Tiếng anh chuyên ngành kế toán part 65 potx

628 Glossary C+, C++: Programming languages used in the 1990s to program many personal com- puter and UNIX based applications. Call option: An asset which gives the owner the right but not the obligation to pur- chase some other asset for a set price on or up to a specified date. Capital asset pricing model (CAPM): A model in which the cost of capital for any security or portfolio of securities equals a risk-free rate plus a risk premium that is proportionate to the systematic risk of the security or portfolio. Capital loss carryover: The excess of capital losses over capital gains that may not be deducted currently but may be carried forward and set off against future capital gains. Capital structure: The composition of the invested capital of a business enter- prise; the mix of debt and equity financing. Capitalization: The conversion of a single period stream of benefits into value. Capitalization factor: Any multiple or divisor used to convert anticipated benefits into value. Capitalization rate: Any divisor (usually expressed as a percentage) used to con- vert anticipated benefits into value. Cash flow: Cash that is generated over a period of time by an asset, group of assets, or business enterprise. It may be used in a general sense to encompass various levels of specifically defined cash flows. When the term is used, it should be supplemented by a qualifier (e.g., “discretionary” or “operating”) and a definition of exactly what it means in the given valuation context. Cash settled: A future contract that does not require delivery of the underlying asset upon expiration. Instead of actual delivery, the contract is marked to market, so that one party is compensated in cash by the other for the change in the underlying asset price. CD: A compact disk, which stores roughly 700,000,000 bytes (700 megabytes) of data in digital format. CDs used in computers and in stereos are identical. A music CD has the capacity to store roughly one hour of sound. Changes in accounting estimates: Estimates are essential to the implementation of accrual accounting. A typical example would the estimates of useful lives and sal- vage values that are necessary in computing depreciation. Changes in either useful lives or salvage values would represent changes in accounting estimates. Changes in accounting principles: A change in the accounting treatment ap- plied to a particular area of accounting. The most common examples would be dis- cretionary changes in inventory and depreciation accounting. A firm might change from the LIFO to the FIFO inventory method or from the accelerated to straight- line method of computing depreciation. Most accounting changes are not discre- tionary but rather are the result of the mandatory adoption of new accounting standards. Charges: Commonly used in accounting in referring to expenses and losses. COBOL: A programming language used prior to the early 1990s to program most business applications. Comfort letter: Communication from the independent auditor to the underwriter, at the time of registration of securities, which includes information about the audi- tor’s role, auditor’s independence, compliance of the financial statements with the Glossary 629 Securities Act of 1933, and any changes in the financial statements subsequent to in- formation included in the Registration Statement. Comprehensive income: An expanded measure of income that includes items of other comprehensive income in addition to traditional realized net income. Conglomerate merger: a combination of firms in unrelated industries. Consolidation: A merger in which an entirely new firm is created. Constant-dollar method: A method of inflation accounting whereby accounts, which are measured according to historical cost accounting principles, are restated into units of the same purchasing power using the same general price index. Control: The power to direct the management and policies of a business enterprise. Control premium: An amount (expressed in either dollar or percentage form) by which the pro rata value of a controlling interest exceeds the pro-rata value of a non- controlling interest in a business enterprise, that reflects the power of control. Cooling-off period: That period from the filing of a Registration Statement in con- nection with an IPO (or other public offering) until the effective date of the Regis- tration Statement, during which time the only written information that may be provided to prospective investors is the Prospectus itself. Core earnings: Earnings exclusive of the effects of nonrecurring items (see sus- tainable earnings base). Also refers to earnings that only derive from the primary, or core, activities of the firm. Cost approach: A general way of estimating a value indication of an individual asset by quantifying the amount of money that would be required to replace the future ser- vice capability of that asset. Cost driver: The cause of the cost of an activity. Cost of capital: The expected rate of return (discount rate) that the market re- quires in order to attract funds to a particular investment. CPU: The Central Processing Unit of a computer. The CPU is the computer’s equiv- alent to its brain: All logical operations occur in the CPU, and the CPU directs all other hardware