Long term investment when the investor is able to exert significant influence over the investee; investors owning 20% or more (but less than 50%) of voting stock are presumed to exert significant influence. |
| Foreign exchange rate | Price of one currency stated in terms of another currency. |
| Held-to-maturity (HTM) securities | Debt securities that a company has the intent and ability to hold until they mature. |
| Long-term investments | Long-term assets not used in operating activities such as notes receivable and investments in stocks and bonds. |
| Multinational | Company that operates in several countries. |
| Other comprehensive income | Equals net income less comprehensive income; includes unrealized gains and losses on available-for-sale securities, foreign currency adjustments, and pension adjustments. |
| Parent | Company that owns a controlling interest in a corporation (requires more than 50% voting stock). |
| Return on total assets | Ratio reflecting operating efficiency; defined as net income divided by average total assets for the period; (also called return on assets or return on investment). |
| Short-term investments | Debt and equity securities that management expects to convert to cash within the next 3 to 12 months (or the operating cycle if longer); also called temporary investments or marketable securities. |
| Subsidiary | Entity controlled by another entity (parent) in which the parent owns more than 50% of the subsidiary's voting stock. |
| Trading securities | Investments in debt and equity securities that the company intends to actively trade for profit. |
| Unrealized gain (loss) | Gain (loss) not yet realized by an actual transaction or event such as a sale. |
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