Financial definition trading account
Prepayments are items paid before the balance sheet date but relating to a subsequent period. Accrued charges are amounts owed by the business, but not yet paid, for other expenses at the date of the balance sheet. This is a term given to net current assets, or total current assets less total current liabilities, e. Working capital is important; lack of it leads to business failure.
Appendix i shows a sample balance sheet and a full set of accounts for the Cerial Marketing Board of Zimbabwe. Almost every company carries stocks of some sort. In an agricultural business, these may be fertilisers, chemicals, produce, etc.
Accounting for stocks presents a problem, because stocks in hand at the end of the financial year are regarded as current assets, whereas stocks used during the year form part of the company's costs. Hence, stocks assets appear in the balance sheet, and stocks used must be accounted for in the trading and profit and loss account.
Valuing closing stocks has always been a problem and a source of disagreement. There are many methods of establishing the value of stocks. Three common alternatives are average cost, first in first out Fifo and last in first out Lifo. This average price may be derived by means of a continuous update, a periodic calculation, or a moving period calculation. This method is often used to calculate the cost of low value items, e. Consider the following example comparing the effect of valuing stock of units: In both cases, there are items in stock.
The lower of cost and net realisable value: The most fundamental accounting concept with regards to the valuation of stocks and work-in-progress is that they need to be stated at cost, or if lower, at net realisable value. Net realisable value is the amount at which it is expected that items of stock and work-in-progress could be sold after allowing for the costs of completion and disposal.
If net realisable value is higher than cost, then cost is taken, as valuing stocks at a higher value would not be prudent, i. It is important to check against the net realisable value to ensure that the current asset, stock, is not stated at a figure above that for which it could be realised at the balance sheet date.
If it is decided to reduce the value of certain items of stock from cost to net realisable value, e. Stock is reduced in value, and a charge is made against profits. The full amount is deducted from stock in the balance sheet, but only the decrease between the beginning and end of a period is shown in that period's trading and profit and loss account.
Purchases of peanuts were made as follows: You are required to calculate the value of closing stock and to prepare the trading account on the following bases: The interpretation of company accounts-ratio analysis Why ratios: Ratios are the means of presenting information, in the form of a ratio or percentage, which enables a comparison to be made between one significant figure and another. Often the same ratios of like firms are used to compare the performance of one firm with another.
A "one off" ratio is often useless - trends need to be established by company ratios over a number of years. Present and potential investors can therefore quickly assess whether the company is a good investment or not. Potential suppliers will, for example, want to judge credit worthiness.
Management can compare current performance with previous periods and competing companies. Which areas are used for analysis Four key areas are generally used for analysis: Therefore, "profit maximisation" entails the most efficient allocation of resources by management, and "profitability ratios" when compared to others in the industry will indicate how well management has performed this task.
Key questions to be identified in profitability analysis include: If so, is it clear why? A sufficient amount of cash and other short-term assets must be available when needed. On the other hand, because most short term assets do not produce any return, a strong liquidity position will be damaging to profits. Therefore, management must try to keep the firm's liquidity as low as possible whilst ensuring that short term obligations will be met. This means that industries with stable and predictable conditions will generally require smaller current ratios than will more volatile industries.
Key questions to be identified in liquidity analysis include: Too much equity in a firm often means the management is not taking advantage of the leverage available with long-term debt. On the other hand, outside financing will become more expensive as the debt-to-equity ratio increases.
Thus, the leverage of an organisation has to be considered with respect both to its profitability and the volatility of the industry. Key questions to be identified in leverage analysis include: When compared to the industry average, the fixed-asset turnover ratio, for example, will show how well the company is using its productive capacity.
Similarly, the inventory turnover ratio will indicate whether the company used too much inventory in generating sales and whether the company may be carrying obsolete inventory. Key questions to be identified in activity analysis are: Are they replaced on a regular basis and adequately maintained? These may relate to long-term trends in the business or to fixed assets, e.
What is their estimated current value? Are different lives used for Current Cost Accounting? What is their value? How long is the commitment? Is market value used if it is lower than cost? How have they been treated in the balance sheet?
Methods used to evaluate organisational performance To evaluate the performance of a company with respect to these ratios, three methods are used, namely industry comparisons, time series analysis and absolute standards. The danger is that when industry averages include companies with different products or markets, averages can be misleading.
You could lose money by investing in a money market fund. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Fidelity's government and U. Normally at least Government securities and repurchase agreements for those securities. Certain issuers of U. Government securities are sponsored or chartered by Congress, but their securities are neither issued nor guaranteed by the U.
Investing in compliance with industry standard regulatory requirements for money market funds for the quality, maturity, and diversification of investments.