associated with the computer. Credit risk: The loss potential that would result from the inability of a counterparty to satisfy the terms of the foreign currency derivative. CRT: A Cathode Ray Tube is very similar to the picture tube in a television set. Most computer monitors use CRT technology, which is relatively cheap. Currency swap: An exchange of currencies between two parties with an agreement to re-exchange the currencies at a future date at the same rate. Current-cost method: A method of inflation accounting that replaces historical cost accounting principles with current (replacement) cost as the basis for financial statement measurement. Data warehouse: A repository for data transactions, in a database format. This technology is frequently used as a stop gap to replace older legacy systems in order to allow greater access to data. Decision support system: An application used by middle-level and senior manage- ment to make management decisions. Deferred tax valuation allowance: A portion of a deferred tax asset that is judged unlikely to be realized. 630 Glossary Derivative: An instrument whose value or contingent cash flows are a function of the value of some other asset or economic variable. Derivative instrument: A financial instrument that derives its value from its rela- tionship to some other financial contract, currency, commodity, or index. Discontinued operations: Operations that constitute an entire segment of the firm’s business and not, for example, simply one product line in a segment made up of a number of related product lines. Other key characteristics include: Segments en- gage in business and produce revenues and incur expenses; the operations of seg- ments are regularly reviewed by the chief operating officer of the enterprise; and discrete financial information can be provided on the operations of segments. Discount rate: A rate of return (cost of capital) used to convert a monetary sum, payable or receivable in the future, into present value. Duration gap: A situation in which assets are more sensitive to interest rates than are liabilities. As interest rates rise, assets fall more than liabilities, wiping out equity. DVD: Digital Video Disks are the direct descendents of CDs, but have the capacity to store roughly 10 times the amount of data as does a CD. This capacity allows a DVD to store all of the pictures and sounds that make up an entire, feature-length movie. Economic exposure: “Derived from the risk that currency fluctuations could af- fect the dollar value of future cash flows at the operating income level” (Dow 1995 annual report, p. 36). Economies of scale: the decrease in the marginal cost of production as a firm’s output expands. EDGAR: The electronic filing system by which IPOs and other filings required under the Securities Act of 1933 and the Securities Exchange Act of 1934 are ef- fected. The public may access such filings through the World Wide Web. EDI: Electronic Data Interchange. Used by businesses to transact commerce elec- tronically. These transactions include purchase orders, shipping notifications, in- voices, and so on. Effective income tax rate: Total income tax provision (expense) deducted from pretax income from continuing operations divided by pretax income from continuing operations. Effectiveness: The degree to which a goal is met. Efficiency: A measure of the inputs needed to produce a given level of output in pursuit of a goal, or the outputs produced in pursuit of a goal by a given level of inputs. Efficient search sequence: A pattern of searching for nonrecurring items that is designed to maximize their discovery and minimize search time. Electronic commerce: The transacting of business over the Internet, whether for the purchase or sale of goods and services. E-mail: Electronic mail is one of the most common and important computer appli- cations, allowing people to communicate cheaply and quickly with other computer users almost anywhere on earth. Encryption: Encryption is a process of encoding data to protect its confidentiality. Typically, we encrypt data before it is transmitted from one computer to another so that, should the data be intercepted by a third party during transmission, the data Glossary 631 will be unintelligible to that third party. Secure Web sites use encryption to protect confidential data that users might send them, such as credit card numbers. Equity net cash flows: Those cash flows available to pay out to equity holders (in the form of dividends) after funding operations of the business enterprise, making necessary capital investments, and reflecting increases or decreases in debt financing. Equity risk premium: A rate of return in addition to a risk-free rate to compensate for investing in equity instruments because they have a higher degree of probable risk than risk-free instruments (a component of the cost of equity capital or equity dis- count rate). ERP: An integrated software package that processes and controls all the functions of a company, including order processing, inventory control, purchasing, invoicing, fi- nancial systems, and customer management. Exercise price: Same as Strike price. Exotics: Engineered derivatives that contain unusual features, or nonstandard con- tingent cash flow formulas. Extraordinary gains and losses: Revenues or