Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books. |
Similar financial terms
Accounting liquidityThe ease and quickness with which assets can be converted into cash
Accounting reference date
The date to which accounts are made up for a company. When a company is incorporated, it will normally have an accounting reference date which is the last day of the month in which the anniversary of its incorporation falls. Directors can change the accounting reference date by filing an appropriate form with the Registrar of Companies.
Accounting
The process of recording a firm's financial transactions in appropriate bookkeeping records, and the summary of this information in the form of accounting (annual, interim)reports.
Accounting exposure
The change in the value of a firm's foreign currency denominated accounts due to a change in exchange rates.
Accounting earnings
Earnings of a firm as reported on its income statement.
Statement of Financial Accounting Standards No. 52
This is the currency translation standard currently used by U.S. firms. It mandates the use of the current rate method.
Statement of Financial Accounting Standards No. 8
This is a currency translation standard previously in use by U.S. accounting firms.
Regulatory accounting procedures
Accounting principals required by the FHLB that allow S&Ls to elect annually to defer gains and losses on the sale of assets and amortize these deferrals over the average life of the asset sold.
Purchase accounting
Method of accounting for a merger in which the acquirer is treated as having purchased the assets and assumed liabilities of the acquiree, which are all written up or down to their respective fair market values, the difference between the purchase price and the net assets acquired being attributed to goodwill.
Creative accounting
The reporting of profit and asset figures in a way that is flattering to the company. A company's senior managers can 'window dress' the profits for any trading period to impress shareholders - however, interpretation of accounting data in this way is actively discouraged by the professional accounting bodies.
Technical insolvency
Default on a legal obligation of the firm. For example, technical insolvency occurs when a firm doesn't pay a bill.
