GLOSSARY OF FINANCIAL TERMS Absorption costing A costing approach in which all manufacturing costs are charged to the product. | Absorption-cost pricing An approach to pricing that defines the cost base as the manufacturing cost; it excludes both variable and fixed selling and administrative costs. | Accelerated-depreciation method Depreciation method that produces higher depreciation expense in the early years than in the later years. | | Account A record of increases and decreases in specific asset, liability, or stockholders' equity items. | Accounting The information system that identifies, records, and communicates the economic events of an organization to interested users. | Accounts receivable turnover ratio A measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable. | Accounts receivable turnover A measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable. | Accounts receivable Amounts owed by customers on account. | Accrual-basis accounting Accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur. | Accruals Adjusting entries for either accrued revenues or accrued expenses. | Accrued expenses Expenses incurred but not yet paid in cash or recorded. | Accrued revenues Revenues for services performed but not yet received in cash or recorded. | Acid-test (quick) ratio A measure of a company's immediate short-term liquidity; computed by dividing the sum of cash, short-term investments, and net receivables by current liabilities. | Activity cost pool The overhead cost attributed to a distinct type of activity or related activities. | Activity index The activity that causes changes in the behavior of costs. | Activity