Fundamental Financial Accounting Key Terms and Concepts Chapter 10 - Corporate Governance, Explanatory Notes, and Other Disclosures

accounting change accrued pension cost business combination business segment commitment contingency corporate governance

A change in the application of an accounting principle. A liability representing the estimated amount by which a company's defined-benefit pension plan is underfunded, based on certain actuarial assumptions. Normally reported in the notes to the financial statements. A merger between two or more firms, or the purchase of one firm by another. A group of the firm's similar business activities; most large firms have several segments. A transaction that has been contractually agreed to but that has not yet occurred and is not reflected in the financial statements. An event that has an uncertain but potentially significant effect on the financial statements. The strategies, behaviors, and virtues of the board of directors and management of the company to steer the company to managing external risks and sustain performance.

explanatory notes to An integral part of the financial statements that contains explanations of accounting the financial policies and descriptions of financial statement details. statements Another name for the footnotes to the financial statements. financial review five-year (or longer) summary management's discussion and analysis management's statement of responsibility net pension expense A summary of key financial data included in an organization's annual report; it is not a financial statement included in the scope of the independent auditor's report. A narrative description of the firm's activities for the year, including comments about its financial condition and results of operations. A discussion included in the explanatory notes to the financial statements describing management's responsibility for the financial statements. The estimated annual cost of providing pension-related benefits to current and former employees, based on certain actuarial assumptions. Normally reported in a detailed schedule in the financial review section of an annual report. An asset representing the estimated amount by which a company's defined-benefit pension plan is overfunded, based on certain actuarial assumptions. Normally reported in a detailed schedule in the financial review section of an annual report. A summary of the characteristics of a security being offered for sale, including a description of the business and financial position of the firm selling the security. An authorization given by a stockholder to another person to vote the shares owned by the stockholder. The method of accounting for the purchase of another company that records as the cost of the investment the fair market value of the cash and/or securities paid, less the liabilities assumed in the transaction.

prepaid pension cost

prospectus proxy purchase accounting

Key Terms and Concepts - Chapter 5 - Page 2 of 2

significant accounting policies stock option plan A brief summary or description of the specific accounting practices followed by the entity. A plan for compensating key employees by providing an option to purchase a company's stock at a future date at the market price of the stock when the option is issued (granted).