Call premium
The difference between the call price of a bond or preferred stock and it’s stated or par value.
Call price
The amount at which the holder of preferred stock or bonds must sell the stock or bond back to the issuing corporation. The call price is disclosed in the indenture. The call price might be the face or par amount plus one year's interest or dividend.
Callable bond
A bond that is callable by the issuer at a certain price. The price and other conditions are disclosed in the bond's indenture.
Callable preferred stock
Preferred stock that is callable by the issuer at a certain price. The price and other conditions are disclosed in the preferred stock's indenture.
Capital
A reference to stockholder equity. See paid-in capital. 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 expenditures
Amounts spent for property, plant and equipment.
Capital lease
A lease that "in substance" is a purchase and financing arrangement. When a lease meets certain criteria, the asset being "rented" is recorded as an asset and a liability is also recorded. A lease that is truly a rental arrangement is known as an operating lease.
Capital maintenance approach in determining net income
Under this method, net income is determined by analyzing the change in owner's equity. The alternative is the transaction approach in which each transaction is recorded, sorted and stored.
Capital maintenance approach to net income
A measurement of net income arrived at by comparing the amount of total equity at the end of a period to the amount of total equity at the beginning of the period. For example, if Al Capone had $5 million of equity at the end of the year, but had only $1 million at the beginning of the year, the government could conclude that he earned $4 million during the year. This method is in contrast to the transaction approach which computes net income by subtracting the expense transactions from the revenue transactions.
Capital stock
A heading that includes common stock and preferred stock.
Capitalize
To include in the cost of an asset. For example, the interest incurred by a company when it constructs its own building is added to the cost of the building's components. This is referred to as capitalizing the interest, or capitalization of interest.
Carrying amount
Also referred to as book value; the cost of an asset minus the accumulated depreciation since the asset was acquired. This net amount is not an indication of the asset's fair market value. Also used in reference to bonds payable: the face amount in Bonds Payable plus Premium on Bonds Payable or minus Discount on Bonds Payable.
Carrying cost of inventory
This phrase has two conotations. One is the cost of holding inventory. In this case the carrying cost is the cost of capital tied up in inventory, the cost of storage, insurance, and obsolescence. Often this is expressed as an annual percentage rate, such as 20% of the cost of the inventory. This is used in the formula for determining the optimum ordering (or manufacturing) quantity of an item. See economic order quantity (EOQ) model.
Another connotation of this term is the cost at which the inventory is reported in the company's general ledger accounts and on its balance sheet. To learn more, see Explanation of Inventory & Cost of Goods Sold for a discussion of the factors that determine the amounts at which inventory is reported.
Carrying value
See carrying amount.
Cash
A current asset account which includes currency, coins, checking accounts, and undeposited checks received from customers. The amounts must be unrestricted. (Restricted cash should be recorded in a different account.)
Cash account
The general ledger account Cash that reports currency, coins, undeposited checks, and the checking accounts of a company. (Could also be a reference to a customer required to pay cash for purchases.)
Cash and cash equivalents
A balance sheet heading or grouping that includes both cash and those marketable assets that are very close to their maturity dates.
Cash basis of accounting
An accounting method wherein revenues are recognized when cash is received and expenses are recognized when paid. This method is inferior to the accrual basis of accounting where revenues are recognized when they are earned and expenses are matched to revenues or the accounting period when they are incurred (rather than paid). The cash basis of accounting is usually followed by individuals and small companies, but is not in compliance with accounting's matching principle.
Cash discount
See sales discount.
Cash flow
Actual changes in cash as opposed to accounting revenues and expenses.
Cash flow statement
See statement of cash flows.
Cash from financing activities
The second section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
Cash from operating activities
The first section of the statement of cash flows. To learn more, see Explanation of Cash Flow Statement.
Cash method of accounting
See cash basis of accounting.
Cash realizable value
See net realizable value.
Cash receipt
The collection of money (currency, coins, checks). Not to be confused with revenues.
Cash short and over
A miscellaneous expense account used to record the difference between the amounts 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.
