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Accounting Terminology Guide Over 1,000 Accounting and Finance Terms

Group that has authority to establish standards of financial reporting for all units of state and local government. A balance sheet that projects the financial position of a business for a future period. The ability to increase earnings for stockholders by earning more on ASSETS than is paid in INTEREST on DEBTincurred to finance the assets. Reporting to stockholders and the public, as opposed to internal reporting for management’s benefit.

It participates with the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and the GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB) in establishing accounting principles. The relationship of a company’s current assets that can be converted into cash to its current liabilities. A trial balance is a report of the balances of all general ledger accounts at a point in time. Accountants prepare or generate trial balances at the conclusion of a reporting period to ensure all accounts and balances add up properly. In professional practice, trial balances function like test-runs for an official balance sheet.

• Financial plan that serves as an estimate of future cost, REVENUES or both.
• It’s similar to financial accounting, but this time, it’s reserved for internal use, and financial statements are made more frequently to evaluate and interpret financial performance.
• BOND on which the holder receives only one payment at maturity which includes both PRINCIPAL and INTERESTfrom issuance to maturity.
• Debt capital covers money obtained through credit instruments such as loans.
• After a taxpayer’s basis in property is determined, it must be adjusted upward to include any additions of capital to the property and reduced by any returns of capital to the taxpayer.
• Date when a SECURITY transaction is entered into, to be settled on at a later date.

Raising the money by issuing shares of COMMON STOCK or PREFERRED STOCK. A way of AMORTIZING BOND DISCOUNTS or PREMIUMS by applying a constant interest rate to the CARRYING VALUE of the BONDS at the beginning of each interest period. The study of the ways goods and services are produced, transported, sold, and used. Rate of change in the gross national product, as expressed in an annual percentage.

Value-Added Tax (VAT)

An exclusive right granted by the federal government to the possessor to publish and sell literary, musical, or other artistic materials for a period of the author’s life plus 50 years, including computer programs. The excess of REVENUES over all variable costs related to a particular sales volume. A taxpayer is considered to have received the income even though the monies are not in hand, it may have been set aside or otherwise made available. Controls that exist at the company level that have an impact on controls at the process, transaction, or application level. Percentage of the selling price of the property, paid by the seller. To clear the BALANCES of temporary accounts in order to be ready for the next accounting period.

The property and lease rentals are security for the LESSOR’S indebtedness. Conditional bank commitment issued on behalf of a customer to pay a third party in accordance with certain terms and conditions. The two primary types are commercial letters of credit and standby letters of credit. Person or entity that has the right to use property under the terms of a LEASE.

American Institute of Certified Public Accountants (AICPA)

Cost incurred to acquire economically useful goods or services that are expected to be consumed in the revenue-earning process within the operating cycle. An actual count of all MERCHANDISE on hand at the end of an accounting period. Income reported on a TAX BASIS for which no cash or financial benefit is realized. Personal property includes tangible items such as cash, cars and computers, as well as intangible items, such as royalties, patents and copyrights.

This is what is going to help you continue to grow your business and secure investors. Accounting is the process of recording, classifying and summarizing financial transactions. It provides a clear picture of the financial health of your organization and its performance, which can serve as a catalyst for resource management and strategic growth. Tax accountants overseeing returns in the United States rely on guidance from the Internal Revenue Service. Federal tax returns must comply with tax guidance outlined by the Internal Revenue Code (IRC).

Double Taxation

Provision of tax law that allows current losses or certain tax credits to be utilized in the tax returns of future periods.. INTEREST cost incurred during the time necessary to bring an ASSET to the condition and location for its intended use and included as part of the HISTORICAL COST of acquiring the asset. Outlay of money to acquire or improve capital assets such as buildings and machinery.

• Person who is responsible for the administration of property owned by others.
• Plus, Boast AI unveils universal data ingestion feature; and other news and updates from the accounting technology arena.
• A tax exempt trust exclusively for the purpose of paying qualified higher education costs of the trusts designated beneficiary.

Material event that occurs after the end of the Accounting period and before the publication of an entity’sFINANCIAL STATEMENTS. Such events are disclosed in the notes to the financial statements. Noncorporate investors may exclude up to 50 percent of the GAIN they realize on the disposition of qualified small business stock issued after Aug. 10, 1993, and held for more than five years. The amount of gain eligible for the 50 percent exclusion is subject to per-issuer limits. An internal reorganization of a corporation including a rearrangement of the capital structure by changing the kind of stock or the number of shares outstanding or issuing stock instead of bonds. It is distinguished from most other types of reorganization because it involves only one corporation and is usually accomplished by the surrender by shareholders of their securities for other stock or securities of a different type.

MUTUAL FUND that does not have a fixed number of shares outstanding, offers new shares to the public, and buys back outstanding shares at market value. Value assigned to ASSETS or LIABILITIES that is not based on cost or market (e.g., the value of a service not yet rendered). Collective term for written promissory notes that are due in less than one year and are held by the entity to whom payment is promised. Any citizen that is not a resident or citizen of the United States.

Variable Rate Loan

Summary of the effect of REVENUES and expenses over a period of time. If no interest or an unrealistic amount of interest is charged in a salve involving certain kinds of deferred payments, then the transaction will be treated as if the realistic rate of interest had been used. The difference between the realistic interest and the interest actually used is referred to as imputed interest. A DEBT SECURITY that management intends to hold to its MATURITY or payment date and whose cash value is not needed until that date.

Taxpayers age 65 or older or those under 65 who are retired with permanent and total disability are eligible to claim a credit to reduce the amount of their tax liability. It is designed primarily to benefit those individuals who receive small amounts of retirement INCOME. Each taxpayer is allocated an initial base amount based on his or her filing status determining the credit.

These dividends are amounts paid by a cooperative to its members and customers based on the quantity or value of business conducted with or for the members during the tax year. Relationship between two or more persons based on a written, oral, or implied agreement whereby they agree to carry on a trade or business for profit and share the resulting profits. Unlike a CORPORATION’S shareholders, the partnership’s general partners are liable for the DEBTS of the partnership.

Up-to-date records help users compare current financial information to historical data. With full, consistent, and accurate records, it enables users to assess the performance of a company over a period of time. These are a set of rules intended to be a single comprehensive set of rules to govern the capitalization, or inclusion in INVENTORY of direct and indirect cost of producing, acquiring and holding property. Under the rules, taxpayers are required to capitalize the direct costs and an allocable portion of the indirect costs attributable to real and tangible personal property produced or acquired for resale. The obvious effect of the uniform capitalization rules is that taxpayers may not take current deductions for these costs but instead must be recovered through DEPRECIATION or AMORTIZATION.

Thus, forensic accounting is the use of accounting principles to a specified standard in order to present findings at a court of law. Students will learn how to collect evidence, provide legal support and testify in court. You’ll learn about the legal aspects of accounting, about accounting fraud investigation and prevention techniques, and gain a thorough understanding of the rules and regulations established within forensic accounting. Elsewhere, accounting degrees may be offered as a Bachelor of Arts (BA) in Accounting, or as a Bachelor of Science (BSc) in Accounting (also abbreviated as BS/ACC).