gains and expenses or losses that are both unusual and nonrecurring. Fair market value: The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unre- stricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts. Family limited partnership: An estate planning device which may entitle a donor to a discount on the value of gifts while allowing the donor to maintain control over the assets given away. FAQ: Frequently asked questions. A file of questions that are frequently asked about a specific product or topic that is available to users through the Internet or intranet. FASB: See Financial Accounting Standards Board. FIFO: A method of computing cost of sales that includes the oldest inventory costs first in the computation of cost of sales. That is, the cost of goods purchased first (first-in) are included first (first-out) in the computation of cost of sales. Financial Accounting Standards Board (FASB): The principal private sector organization with the responsibility of establishing U.S. generally accepted account- ing principles (see GAAP). Fire wall: A hardware and software device that protects an organization’s computer systems and data from possible electronic intrusion from external sources. Computers that are connected to the Internet would be under constant threat from hackers and snoops without the protection of a fire wall. Firm underwriting: An arrangement by which the underwriters agree themselves to purchase all the shares of a public offering. Fixed costs: Those costs that are not responsive to changes in volume over the rele- vant range, but which respond to factors other than volume. Fixed costs are some- times known as “period costs” when they depend on time (e.g., rent, depreciation, insurance). Flexible budget: A budget prepared for more than one level of activity, covering several levels within the relevant range of activity. Also called a dynamic budget. 632 Glossary Foreign Corrupt Practices Act of 1997: The law that explicitly prohibits the bribery of foreign governments or political officials and requires firms to keep accu- rate and detailed records of company financial activities and maintain an adequate system of internal controls. Foreign currency transaction: Any transaction (e.g., the sale or purchase of in- ventory, the lending or borrowing of money) that creates a balance-sheet account that is denominated in foreign currency. Examples include foreign-currency denominated receivables and loans, and foreign-currency denominated payables and long-term debt. Form S-1: The standard form which is to be completed by a registrant and filed with the Securities and Exchange Commission in connection with an IPO (and with many other public offerings). Forms 10-K, 10-Q, 8-K: Principal periodic reports filed by most companies regis- tered under the Securities Acts. Forms SB-1 and SB-2: Forms for filing an IPO or other public offering with the Se- curities and Exchange Commission for certain small business issuers. Forward: A contract in which two parties agree to a deferred transaction. One party is obligated to deliver an underlying asset or commodity; the other party is obligated to take delivery and pay for it. The terms of the deferred transaction are fully speci- fied in the forward contract. Forward exchange contract: A privately negotiated agreement to purchase for- eign currency for future receipt or to sell foreign currency for future delivery. The amount of foreign currency, the rate of exchange, and the future date of settlement are established at the time the contract is made. Forward exchange rate: Rate at which currencies are to be exchanged at future dates. Functional currency: The currency of the primary economic environment in which the entity operates. Typically, this is the currency of the environment in which it generates and expends cash. The functional currency may be the U.S. dollar and not the local currency of the foreign country. Futures contract: An exchange-traded instrument with a preestablished expiration date, whose market value is linked to the relative exchange rates between two cur- rencies. A futures contract can be purchased (a long position), resulting in a gain if the foreign currency appreciates and a loss if it depreciates. A contract can also be sold (a short position), resulting in a gain if the foreign currency depreciates or a loss if it appreciates. GAAP: See generally accepted accounting principles. Generally accepted accounting principles: The body of standards, rules, proce- dures, and practices that guide the preparation of financial statements. For commer- cial firms, the primary bodies involved with adding to or modifying existing GAAP are the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission. Geographical information system: A computer application that uses a mapping system display on a terminal or a printer. Data, such as sales data or census data, is overlaid over the geographical information for decision-making purposes. Glossary 633 Giga-: The prefix given to another number which means a billion. Thus, a 10 giga- byte hard drive has the capacity to store 10 billion bytes of data. Going private: The conversion of a public firm into a private company, usually by either a leveraged buyout (LBO) or a management buyout (MBO). Goodwill: As it relates to valuation, that