Cash surrender value (CSV)
The amount of cash that could be received if a whole life insurance policy were canceled.
Cashier’s check
A check drawn on a bank. A cashier's check leaves no doubt that the funds represented by the check are real. A bank money order or a certified check would also assure the payee that the funds are in the bank.
Ceiling
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. To learn more, see Explanation of Lower of Cost or Market.
CEO
See chief executive officer.
Certified public accountant
A designation awarded to a college graduated person passing a rigorous exam administered by the American Institute of Certified Public Accountants and having several years of professional work experience. The designation and licensing is regulated by the states within the USA.
CFO
See chief financial officer.
Change in accounting estimate
Accounting estimates include the estimated salvage value and the estimated useful life of depreciable assets, estimated percentage of bad debt expense, estimated percentage of units to be repaired or replaced during a warranty period, and routine estimates of monthly expenses for utilities and other expenses. When a change is needed to one of these estimates, the change can affect the current and future periods only. Previous periods are not restated for changes in estimates. (Corrections of errors require a restatement of a prior period amount.)
Change in accounting principle
For changes in accounting principle prior to December 2005, see cumulative effect of a change in accounting principle.
For changes in accounting principle after December 2005, the FASB's Statement of Financial Standards No. 154, Accounting Changes and Error Corrections, requires "retrospective application to prior periods' financial statements of changes in accounting principle." (Statement No. 154 is available at www.fasb.org. Select "Pronouncements & EITF Abstracts" from the left panel of the home page.)
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, and 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.
To learn more, see Explanation of Chart of Accounts.
Check printing charges
A fee for the printing of checks ordered by a company. Often the amount is deducted automatically from a company's checking account by the company that printed the checks.
Chief executive officer (CEO)
Usually the top ranking officer of the corporation who is charged with executing the policies set by the board of directors.
Chief financial officer (CFO)
The top ranking financial person in the corporation.
Chief operating officer (COO)
A top ranking corporation official usually reporting to the chief executive officer and responsible for the operations of the corporation.
Classified balance sheet
A balance sheet with classifications (groupings or categories) such as current assets, property plant and equipment, current liabilities, long term liabilities, etc. To learn more, see Explanation of Balance Sheet.
Clear
See cleared.
Cleared
A term used to describe checks written by a company that have been received and paid by the bank on which they were drawn or written. The check number and amount will appear on the company's checking account statement.
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.
Closely-held account
A corporation with a limited number of stockholders and whose stock is usually not publicly traded.
Closing entries
These journal entries are made after the financial statements have been prepared at the end of the accounting year. Most of the closing entries involve the income statement accounts (revenues, expenses, gains, losses, and summary/clearing accounts) whose balances will be transferred to the owner's capital account or the corporation's retained earnings account. A closing entry also transfers the owner's drawing account (a temporary balance sheet account) balance to the owner's capital account. The closing entries will mean that the temporary accounts (income statement accounts and drawing account) will start the new accounting year with zero balances.
Coefficient of correlation
In regression analysis this is a statistic (designated as r and ranging from -1 to +1) indicating the percentage of correlation between the dependent variable and the independent variable(s). When this statistic is squared it produces the coefficient of determination, which indicates the percentage change in the dependent variable that is explained by the change in the independent variable(s). (Correlation does not necessarily mean there is a cause-and-effect relationship.
Coefficient of determination
In regression analysis this is a statistic (designated as r-squared) indicating the percentage of the change occurring in the dependent variable that is explained by the change in the independent variable(s). The percent change does not necessarily mean there is a cause-and-effect relationship.
Commissions expense
Under the accrual basis of accounting this income statement account reports the amount of commission’s expense that pertains to the revenues earned by the company during the accounting period shown in the heading of the income statement.
Commitments
Commitments are items that are not reported as liabilities as of the balance sheet date. Some of these items are reported in the notes to the financial statements. Examples include noncancelable contracts to rent space in the future or to purchase items at specified prices.
Common costs
Costs that is 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.
