ACCOUNTING ESTIMATE Definition

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ACCOUNTING ESTIMATE is an approximation of a financial statement element. Estimates are included in historical financial statements because some amounts are
uncertain pending outcome of future events and relevant data about events that have occurred cannot be accumulated on a timely, cost-effective basis.

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CONVERTIBLE is a corporate security (usually bonds, notes or preferred stock) that can be exchanged for another form of security (usually common stock).

AVERAGE PAYMENT PERIOD (APP) is the number of days an entity takes to pay off credit purchases. As the average payment period increases, cash should increase as well, but working capital will remain the same. Formula: accounts payable / (total annual purchases / 360).

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