A
Accounts Payable: An amount owing to a creditor, usually arising from the purchase of goods or services, that is due to be paid within a 12- month period or within the normal operating cycle (where the cycle is longer than a year).
Accounts Receivable: An amount owed to the business usually arising from the sale of goods or services.
Accounts Receivable Aging: The placing of individual accounts receivable into categories according to how long they have been outstanding. Normally, four categories (current, over 30 days, over 60 days, and over 90 days) are sufficient to assess the collectibility and effectiveness of the collection policy, and hence the value of the receivables.
Accrual Basis of Accounting: A method of accounting/reporting whereby revenue and expenses are recorded in the period when they are earned or incurred, regardless of when the cash transaction took place.
Accruals: Represents services that the business has used, but not been billed for, and not paid. The most
common example is salaries covering a pay period that overlaps the business year-end.
Accrued Expenses Payable: Liabilities resulting from transactions that occur during one accounting period but
are payable during the next. The most common example is wages earned in one period but not payable until the
next.
Adjusted Cost: Purchase cost of a capital asset less any Business Investment Tax Credit claimed on that
purchase.
Adjusted Debt Service Capacity: The amount available for debt servicing calculated as net income after tax plus term interest plus depreciation minus gain/loss on disposal of assets minus extraordinary income minus deferred income taxes minus dividends minus living expenses plus off-farm income.
Adjusted Debt Service Coverage: Adjusted debt service capacity divided by debt service requirements (Total
principal payments plus term interest expense.)
Administrative & Financial Expenses: Category on income statement that includes expenses such as management salaries, office expenses, bank charges and interest paid, bad debts, utilities and rent.
Amortization: Similar to depreciation. The scheduled or systematic reduction of a balance in an account over an appropriate period of time of intangible assets such as patents, leaseholds, agricultural marketing quota or goodwill. Amortization is often used interchangeably with depreciation on Income Statements.
Appraisal Increase: The credit resulting from an increase in the recorded value of fixed assets arising from an appraisal.
Arm’s Length: These are any transactions where the parties are not related or connected with each other.
Asset: Tangible or intangible item of value owned by the business (cash, land, equipment, inventory).
Authorized Capital: The number and par value, if any, of shares of each class of capital stock that a company may issue in accordance with its instruments of incorporation.
Last updated on February 17, 2015 by FCC AgExpert