Common stock
The type of stock that is present at every corporation. (Some corporations have preferred stock in addition to their common stock.) Shares of common stock are evidence of ownership in a corporation. Holders of common stock elect the corporation's directors and share in distribution of profits of the company via dividends after preferred stock (if any) receives its dividend. If the corporation was to liquidate, the secured lenders would be paid first, followed by unsecured lenders, then the preferred stockholders, and lastly the common stockholders.
Common stock account
The stockholders' equity account that reports the par or stated value of the issued shares of common stock. If the common stock does not have a par or stated value, this account will report the amount received when the shares of common stock were issued.
Common stock dividend distributable
A cash dividend that has been declared by the board of directors, but not yet paid.
Common-size balance sheet
A company's balance sheet that shows each item's amount after it has been divided by the amount of total assets. In other words, current assets will be shown as a percentage of total assets. This will allow comparisons between companies of different size.
Common-size financial statement
See common-size balance sheet and common-size income statement.
Common-size income statement
A company's income statement which reports each item as a percentage of net sales.
Comparability
A quality of accounting information that facilitates the comparison of financial reporting of one company to the financial reporting of another company.
Comparative financial statements
Financial statements that show more than the current year's amounts. For example, it is generally accepted that a corporation's income statement will show the most recent three years of results. This provides the reader with two years of past amounts as a frame of reference for the most recent year. Comparative balance sheets typically show the most recent two years.
Compensated absences
A term used in accounting that refers to employees’ time off with pay for vacations, holidays, and sick days. Companies that are obligated to pay for these days off are required by the matching principle to record the expense for these fringe benefits when the employees are working, since this a part of the employees' compensation.
The expense is recorded each accounting period that an employee works by debiting expense (fringe benefit expense, compensated absences expense, etc.) and crediting a liability account (fringe benefits payable, compensated absences payable, etc.) When the employees actually take time off, the liability account is debited instead of an expense account.
To learn about the details in accounting for compensated absences you should read FASB Standard No. 43, Accounting for Compensated Absences. The standard is available at www.fasb.org by selecting FASB Pronouncements in the left panel of the home page.
Compensating balances
A bank account balance that a corporation agrees to maintain at a current or potential lender. For example, a corporation may agree to keep $1 million in its checking account at a bank in exchange for the bank agreeing to lend up to $10 million to the corporation at 1% below the prime lending rate. At a minimum, compensating balances must be disclosed in the notes to the corporation's financial statements.
Compound interest
Interest on interest. For example, if $1,000 is deposited in an account earning interest of 6% per year the account will earn $60 in the first year. In year two the account balance will earn $63.60 (not $60.00) because 6% interest is earned on $1,060. Similarly the bank paying the interest will incur interest on interest.
Compounding of interest
See compound interest.
Compound journal entry
A journal entry with more than the minimum of one debit and one credit. Example: a debit to Cash of $500 and a credit to Sales of $475 and a credit to Sales Tax Payable of $25.
Comprehensive income
This is the total of the net income plus a few items that affect the owner's equity but are not reported on the income statement. Two examples are unrealized gains and losses on some investments, and unrealized gains and losses involving foreign currency.
Comptroller
The British term for controller.
Conceptual framework
One of the first efforts begun in the 1970s by the Financial Accounting Standards Board to articulate and organize into a cohesive framework all of the accounting rules that had been developed in the past. It was hoped that future accounting rules would evolve from this framework.
Condensed financial statements
Financial statements (such as the income statement and balance sheet) that summarize much of the detail into a few major lines of information.
Conformity rule
See inventory conformity rule.
Conservatism
This accounting guideline states that if doubt exists between two acceptable alternatives (in other words the accountant needs to break a tie), the accountant should choose the alternative that will result in a lesser asset amount and/or a lesser profit. A classic example is inventory where the replacement cost is less than the actual cost. The accountant must decide whether to leave the inventory at cost or to reduce the inventory amount to its replacement cost. Conservatism directs the accountant to reduce the inventory to the lower amount (the replacement cost). This results in a lower asset amount and a debit to an income statement account, such as Loss from Reducing Inventory to LCM. To learn more, see the Explanation of Lower of Cost or Market (LCM).
