Breaking Down 1300+ Common Financial and Accounting Terms

Financial and accounting terms can be intimidating for anyone not in the industry, but understanding the basics can help you better manage your own finances. Whether you’re new to the world of finance or just need a refresher, breaking down common financial and accounting terms can help you gain the knowledge and confidence you need to make informed decisions. This article will give you an overview of more than 1,300 of the most common financial and accounting terms. This will help you understand the complicated world of finance better.

A

A/c: An abbreviation for "account."

ABC: An acronym for "activity-based costing," a system of assigning costs to activities that use resources.

ABC Inventory System: An inventory system that uses an activity-based costing approach to determine the cost of each item in inventory.

Abnormal Spoilage: Spoilage that is above the normal amount, often resulting from defective materials or improper production processes.

Absorption Costing: An accounting method that includes both the variable and fixed costs of producing a product in the cost of the product.

Accelerated Depreciation: A method of depreciation in which a larger portion of the cost of an asset is expensed in the early years of its use.

Account: A record of financial transactions, such as a customer's account or a company's general ledger.

Accounting Cycle: The process of recording, summarizing, and reporting financial transactions.

Accounting Department: The department responsible for recording, summarizing, and reporting financial transactions.

Accounting Equation: The equation that states that a company's assets equal its liabilities plus its owner's equity.

Accounting Net Income Flows: The difference between the total revenue and total expenses reported on the income statement.

Accounting Principles: The set of rules and principles that govern the preparation of financial statements.

Accounting Principles Board (APB): The organization responsible for setting the accounting principles used in the preparation of financial statements.

Accounting Rate of Return: The ratio of net income to the average invested capital of a company.

 Accruals: Expenses that have been incurred but not yet paid, or revenues that have been earned but not yet received.

Accrue: To record an expense or revenue when it is incurred or earned, regardless of when cash is received or paid.

Accrued Expense: An expense that has been incurred but not yet paid.

Accrued Expenses Payable: Money owed to suppliers or other creditors for expenses that have been incurred but not yet paid.

Accrued Liability: A liability that has been incurred but not yet paid.

Accrued Payroll: Payroll expenses that have been incurred but not yet paid.

Accrued Rent: Rent that has been incurred but not yet paid.

Accrued Rent Expense: The expense associated with rent that has been incurred but not yet paid.

Accrued Rent Income: The income associated with rent that has been earned but not yet received.

Accrued Rent Liability: The liability associated with rent that has been incurred but not yet paid.

Accrued Rent Receivable: The receivable associated with rent that has been earned but not yet received.

Accrued Revenue: Revenue that has been earned but not yet received.

Accrued Vacation: Vacation expenses that have been incurred but not yet paid.

Accrued Vacation Liability: The liability associated with vacation expenses that have been incurred but not yet paid.

Accrued Vacation Pay: The pay associated with vacation expenses that have been incurred but not yet paid.

Accumulated Deficit: The total amount of losses a company has sustained since it began operations.

Accumulated Depletion: The total amount of depletion expenses charged against the cost of natural resources.

Accumulated Depreciation: The total amount of depreciation expenses charged against the cost of an asset.

Accumulated Depreciation - Buildings: The total amount of depreciation expenses charged against the cost of buildings.

Accumulated Depreciation - Equipment: The total amount of depreciation expenses charged against the cost of equipment.

Accumulated Depreciation - Land Improvements: The total amount of depreciation expenses charged against the cost of land improvements.

Accumulated Other Comprehensive Income: The total amount of income from items that are not normally reported in the income statement.

Acid Test Ratio: A measure of a company's liquidity that takes into account only the most liquid assets, such as cash and accounts receivable.

Activity-Based Costing (ABC): A system of assigning costs to activities that use resources.

Activity-Based Management: A management process that uses activity-based costing to identify and reduce costs.

Actual Costing: An accounting method that assigns actual costs to a product or service.

Actual Overhead: The actual costs of overhead, such as indirect materials, indirect labor, and overhead expenses.

Adjunct Account: An account used to show the effect of non-recurring transactions on the financial statements.

Adjusted Trial Balance: A trial balance that has been adjusted to include any changes that have occurred since the last closing of the books.

Adjusting Entries: Entries made at the end of an accounting period to record expenses that have been incurred but not yet paid, or revenues that have been earned but not yet received.

Administrative Expenses: Expenses related to the day-to-day operations of a business, such as rent, insurance, and utilities.

Advance from Customer: Money received from a customer before the goods or services have been delivered.

Advance to Employee: Money paid to an employee before the work has been completed.

Advertising Expense: The cost of advertising a product or service.

After-Tax: The amount remaining after taxes have been deducted.

