GLOSSARY
Accelerated methods of depreciation Depreciation methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset’s useful life.
Account With the accounting systems, a formal record of increases and decreases in a specific asset, liability, component of owners’ equity, revenue, or expense.
Accounting profit Income as reported on the income statement, in accordance with prevailing accounting standards, before the provisions for income tax expense.
Accrual basis Method of accounting in which the effect of transactions on financial condition and income are recorded when they occur, not when they are settled in cash.
Accrued expenses (accrued liabilities) Liabilities related to expenses that have been incurred but not yet paid as of the end of an accounting period—an example of an accrued expense is rent that has been incurred but not yet paid, resulting in a liability “rent payable.”
Accumulated benefit obligation Under U.S. GAAP, a measure used in estimating a defined-benefit pension plan’s liabilities, defined as “the actuarial present value of benefits (whether vested or nonvested) attributed by the pension benefit formula to employee service rendered before a specified date and based on employee service and compensation (if applicable) prior to that date.”
Accumulated depreciation An offset to property, plant, and equipment (PPE) reflecting the amount of the cost of PPE that has been allocated to current and previous accounting ...