Consigned goods
Merchandise that is not owned by the party in possession of the goods. For example, a craftsperson might have produced 100 ornate wood items. In order to sell the items, the person asks a local merchant to take five of the items on consignment. This means that the merchant has possession of the five items and will attempt to sell them for a commission, but the merchant does not own the items. Those five items are consigned goods. (When the merchant sells one of the items, the merchant might be required to remit 80% of the selling price to the craftsperson’s and can keep 20% as a commission.) The merchant is the consignee and the craftsperson is the consignor.
Consignee
The party receiving goods to be sold. See consigned goods.
Consignment
Sending merchandise to another party (an agent, consignee) in order to sell the merchandise. Also see consigned goods.
Consignor
The party who delivered its goods to another party (consignee). The objective is for consignee to sell the goods for the consignor. Also see consigned goods.
Consistency
A quality of accounting information that facilitates comparing a company's reporting of one accounting period to another. For example, the reader of a company's financial statements can assume that the company is using the same inventory cost flow assumption this period as it used last period or last year. (If the company did change, it must be disclosed to the reader.)
Consistent
See consistency.
Consolidated financial statements
Financial statements that reflect the total economic entity. For example, on a consolidated income statement a corporation having several subsidiaries would report the total of all of its companies' sales that were made to customers outside of its group. (Sales to companies within its group of related companies would be excluded as well as the purchases within its group.) A consolidated balance sheet would report the combined assets except for claims against companies within its group. Liabilities would be combined except for amounts owed to companies within its group.
Constant-dollar
A dollar adjusted for inflation. If an asset such as land was purchased for $10,000 many years ago when the consumer price index (CPI) was 100 and today the CPI is 400, today's constant-dollar amount would be $40,000. However, generally accepted accounting principles (specifically the monetary unit assumption) assumes that the CPI is unchanging. Therefore the land will be reported at its original, unadjusted amount of $10,000.
Constraints
In financial accounting this term often refers to the accounting guidelines or principles of conservatism and materiality.
Construction work in progress
This is a long term asset account that accumulates the cost of a project that has not yet been placed into service. When the project is finished and placed into the service, the cost is removed from this account and is recorded in a plant asset account.
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. See the income tax code or a tax professional for more information.
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. Because of conservatism, accountants usually do not report or disclose contingent gains (but will report or disclose contingent losses).
Contingent liability
A potential liability dependent upon some future event occurring or not occurring. For example, a company is named as a defendant in a $1 million lawsuit. Does that mean the company automatically has a liability of $1million? What if the lawsuit has no merit and can easily be defended? If it is probable that the company will lose and the amount can be estimated, a journal entry is prepared to debit Loss from Lawsuit and to credit Lawsuit Payable. If it is possible but not probable that the company will lose, the journal entry is not made but instead there will be a footnote disclosure. If the lawsuit is remote (a nuisance suit without any merit), there is no need for a journal entry and no need to disclose the lawsuit. Accountants usually consider product warranties to be a contingent liability that is both probable and can be estimated and is therefore recorded with a journal entry.
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.
Continuing operations
The operating activities of a company, excluding the major segments of the company that are being discontinued.
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 because a reduction in the amounts reported. For example net sales are 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.
Contra asset account
An asset account which is expected to have a credit balance (which is contrary to the normal debit balance of an asset account). The contra asset account is related to another asset account. For example, the contra asset account Allowance for Doubtful Accounts is related to Accounts Receivable. The contra asset account Accumulated Depreciation is related to a constructed asset(s), and the contra asset account Accumulated Depletion is related to natural resources.
The net of the asset and its related contra asset account is referred to as the asset's book value or carrying value.
Contra equity account
An owner's or stockholders' equity account with a debit balance instead of the normal credit balance. Examples include the owner's drawing account, a dividend account, and the treasury stock account.