Treasury securities and repurchase agreements for those securities. Additional options might be available by calling your representative. All brokerage securities held in an account are listed under a single brokerage account number. This number always has 9 characters and can be found in your portfolio summary. See how to determine your routing and account numbers for direct deposit. Collection periods vary depending on the deposit method. The collection period for check and EFT deposits is generally 4 business days.
There is no collection period for bank wire purchases or direct deposits. Trade proceeds vary according to the security being traded. Settlement times for trades. Fidelity may waive this requirement for customers with previous Fidelity credit history or mutual fund assets on deposit. A benefit of the core position is that it allows you to earn interest on uninvested cash balances. Interest is calculated on a daily basis and is credited on the last business day of the month.
Balances display values that change with market price fluctuations on the underlying securities in your account. Essentially, it is a complete recalculation based on price fluctuations of positions, trade executions, and money movement into or out of the account.
Balances reflect trade executions and money movement into and out of the account during the day. Balances display values after a nightly update of the account.
In some cases, certain balance fields can only be updated overnight due to regulatory restrictions. You can view up to nine years' worth of interactive statements online under statements. Your tax documents will still arrive by mail. View a full list of account features that you can update. To get started, fill out a form available in account access rights. Money market funds held in a brokerage account are considered securities.
It also does not cover other claims for losses incurred while broker-dealers remain in business. This is the maximum excess of SIPC protection currently available in the brokerage industry. Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account, and securities held in book-entry form. Neither SIPC nor the additional coverage protects against loss of market value of the securities.
Certain assets are not eligible for SIPC protection. Among the assets typically not eligible for SIPC protection are commodity futures contracts and precious metals, as well as investment contracts such as limited partnerships and fixed annuity contracts that are not registered with the U. Securities and Exchange Commission under the Securities Act of In accordance with the SEC rule 15c, often known as the "Customer Protection Rule," Fidelity protects client securities that are fully paid for by segregating them and ensuring that they are not used for any other purpose, such as for loans to investors or institutions, corporate investment purposes, and spending.
This practice helps ensure that customers have access to these securities at all times. Customer assets may still be subject to market risk and volatility.
Protecting your personal information When you use the Fidelity web site, we want to make sure you have the peace of mind that comes with knowing that your information is safe and secure. That's why we only allow access to your account using confirmed information, such as your Social Security number or a username and password that you've created.
We generally recommend using a username and password instead of your Social Security number as that combination can offer increased protection. However, no matter which mode of access you choose, we protect your information using the strongest encryption available to us. We also offer the same encryption when you access your accounts using your mobile device. Furthermore, we also offer protection for your assets in the case of unauthorized activity in your account.
For more information, please see our Customer Protection Guarantee. No, our product and service offerings for customers and prospective customers who reside outside of the United States are limited. While the questions below provide a general overview of those limits, because so much is dependent on the particulars of your specific situation, we suggest you call us at to learn about how they apply to you.
If you are calling us from outside the United States, please visit Fidelity Phone Numbers, For Customers Traveling Abroad to see a list of available international phone numbers available. Please see the website for more information regarding the registration process and required documentation at: Upon discovering that an investor falls in any of the following categories, a securities broker shall refuse to open an account to, or, if an account has already been opened, refuse to accept orders for brokerage trading or subscription of securities: Incapacitated persons without legal capacity or with limited legal capacity, who do not have the agency or authorization of their legal guardian.
Personnel or employees of the Competent Authority in charge of securities matters without a letter of consent. Employees of the TWSE without a letter of consent. Persons declared bankrupt and whose rights have not been reinstated. Interdicted persons who are not represented by their statutory agents. Juristic persons opening accounts that cannot supply proof of authorization to open the account.
Securities dealers who have not been approved by the Competent Authority. A principal who has engaged a director, supervisor, or employee of a securities firm to open an account with such securities firm as an agent or representative of the principal.
When more than one discretionary investment account has been opened at the same business premises of the same securities broker by the same principal with respect to the same authorized discretionary trader; provided, this restriction shall not apply to a principal that is a government fund such as a civil servant pension fund, labor pension fund, labor insurance fund, or postal remittance and savings fund and that, when authorizing the same authorized discretionary trader for discretionary investment, may open, at the same business premises of the same securities broker, different discretionary investment accounts for different brokerage contracts.
Investor applying to transfer his discretionary account to regular account. Any person that has breached a contract relating to securities trading, where the TWSE or the Over-the-Counter Securities Exchange have notified all securities brokers of this fact, where the case has not been closed and less than five years have elapsed. The contra orders of the margin trade and day trade on the notification day are not included.
Any person that has violated the Securities and Exchange Act or been suspected of forging altering listed or OTC securities documents and has been under public prosecution, or has been adjudicated criminally guilty by a final and unappealable court judgment within the last five years.