intangible asset arising as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified. The excess of purchase price over fair market value of net assets acquired under the purchase method of accounting; goodwill appears on the acquirer’s bal- ance sheet as an intangible asset and is amortized over a period of not more than 40 years. Hedge: To reduce risk by taking a position that offsets some preexisting risk exposure. Hedging: Steps taken to protect the dollar value of a foreign-currency asset or to hold constant the dollar burden of a foreign-currency liability, in the presence of fluctuating exchange rates, by maintaining offsetting foreign-currency positions. Horizontal merger: A merger of firms producing similar goods or services. Hypertext: Hypertext is the data-connecting protocol of the Internet that allows a document on the World Wide Web to connect with (or link to) other documents on the Web. Income (income-based) approach: A general way of determining a value indica- tion of a business, business ownership interest, security, or intangible asset using one or more methods that convert anticipated benefits into a present single amount. Income from continuing operations: A measure of financial performance for the period that excludes the effects of discontinued operations, extraordinary items, and the cumulative effect of accounting changes. All other revenues, gains, expenses, and losses are included in the computation of income from continuing operations. Intangible assets: Nonphysical assets (such as franchises, trademarks, patents, copyrights, goodwill, equities, mineral rights, securities, and contracts as distin- guished from physical assets) that grant rights, privileges, and have economic bene- fits for the owner. International Accounting Standards Committee (IASC): An organization rep- resenting accounting bodies from over 70 countries whose mission is to harmonize accounting standards internationally. In-the-money: An option is in-the-money when exercise would be profitable. For a call option this is when the underlying stock price is above the strike price. For a put option, this is when the stock price is below the strike price. Intrinsic Value: The amount of money earned when an option is exercised, or zero, whichever is greater. For a call option, intrinsic value is the maximum of zero or the stock price minus the strike price. For a put option it is the maximum of zero or the strike price minus the stock price. Invested capital: The sum of equity and debt in a business enterprise. Debt is typ- ically (a) long-term liabilities or (b) the sum of short-term interest-bearing debt and long-term liabilities. Invested capital net cash flows: Those cash flows available to pay out to equity holders (in the form of dividends) and debt investors (in the form of principal and 634 Glossary in terest) after funding operations of the business enterprise and making necessary capital investments. Investment risk: The degree of uncertainty as to the realization of expected returns. Investment value: The value to a particular investor based on individual invest- ment requirements and expectations. IPO: An initial public offering; such transaction is registered with the Securities and Exchange Commission and permits a company, called a “registrant,” first to offer to the public its shares of common stock or other securities. Irregular items of revenue, gain, expense, or loss: See nonrecurring items. ISP: An Internet service provider is an organization that sells connectivity to the In- ternet. An ISP has a permanent, high capacity connection to the Internet. Customers of the ISP use a telephone or cable modem to connect themselves to the ISP, and, thereby, the Internet. America OnLine is the largest ISP in the world. Kilo-: The prefix given to another number which means a thousand. Thus, a 10 kilo- byte document contains 10,000 bytes or characters of data. Labor variance: A measure of the change in the cost of labor, analyzed according to wage changes and changes in labor productivity. LAN: A local area network is a group of computers, usually within one or a few nearby buildings, which are connected to each other to allow the sharing of data, printers, e-mail, and other capabilities. LCD: A liquid crystal display is a method of displaying data using a relatively flat panel. Many digital watches use LCDs to show time. LCD technology competes with CRT technology in computer monitors. LCDs take up less space than CRTs, but cost more. Leading and lagging: A foreign-currency hedging technique that involves the matching of cash flows associated with foreign currency payables and receivables by speeding up or slowing down their payment or receipt. Legacy systems: Older systems that were developed prior to the 1990s using older technologies. Usually mission critical systems, they are both costly and difficult to replace. LIBOR: The London interbank offered rate. The interest rate used in Euromoney transactions between London banks. It is widely used as the benchmark floating rate in swaps. LIFO inventory method: A method of computing cost of sales that charges the most recent inventory costs to cost of sales. The most recent (last-in) inventory items go into the cost of sales computation first (first-out). LIFO liquidation: A reduction in the physical