Dictionary of Accounting, Finance & Business Terms

1. Abandonment option:
The option of terminating an investment earlier than originally planned.
2. Abnormal returns:
Part of the return that is not due to systematic influences (market wide
influences). In other words, abnormal returns are above those predicted by the
market movement alone. Related: excess returns.
3. Absolute priority:
Rule in bankruptcy proceedings whereby senior creditors are required to be paid
in full before junior creditors receive any payment.
4. Accelerated
cost recovery system (ACRS):
Schedule of
depreciation rates allowed for tax purposes.
5. Accelerated
Any depreciation method that produces
larger deductions for depreciation in the early years of a project’s life.
Accelerated cost recovery system (ACRS), which is a depreciation schedule
allowed for tax purposes, is one such example.
6. Accounting
The change in the value of a firm’s
foreign currency denominated accounts due to a change in exchange rates.
7. Accounting
Earnings of a firm as reported on its
income statement.
8. Accounting
: Total liabilities exceed total
assets. A firm with a negative net worth is insolvent on the books.
9. Accounting
 The ease and quickness with which assets can
be converted to cash.
10. Accounts
Money owed to suppliers.
11. Accounts
Money owed by customers.
12. Accounts
receivable turnover:
 The ratio of net credit sales to average
accounts receivable, a measure of how quickly customers pay their bills.
13. Accretion
(of a discount):
In portfolio accounting, a
straight-line accumulation of capital gains on discount bond in anticipation of
receipt of par at maturity.
14. Accrual
A bond on which interest accrues, but is not paid
to the investor during the time of accrual. The amount of accrued interest is
added to the remaining principal of the bond and is paid at maturity.
15. Accrued interest:
The accumulated coupon interest earned but not yet paid to the seller of a bond
by the buyer (unless the bond is in default).

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