Terms Need to Know
CONTRA ACCOUNT – An account that follows another account and has a balance opposite of it ; asset with
credit balance, asset goes against sign of normal assets. ex. accumulated depreciation (is contra to the other accounts
(-) where others are (+)
SINGLE STEP – one step by adding up gross income minus gross expenses equal net income.
MULTI STEP – you calculate the various subtotals for revenues and expenses
CLASSIFIED BALANCE SHEET– separatating current assets and liabilities
NONCLASSIFIED BALANCE SHEET –not separating current assets and liabilities
EXECUTORY CONTRACT– contract not yet performed, ex. purchase order
PAR VALUE – legally stated minimum that the stock can be sold, face amount of security (stock value stated in
corporate charter).
ADDITIONAL PAID IN CAPITAL – capital paid in excess of par (cannot be negative)
NET WORKING CAPITAL – current assets minus current liabilities
ASSET – Items that a business or individual owns or are owed; resources that have future benefit
ACQUISITION (HISTORICAL) COST – price of asset plus all costs up to first productive use (all cost
capitalized)
NET REALIZABLE VALUE – Net realizable value = FMV – cost required to sell/dispose,
