Glossary – Accounting

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There are 32 names in this directory beginning with the letter C.
Call premium
The difference between the call price of a bond or preferred stock and its stated or par value.

Call price
The amount at which the holder of preferred stock or bonds must sell the stock or bonds back to the issuing corporation.

A reference to stockholders’ equity. Also an adjective that references property, plant and equipment used in a business; for example, capital expenditures and capital budgeting.

Capital budgeting
The formal planning for significant expenditures, such as property, plant and equipment.

Capital market
A structured market for trading stocks and bonds such as the New York Stock Exchange or NASDAQ. Capital market can also include less structured markets such as private placements.

Capital stock
A heading that includes common stock and preferred stock.

A current asset account which includes currency, coins, checking accounts, and undeposited checks received from customers. The amounts must be unrestricted.

Cash account
The general ledger account Cash that reports currency, coins, undeposited checks, and the checking accounts of a company.

Cash flow
Actual changes in cash as opposed to accounting revenues and expenses.

Cash short and over
A miscellaneous expense account used to record the difference between the amount of cash needed to replenish a petty cash fund and the amount of petty cash receipts at the time the petty cash fund is replenished.

A term used in the lower of cost or market (LCM) that serves as a constraint for the market value. In the LCM for inventory, the ceiling is the net realizable value (NRV). This means that if the replacement cost of an inventory item is greater than the NRV, the NRV becomes the market amount that will be compared with the item’s cost for valuing inventory under LCM.

Chief executive officer.

Certified management accountant
A professional certification awarded to an accountant who has successfully completed the CMA Exam and has achieved the required work experience. The certified management accountant is recognized as a person with a strong proficiency in both management and financial accounting.

Chief financial officer.

Chart of accounts
A listing of the accounts available in the accounting system in which to record entries. The chart of accounts consists of balance sheet accounts (assets, liabilities, stockholders’ equity) and income statement accounts (revenues, expenses, gains, losses). The chart of accounts can be expanded and tailored to reflect the operations of the company.

Clearing account
A general ledger account which serves to summarize similar transactions. For example, all of the closing entries involving operating expenses might be posted to an operating expense clearing (or summary) account.

Common costs
Costs that are common to several products, processes, activities, departments, territories, etc. Often common costs are subsequently allocated to each of the joint products, joint processes, etc. in order to determine the cost of each.

The party receiving goods to be sold.

Consumer price index
A government index that tracks the changes in prices in order to measure general inflation. This index can be used by small companies to obtain the benefits of LIFO without tracking individual units in inventory.

Contingent gain
A potential gain that is not recognized by accountants in the financial statements until it actually occurs. For example, Company P is suing Company D over a patent infringement. Company P has a contingent gain.

Contingent loss
A potential loss that is dependent upon some future event occurring or not occurring. If the loss is probable and the amount can be estimated, then the loss and a liability are recorded with a journal entry. If the loss is only reasonably possible (not probable), then a journal entry is not recorded but a disclosure should be made in the notes to the financial statements. If the loss is remote, then neither a journal entry nor a disclosure is required.

Contra account
An account with a balance that is the opposite of the normal balance. For example, Accumulated Depreciation is a contra asset account, because its credit balance is contra to the debit balance for an asset account. Another example is the owner’s drawing account. This is an owner’s equity account and as such you would expect a credit balance. However, the drawing account has a debit balance. Other examples include (1) the allowance for doubtful accounts, (2) discount on bonds payable, (3) sales returns and allowances, and (4) sales discounts. The contra accounts cause a reduction in the amounts reported. For example net sales is gross sales minus the sales returns, the sales allowances, and the sales discounts. The net realizable value of the accounts receivable is the accounts receivable minus the allowance for doubtful accounts.

Contribution margin
The result of subtracting all variable expenses from revenues. It indicates the amount available from sales to cover the fixed expenses and profit.

The chief accounting officer of a company. This person would head up the accounting department.

Chief operating officer.

An exclusive right granted by the federal government to publish and sell various works. In accounting a copyright is recorded at its cost and is reported on the balance sheet as an intangible asset.

A legal entity organized under state laws that is considered separate from its owners. Ownership is evidenced by shares of stock.

Cost-volume-profit (CVP)
The analysis of how profits change as volume changes. The calculation of the break-even point is a part of cost-volume-profit analysis.

Certified public accountant.

Credit balance
A balance on the right side (credit side) of an account in the general ledger.

Someone who has granted credit. If a bank lends a company money, the bank is a creditor. If a supplier sold merchandise to a company on credit, the supplier is a creditor.

See cash surrender value.
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