After-Tax Cost of Debt: The cost of borrowing money after factoring in the tax implications.

Aging of Accounts Payable: A report that shows the amount of money owed to suppliers, categorized by the length of time the money has been owed.

Aging of Accounts Receivable: A report that shows the amount of money owed to a company, categorized by the length of time the money has been owed.

AICPA: An acronym for the American Institute of Certified Public Accountants.

Allocate: To divide an amount among several categories or accounts.

Allocated: An amount that has been divided among several categories or accounts.

Allocation: The process of dividing an amount among several categories or accounts.

Allowance for Doubtful Accounts: An estimate of the amount of accounts receivable that will not be collected.

Allowance for Uncollectible Accounts: An estimate of the amount of accounts receivable that will not be collected.

Allowance Method for Bad Debts Expense: An accounting method used to estimate bad debts expense for the period.

Allowance to Reduce Inventory to Net Realizable Value: An estimate of the amount of inventory that will not be sold and will have to be written off.

American Institute of Certified Public Accountants (AICPA): A professional organization that sets standards for the accounting profession.

Amortization: The process of spreading the cost of an asset over its useful life.

Amortization Expense: The expense associated with amortizing the cost of an asset over its useful life.

Amortization of Bond Discount: The process of writing off the difference between the face value and the issue price of a bond.

Amortization of Bond Issue Costs: The process of writing off the costs associated with issuing a bond.

Amortization of Bond Premium: The process of writing off the difference between the face value and the issue price of a bond.

Amortization of Intangible Assets: The process of writing off the cost of intangible assets over the estimated useful life of the assets.

Amortization Schedule: A schedule that shows the amount of each payment to be made and the remaining balance of a loan or other debt.

Annuity: A series of equal payments made at regular intervals.

Annuity Due: An annuity in which the first payment is made at the beginning of the period.

Annuity in Advance: An annuity in which the first payment is made at the beginning of the period.

Annuity in Arrears: An annuity in which the first payment is made at the end of the period.

APB: An acronym for the Accounting Principles Board.

Applied Overhead: The amount of overhead applied to a product or service.

Apportionment: The process of allocating a cost or expense among several accounts.

Appraisal: The process of determining the value of an asset.

Appraisal Report: A report that contains the appraiser's opinion of the value of an asset.

Appropriated Retained Earnings: Retained earnings that have been set aside for a specific purpose.

ARB: An acronym for the Accounting Research Bulletin.

Arm's Length Transaction: A transaction between two parties that is conducted with no special relationship or arrangement between them.

Arrears: A payment or payments that are overdue.

Articles of Incorporation: The legal document that establishes a corporation.

Asset Turnover Ratio: The ratio of sales to total assets, used to measure a company's efficiency in using its assets to generate sales.

Assets: Anything owned by a company that has monetary value.

Assign: To transfer ownership of an asset to another party.

Assigned Accounts Receivable: Accounts receivable that have been transferred from one party to another.

Assignee: The party to whom an asset has been transferred.

Assignor: The party who has transferred an asset to another party.

Audited Financial Statements: Financial statements that have been reviewed and verified by an independent auditor.

Auditor's Report: A report issued by an independent auditor that states the auditor's opinion on the accuracy and completeness of the financial statements.

Authorized Number of Shares of Stock: The maximum number of shares of stock that can be issued by a company, as stated in the articles of incorporation.

Average Accounts Receivable: The average amount of accounts receivable over a certain period of time.

Average Collection Period: The average length of time it takes to collect accounts receivable.

Average Cost of Inventory: The average cost of inventory over a certain period of time.

Average Inventory: The average amount of inventory over a certain period.

B

Dad debts expense: The amount of money that a company has written off because of a customer not paying a debt.

Balance Sheet: A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Balance Per Bank: The difference between a company's books and its bank statement, representing deposits, withdrawals, and other transactions that have not yet been reconciled.

Balance Per Books: The difference between a company's records and its bank statement, representing deposits, withdrawals, and other transactions that have not yet been reconciled.

Bank Balance: The amount of money in a bank account, both available and unavailable funds.

Bank Errors: Mistakes made by a bank or its employees, such as incorrectly crediting or debiting an account.

Bank Overdraft: An overdraft occurs when an account holder withdraws more money than is available in their account.

Bank Rec: Bank rec is short for Bank Reconciliation; a process used to match and reconcile the balances of a company's bank account and its internal records.

Bank Reconciliation: The process of comparing a company's internal records to its bank statement to ensure that all transactions are accounted for correctly.

Bank Service Charge Expense: A fee charged by a bank for services such as maintaining an account or providing overdraft protection.

Bank Statement: A document issued by a bank or financial institution that summarizes all transactions in an account over a given period.

