Similar financial terms
Accounting reference dateThe 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.
Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.
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.
Liquidity risk on bonds
The primary measure of liquidity is the size of the bid-ask spread. Liquidity risk depends on the ease with which an issue can be sold at or near its value. It follows that the wider the dealer spread, the more liquidity risk.
Liquidity premium
The amount that forward interest rates exceed expected future spot interest rates.
Liquidity theory of the term structure
A biased expectations theory that asserts that the implied forward rates will not be a pure estimate of the market's expectations of future interest rates because they embody a liquidity premium.
Liquidity risk
The risk that arises from the difficulty of selling an asset. It can be thought of as the difference between the "true value" of the asset and the likely price, less commissions.
Liquidity ratios
Ratios that measure a firm's ability to meet its short-term financial obligations on time.
Liquidity preference hypothesis
The argument that greater liquidity is valuable, all else equal. Also, the theory that the forward rate exceeds expected future interest rates.
Liquidity diversification
Investing in a variety of maturities to reduce the price risk to which holding long bonds exposes the investor.
Liquidity
A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance. Also a market characterized by the ability to buy and sell with relative ease.