quantity of inventory by a firm using the LIFO method. Typically, older and lower costs will be associated with the liqui- dated quantities. This has the effect of reducing cost of sales and increasing earnings. This earnings increase is treated as nonrecurring in the computation of sustainable earnings. LIFO reserve: The excess (typically) of the replacement cost of a LIFO inventory over its LIFO carrying value. Link: A connection from one World Wide Web document to another. Typically, one navigates the Web by following a series of links. Glossary 635 Liquidity: the ability to quickly convert property to cash or pay a liability. Long: To enter a future or forward as the long party. Also known as “buying” the fu- ture or forward. Long party: The party in a forward or future contract that will take delivery of the underlying asset and make payment, that is, the buying party. The party in a for- ward or future contract that benefits from a rise in the price of the underlying asset. Management’s Discussion and Analysis of Results of Operations and Finan- cial Condition (MD&A): A report required under Securities and Exchange Com- mission regulations, constituting part of an S-1 for an IPO and an annual report on Form 10-K. The discussion of operations is required to include material nonrecurring items of revenue, gain, expense, and loss. Mark to market: The process by which at the end of each trading day, a payment is made from one party in a futures contract to the other, based on that day’s movement in the futures price. When the futures price rises, the short party pays the long party the amount of the price rise. When the futures price falls, the long party pays the short party the amount the price fell. Market (market-based) approach: A general way of determining a value indica- tion of a business, business ownership interest, security, or intangible asset by using one or more methods that compare the subject to similar businesses, business owner- ship interests, securities, or intangible assets that have been sold. Marketability: The ability to quickly convert property to cash at minimal cost. Master budget: The total budget package of an organization, including both the operating and financial budgets. Sometimes referred to as the profit plan. Material items: Items of sufficient size to have the potential to influence decision makers or other users of financial statements. Material variance: A measure of the change in cost of materials used, analyzed according to price changes and changes in material efficiency. MD&A: See Management’s Discussion and Analysis of Results of Operations and Financial Condition. Mega-: The prefix given to another number which means a million. Thus, a 10 megabyte file contains 10,000,00 bytes or characters of data. Merger: The combination of two or more companies into a single entity Minority discount: A discount for lack of control applicable to a minority interest. Minority interest: An ownership interest less than 50% of the voting interest in a business enterprise. Modem: A device used to allow computers to communicate with each other over wires not originally designed for computer communications. The most common form of modem allows computers to communicate over regular voice telephone wires. Cable modems allow computers to communicate using wires originally de- signed for cable TVs. Monetary assets and liabilities: Assets and liabilities that represent a fixed number of monetary units. Monetary assets include cash and accounts receiv- able; monetary liabilities include accounts and notes payable. During inflationary periods monetary assets (liabilities) result in purchasing power gains (losses), respectively. 636 Glossary Multimedia: The simultaneous use of multiple forms of media on a computer. If you were to watch a football game on your computer that is coming to you over the Internet, you would be simultaneously using both video and sound media. Multistep income statement: An income statement format that includes one or more profit subtotals such as gross profit and operating profit (also see single-step in- come statement). NASD: See National Association of Securities Dealers Inc. NASDAQ: National Association of Securities Dealers Automated Quotation Sys- tem. An organized, electronically linked over-the-counter market for stocks. The NASDAQ stock index comprises stocks that trade on NASDAQ. These stocks are gen- erally smaller, less capitalized stocks than those that compose the S&P 500. National Association of Securities Dealers Inc: A self-regulatory organization which regulates the business of broker/dealers, including underwriters who sell secu- rities to the public. In an IPO or any other public offering, the underwriters must ob- tain approval of the NASD of their compensation as “fair and reasonable.” Net cash flow: A form of cash flow. When the term is used, it should be supple- mented by a qualifier (e.g., “Equity” or “Invested Capital”) and a definition of ex- actly what it means in the given valuation context. Net operating loss carry-forward: Under U.S. tax law, operating losses can be carried back and set off against profits in the previous three years. A refund of taxes can be obtained. If the loss is greater that the profits in the three previous years, then the loss can be carried