Contra liability account
A liability account with a debit balance. Discount on Bonds Payable is a contra account associated with the liability account Bonds Payable.
Contra owner's equity account
See contra equity account.
Contra revenues account
A revenues account with a debit balance instead of the usual credit balance. Examples include sales returns, sales allowances, and sales discounts.
Contractual interest rate
The interest rate specified or stated in a note payable or in a bond payable. Often this rate is fixed and will not change during the life of the note or bond.
Contributed capital
Sometimes used as a heading in place of paid-in capital.
Contribution approach income statement
An income statement that subtracts all variable costs and expenses from revenues in order to show the contribution margin. From that is subtracted the fixed costs and expenses to arrive at net income. To learn more, see Explanation of Breakeven Point.
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.
Contribution margin ratio
This ratio indicates the percentage of each sales dollar that is available to cover a company's fixed expenses and profit. The ratio is calculated by dividing the contribution margin (sales minus all variable expenses) by sales.
Control account
A general ledger account containing the correct total amount without containing the details. For example, Accounts Receivable could be a control account in the general ledger. Each day the total of the day's credit sales and the day's collections are posted to this account. However, the details involving specific customers' accounts will be found in a subsidiary ledger.
Controller
The chief accounting officer of a company. This person would head up the accounting department.
Conversion costs
The combination of a manufacturer's direct labor and factory overhead.
Convertible bond
A bond (long term note) that can be exchanged by the holder for a specified number of shares of stock in the company. The convertibility feature usually allows for the bond to have a lower interest rate when it is issued. The holder of the bond enjoys the potential for a gain if the stock price increases.
Convertible preferred stock
Preferred stock that can be exchanged by the holder for a specified number of shares of common stock of the same company.
COO
See chief operating officer.
Copyright
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.
Corporation
A legal entity organized under state laws that are considered separate from its owners. Ownership is evidenced by shares of stock.
Correcting entry
A journal entry to correct an erroneous amount previously entered in the general ledger.
Correlation
The relationship between two variables. There can be correlation without a cause-and-effect relationship. Also see coefficient of correlation.
Cost
In accounting, cost is defined as the cash amount (or the cash equivalent) given up for an asset. Cost includes all costs necessary to get an asset in place and ready for use. For example, the cost of an item in inventory also includes the item's freight-in cost. The cost of land includes all costs to get the land ready for its use. Also see cost principle.
Cost accounting
The accounting focused on determining the cost per unit of a manufacturer in order to value inventory and cost of goods sold. It is also used to determine unit costs of items processed in service businesses, such as a bank's cost to process a check or deposit.
Cost flow assumption
An assumption that determines the order in which costs should flow out of a balance sheet account (e.g. Inventory, Investments, Treasury Stock) when the item is sold. For an illustration of the cost flow assumption, see Explanation of Inventory & Cost of Goods Sold.
Cost method of recording treasury stock
The method of accounting for treasury stock whereby the cost of the stock that is repurchased by the issuing corporation is recorded and is reported in the contra stockholders' equity account Treasury Stock.
Cost of goods available for sale
This is the sum of the beginning inventory of merchandise plus the net cost of the merchandise purchased including freight-in.
Cost of goods purchased
For a merchandiser this is the cost of merchandise purchased after deducting purchase returns, purchase allowances, and purchase discounts but after adding freight-in.
Cost of goods sold
Cost of Goods Sold is usually the largest expense on the income statement of a company selling products or goods. This account or this calculation (depends on inventory system) matches the cost of the goods sold with the sales (revenue) of the goods that have been sold.
The Cost of Goods Sold can be computed as follows: cost of beginning inventory + cost of goods purchased (net of any returns or allowances) + freight-in - cost of ending inventory.
Cost principle
The accounting guideline requiring amounts in the accounts and on the financial statements to be the actual cost rather than the current value. Accountants can show an amount less than cost due to conservatism, but accountants are generally prohibited from showing amounts greater than cost. (Certain investments will be shown at fair value instead of cost.)
