Balance sheeT - A document that reports the assets, liabilities, and owner’s equity of a business at a specific point in time., Book value - The purchase price of an asset, less the accumulated depreciation (the sum of the amounts charged because the asset will wear out over its lifetime)., Capital improvement - The purchase of real or personal property that results in a depreciable asset., Capital items - Major purchases that require a significant financial commitment and will be used over a long period of time, also known as Furnishings, fixtures, and equipment (FF&E) items., Cost–benefit analysis - An analysis that examines the cost of purchasing an item in relationship to its potential cost savings., Current assets - Cash and assets that will be converted to cash in one year or less., Current liabilities - Those liabilities that must be paid within the next 12 months., Current ratio - Total current assets divided by total current liabilities., Economic study - A direct financial comparison of cost–benefit analyses for two or more alternatives., Furnishings, fixtures, and equipment (FF&E) - Major purchases requiring a significant financial commitment that will be used over a long period of time, also called capital items., Lease - A legal arrangement by which property owned by one person or business is occupied or used by another person or business., Liquidated - A situation in which all of a business’s assets are sold and it ceases operations., Long-term debt - Any obligation, or loan, that will be paid back in a period longer than 12 months., Owner’s equity ratio - Total owner’s equity divided by total assets; the ratio indicates how much the owners of a business would receive in the event the business was liquidated., Payables - Another term for liabilities., Payback period - The length of time it will take to recover the amount of an investment., Personal property - Property that is not permanently attached to the land, such as kitchen equipment., Prepaid expenses - Using cash to purchase a good or service, the benefits of which will be realized or received within the current year; for example, the money paid at the beginning of the year for an annual insurance policy., Rate of return - The relationship between the savings (or additional income) and the amount expended on an item., Real property - Land and any structures permanently attached to the land, also known as real estate., Return on investment (ROI) - A measurement of the financial benefits of a purchase: how much is saved or earned in the long run by making the purchase., Solvency ratio - Total assets divided by total liabilities., Statement of cash flows - A summary of the changes, or flows, in cash available to a business during a designated accounting period., Tax management - The process used by owners and managers of an establishment to ensure they are in compliance with all tax-related requirements., Ratio analysis - The comparison of financial information found on the balance sheet, income statement, or other financial statement., Tax planning - A year-round activity designed to ensure a business legally complies with the tax code, while doing so in a way that is of most benefit to the business.,

Accounting Chapter 10

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