Bank Statement Reconciliation: The process of comparing a bank statement to a company's internal records to ensure that all transactions are accounted for correctly.

Basic Accounting Equation: The equation Assets = Liabilities + Equity, which is the fundamental representation of a company's financial position.

Basis Point: A unit of measure used in finance to indicate a percentage. One basis point is equal to 0.01%.

Batch-Level Activities: Activities that occur at a set frequency and involve a set quantity of resources, such as producing a batch of products.

Batch-Level Cost: The cost associated with producing a batch of products.

Bearer Bond: A bond issued without a name or registry, which can be transferred by delivering the physical document.

Big Four: The four largest global accounting and consulting firms: Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers.

Bill: An invoice sent by a seller to a buyer, listing the products or services sold and their prices.

Bill of Materials: A list of the components and materials used in the manufacture or assembly of a product.

Bill Payable: An account used to record amounts owed to creditors.

Biweekly: Occurring once every two weeks.

Blank Rec: Short for Blanket Reconciliation, a process used to reconcile multiple accounts at once.

Blue-Collar Worker: A worker who performs manual labor, typically in an industrial or manufacturing setting.

Board of Directors: A group of individuals elected to oversee and manage the operations of a company.

Board-Designated Restriction: A restriction placed on a company's use of its assets by its board of directors.

Boards of Accountancy: Organizations that oversee and regulate the practice of accountancy in each jurisdiction.

Bond: A debt security issued by a company or government.

Bond Call Price: The price at which a bond issuer can choose to redeem a bond prior to its maturity date.

Bond Coupon Rate: The rate of interest paid on a bond.

Bond Discount: The difference between the face value of a bond and the price at which it is traded in the secondary market.

Bond Indenture: A legal document that outlines the terms and conditions of a bond.

Bond Interest Expense: The amount of interest paid on a bond each period.

Bond Interest Rate: The rate of interest paid on a bond.

Bond Issue Costs: The costs associated with issuing a bond, such as underwriting fees and legal fees.

Bond Premium: The difference between the face value of a bond and the price at which it is traded in the secondary market.

Bond Sinking Fund: A fund set aside by the issuer of a bond to use for the repayment of the bond at its maturity.

Bonds Payable: An account used to record debts owed to lenders in the form of bonds.

Book Balance: The amount of money in a company's internal records, both available and unavailable funds.

Book Depreciation: The amount of an asset's cost that is allocated to expense each period, based on the estimated useful life of the asset.

Book of Original Entry: A book used to record a company's transactions in chronological order.

Book Value: The value of an asset as recorded in a company's books.

Book Value of a Company: The net worth of a company, calculated by subtracting total liabilities from total assets.

Book Value of an Asset: The value of an asset according to the company's accounting records.

Book Value per Share of Stock: The net asset value of a company divided by the number of outstanding shares of stock.

Bookkeeping: The process of recording and classifying financial transactions.

Books: A company's financial records.

Borrow: To take money from a lender with the intention of repaying it at a later date.

Borrower: A person or entity who takes out a loan from a lender.

Bottom Line: A company's net income, or the difference between its total revenues and total expenses.

Bounced Check: A check that is returned by the bank due to insufficient funds.

Break-Even Analysis: A tool used to determine the point at which a company's revenues equal its expenses.

Break-Even Point: The point at which a company's revenues equal its expenses.

Budget: A plan for the allocation of resources over a given period of time.

Budget Variance: The difference between the actual results and the budgeted results.

Budgetary Slack: The practice of setting budgets that are easier to achieve than would be optimal.

Budgeted Balance Sheet: A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at the end of a given period.

Budgeted Capacity: The amount of production a company expects to be able to achieve in a given period.

Budgeted Income Statement: A financial statement that summarizes a company's revenues, expenses, and net income over a given period.

Burden Rate: The rate used to allocate indirect costs to products or services.

Accounting Research Bulletin (ARB): A publication issued by the Accounting Principles Board that provides guidance on the reporting of financial information.

Accounts Payable: Money owed to suppliers or other creditors.

Accounts Receivable: Money owed to a company by its customers.

Accounts Receivable - Net: The number of accounts receivable after allowing for any bad debts.

Accounts Receivable Turnover Ratio: The ratio of sales to accounts receivable, used to measure a company's ability to collect its receivables.

Accounts Written Off: Accounts receivable that are determined to be uncollectible and are written off the books.

Accrual Basis of Accounting: An accounting method under which transactions are recorded when they occur, regardless of when cash is received or paid.

Accrual Method of Accounting: An accounting method under which transactions are recorded when they occur, regardless of when cash is received or paid.

Accrual-Type Adjusting Entry: An entry made at the end of an accounting period to record expenses that have been incurred but not yet paid, or revenues that have been earned but not yet received.