forward for 20 years and set off against the profits of future years. The carrying forward of a loss may produce a future tax savings. In con- trast, the carrying back of a loss produces a tax refund. NetWare: The network operating system standard through the early and mid-1990s. Developed by Novell. Network: The connecting together of two or more computers, typically with the purpose of sharing resources, such as printers, data, or an Internet connection. Nonrecurring items: Items of revenue, gain, expense, and loss that appear in earnings on only an infrequent or irregular basis, fluctuate significantly in terms of amount and or sign, and are often not related to the core operational activities of the firm. Notional principal: The principal amount specified in a swap agreement, which though not exchanged, serves as the benchmark to determine all cash flows. The cash flows generally equal the difference between two interest rates, multiplied by the notional principal. Operating income: An intermediate, pretax measure of financial performance. Only operations-related items of revenue, gain, expense, and loss are included in the computation of operating income. Operational control system: Systems that run the company’s day-to-day operations. Opportunity cost: A benefit forgone as a result of pursuing an alternative action. Option contract: The right, but not the obligation, to purchase foreign currency at a fixed price (a call option), or the right, but not the obligation, to sell foreign cur- rency at a fixed price (a put option). Glossary 637 Other comprehensive income: A set of unrealized income elements that are added to conventional net income to arrive at comprehensive income. The key other comprehensive income items are foreign currency translation adjustments, unreal- ized gains and losses on certain securities, and adjustments related to underfunded pension plans. Out-of-the-money: An option is out of the money when exercise would generate a loss. For a call option this is when the underlying stock price is below the strike price. For a put option this is when the stock price is above the strike price. Overhead variance: A measure of the change in the cost of overhead items, ana- lyzed according to price and salary changes and changes in labor productivity. Over-the-counter: Description of contracts that are negotiated between two par- ties, often with the help of an intermediary. Over-the-counter derivatives are cus- tom-tailored to meet the needs of the parties involved. Over-the-counter derivatives are not traded on exchanges. Participative budgeting: The process of preparing the budget using input from managers who are held responsible for budget performance. PDA: Personal Digital Assistants are small, pocket-sized computers, usually with LCD screens, which allow users to keep their calendar, list of contacts, play games, and, in some cases, send and receive e-mail. Physical delivery: A future contract that stipulates actual delivery of the underly- ing asset upon expiration of the contract. “Plain English”: The standards for clarity in drafting various portions of a Prospectus, as set forth in SEC Rule 421. Plain vanilla: The most common type of swap. It is a fixed for floating interest rate swap, where LIBOR is the floating rate. The fixed rate is the current rate of the Treasury bond with the same maturity as the swap. Pooling method: After the acquisition, the bidder and target firm balance sheets are combined simply by adding book values Premise of value: An assumption regarding the most likely set of transactional circumstances that may be applicable to the subject valuation (e.g., going concern, liquidation). Premium: The amount paid to the target over current market price to execute an acquisition. Premoney valuation: The valuation ascribed to a business enterprise prior to the issuance of additional equity securities, for the purpose of pricing those securities to their public or private purchasers. Private placement: An offering of securities to a sufficiently small or to a suffi- ciently sophisticated group of purchasers, such that registration of the transaction is not required with the Securities and Exchange Commission. Private Securities Litigation Reform Act of 1995: A U.S. statute that estab- lishes a safe harbor for forward-looking statements by public companies, insulating the company and management from liability for statements that ultimately prove to be inaccurate if they are believed to be true when made and if the contingencies on which their accuracy depend are properly articulated. Productivity: Output divided by input. Productivity rates measure the input re- quired for a unit of output. Compare the definition of efficiency. . issuers. Forward: A contract in which two parties agree to a deferred transaction. One party is obligated to deliver an underlying asset or commodity; the other party is obligated to take delivery. a liability. Long: To enter a future or forward as the long party. Also known as “buying” the fu- ture or forward. Long party: The party in a forward or future contract that will take delivery. payment is made from one party in a futures contract to the other, based on that day’s movement in the futures price. When the futures price rises, the short party pays the long party the amount of