Cost ratio
In estimating the ending inventory under the retail method the cost ratio is the cost of goods available divided by the retail value of the goods available?
CPA
See certified public accountant.
Credit (as in debit and credit)
To enter an amount on the right side of an account. Normal entries to revenue accounts are credits. Liabilities normally have credit balances. To learn more, see Explanation of Debits & Credits.
Credit (as in debt, not cash)
Allowing a person or company to purchase goods or services without paying cash at the time of purchase.
Credit balances
A balance on the right side (credit side) of an account in the general ledger.
Credit line
See line of credit.
Credit sales
Sales made on account. Sales where the customer is allowed to pay at a later date. Monkish sales.
Credit terms
The terms which indicate when payment is due for sales made on account (or credit). For example, the credit terms might be 2/10, net 30. This means the amount is due in 30 days; however, if the amount is paid in 10 days a discount of 2% will be permitted. Other terms might be net 10 days, due upon receipt, net 60 days, etc.
Creditor
Someone who has granted credit. If a bank lends company money, the bank is a creditor. If a supplier sold merchandise to a company on credit, the supplier is a creditor.
Cross foot
A word that means to add column totals across to see if the sum will equal the grand total. In the table below each of the columns A through D was "footed" (added or summed) in order to get each column's total. Note that column D contains the total amount for each item. To cross foot means to add the totals shown in Columns A + B + C to verify that it sums to the total of column D. In the following example, cross footing means to add the following column totals: 20 + 15 + 16 to verify that it equals the total of column D, which is listed as 51.
| Item | A | B | C | D |
| Red | 7 | 6 | 7 | 20 |
| Blue | 4 | 6 | 3 | 13 |
| Yellow | 9 | 3 | 6 | 18 |
| Total | 20 | 15 | 16 | 51 |
CSV
See cash surrender value.
Cumulative effect of a change in accounting principle
Prior to December 2005, the cumulative effect of a change in accounting principle was reported on a separate line on the income statement covering the period in which the change took place.
For a change in accounting principle after December 2005, see change in accounting principle.
Cumulative preferred stock
Preferred stock that assures the owner that any omitted dividends on this stock will be made up before the common stockholders will receive a dividend. Omitted dividends on cumulative preferred stock are referred to as dividends in arrears and they must be disclosed in the notes to the financial statements.
Current assets
Cash and other resources that are expected to turn to cash or to be used up within one year of the balance sheet date. (If a company's operating cycle is longer than one year, an item is a current asset if it will turn to cash or be used up within the operating cycle.) Current assets are presented in the order of liquidity, i.e., cash, temporary investments, accounts receivable, inventory, supplies, prepaid insurance.
Current liabilities
Obligations due within one year of the balance sheet date. (If a company's operating cycle is longer than one year, an item is a current liability if it is due within the operating cycle.) Another condition is that the item will use cash or it will create another current liability. (This means that if a bond payable is due within one year of the balance sheet date, but the bond will be retired by a bond sinking fund (a long term restricted asset) the bond will not be reported as a current liability.)
Current maturity of long-term debt
See current portion of long-term debt.
Current portion of long-term debt
The principal portion of an obligation that must be paid within one year of the balance sheet date. For example, if a company has a bank loan of $50,000 that requires monthly interest and principal payments, the next 12 monthly principal payments is the current portion of the long-term debt. That amount is reported as a current liability and the remaining principal amount is reported as a long-term liability.
Current ratio
The ratio of current assets to current liabilities. This ratio is an indicator of a company's ability to meet its current obligations. To learn more, see Explanation of Financial Ratios.
Current value
The present fair market value.
Current year's net income
Often this account appears as a line in the retained earnings section of stockholders' equity (balance sheet) and will show the year-to-date net income. The reason is that some accounting software will not put the current year's net income into the Retained Earnings account until the accounting year is finished.
Customer deposits
A liability account on the books of a company receiving cash in advance of delivering goods or services to the customer. The entry on the books of the company at the time the money is received in advance is a debit to Cash and a credit to this account.
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