Glossary G-7format, where each column shows the
change in each major stockholders’
equity classification. (p. 508)
Stock dividend A distribution of shares
of stock to stockholders. (p. 507)
Stock option The right to purchase
common stock at a fixed price over a
limited period of time, often used to
provide employee incentives to enhance
stock price. (p. 501)
Stock split A reduction in the par or
stated value of a common stock and the
issuance of a proportionate number of
additional shares. (p. 503)
Stockholders Investors who purchase
stock in a corporation. (p. 11)
Stockholders’ equity The stockholders’
rights to the assets of a business.
(pp. 17, 115)
Straight-line method A method of
depreciation that provides for equal
periodic depreciation expense over the
estimated life of a fixed asset. (pp. 406,
455)
Subsidiary company The corporation
that is controlled by a parent company.
(p. 549)
Subsidiary ledger A ledger containing
individual accounts with a common
characteristic. (p. 221)
Temporary accounts Revenue, expense,
and dividend accounts whose balances
are transferred to retained earnings at
the end of the period. (p. 169)
Temporary investments The balance
sheet caption used to report investments
in income-yielding securities that can be
quickly sold and converted to cash as
needed. (p. 544)
Term bonds Bonds of an issue that
mature at the same time. (p. 447)
Trademark A name, term, or symbol
used to identify a business and its prod-
ucts. (p. 413)
Trading securities Securities that man-
agement intends to actively trade for
profit. (p. 544)
Transaction An economic event that
under generally accepted accounting
principles affects an element of the
accounting equation and, therefore,
must be recorded. (p. 54)
Transaction processing system A sub-
system of accounting that records and
summarizes the effects of financial trans-
actions on the business. (p. 153)
Treasury stock Stock that a corporation
has once issued and then reacquires.
(p. 502)
Trial balance A summary listing of the
accounts and their balances in the
ledger. (p. 161)
Unearned revenues Items that are ini-
tially recorded as liabilities but areexpected to become revenues over time
or through the normal operation of the
business; often called deferred revenues.
(p. 100)Unit of measure concept A concept of
accounting requiring that economic data
be recorded in dollars. (p. 23)
Units-of-production method A method
of depreciation that provides for depre-
ciation expense based on the expected
productive capacity of a fixed asset.
(p. 407)
Unrealized holding gain or loss The dif-
ference between the fair market values
of the securities and their cost. (p. 545)
Vertical analysis A method of analyz-
ing comparative financial statements in
which percentages are computed for
each item within a statement to a total
within the statement. (pp. 69, 633)
Voucher Any document that serves as
proof of authority to pay cash. (p. 318)
Voucher system A set of procedures for
authorizing and recording liabilities and
cash payments. (p. 318)
Work in process inventory The direct
materials costs, the direct labor costs,
and the factory overhead costs that
have entered into the manufacturing
process, but are associated with a
product that has not been finished.
(p. 266)