Byproduct: A secondary product created as a result of a manufacturing process.

C

Call Premium: The amount by which the price of a call option exceeds its intrinsic value.

Call Price: The price at which a call option can be exercised.

Callable Bond: A bond that can be redeemed by the issuer prior to its maturity date.

Callable Preferred Stock: Preferred stock that can be redeemed by the issuer prior to its maturity date.

Capital: Funds used to acquire assets and finance operations.

Capital Budgeting: The process of evaluating and selecting long-term investments for a company.

Capital Expenditures: Funds used to acquire long-term assets such as buildings, machinery, and equipment.

Capital Lease: A lease agreement in which the lessee is required to assume ownership of the asset at the end of the lease period.

Capital Maintenance Approach in Determining Net Income: A method of accounting that focuses on measuring net income by comparing the changes in net assets from one period to the next.

Capital Maintenance Approach to Net Income: A method of accounting that focuses on measuring net income by comparing the changes in net assets from one period to the next.

Capital Market: A market in which debt and equity instruments are traded.

Capital Stock: The total amount of shares of a company that have been issued and are outstanding.

Capitalize: To record an expense as an asset.

Carrying Amount: The current amount of an asset or liability on the balance sheet.

Carrying Cost of Inventory: The costs associated with holding inventory, such as storage, insurance, and taxes.

Carrying Value: The current amount of an asset or liability on the balance sheet.

Cash: Money on hand or in a bank account.

Cash Account: A bank account in which cash is deposited and withdrawn.

Cash and Cash Equivalents: Short-term investments that can easily be converted into cash.

Cash Basis of Accounting: An accounting method in which income and expenses are recorded when cash is received or paid out.

Cash Discount: A reduction in the price of a good or service when payment is made in cash.

Cash Flow: The inflow and outflow of cash from a business.

Cash Flow Net of Tax: The net cash flow after taxes have been paid.

Cash Flow Statement: A financial statement that summarizes the cash inflows and outflows of a business over a specific period of time.

Cash from Financing Activities: The cash inflows and outflows from activities related to financing a business.

Cash from Operating Activities: The cash inflows and outflows from activities related to the day-to-day operations of a business.

Cash Method of Accounting: An accounting method in which income and expenses are recorded when cash is received or paid out.

Cash Realizable Value: The amount of cash that can be realized from the sale of an asset.

Cash Receipt: A document evidencing the receipt of cash.

Cash Receipts Journal: A book of original entry that records all cash receipts.

Cash Short and Over: The amount of cash in a cash register that is either short or over the expected amount.

Cash Surrender Value (CSV): The amount of cash that can be received when an insurance policy is surrendered or canceled.

Cashier's Check: A check drawn on the funds of a bank and signed by a cashier or other authorized person.

CD: A certificate of deposit, a type of savings account that pays a fixed rate of interest over a set period of time.

Certificate of Deposit: A type of savings account that pays a fixed rate of interest over a set period of time.

Certified Management Accountant: A professional designation in the field of accounting that recognizes an individual’s expertise in management accounting and financial decision making.

Certified Public Accountant: A professional designation in the field of accounting that recognizes an individual’s expertise in auditing, taxation, financial reporting, and other related areas.

CFO: Chief Financial Officer, the highest-ranking financial executive in an organization.

Change in Accounting Estimate: A change in an accounting estimate that is made in light of new information or events.

Change in Net Assets: The difference between the beginning and ending net assets of a company over a given period of time.

Chart of Accounts: A listing of the accounts used by a business to record its transactions.

Check Printing Charges: The fees associated with printing a check.

Checkbook: A book containing blank checks for use in making payments.

Checking Account: A bank account from which payments can be made by check.

Cheque: An alternative spelling of check, a written order to pay a certain sum of money.

Chief Executive Officer (CEO): The highest-ranking executive in an organization.

Chief Financial Officer (CFO): The highest-ranking financial executive in an organization.

Chief Operating Officer (COO): The highest-ranking operating executive in an organization.

Circular E: A publication from the Internal Revenue Service (IRS) that provides employers with information about federal payroll taxes.

Classified Balance Sheet: A balance sheet that is organized into different categories such as current assets, non-current assets, current liabilities, and non-current liabilities.

Clear: To settle a transaction with someone.

Cleared: A transaction that has been settled with someone.

Clearing Account: An account used to temporarily hold funds until they can be transferred to another account.

Closely-Held Corporation: A company with a small number of owners.

Closing Entries: Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to the owner’s capital account.

Coefficient of Correlation: A measure of the strength of the relationship between two variables.

Coefficient of Determination: A measure of how well a regression line fits a set of data.

COGS: Cost of Goods Sold, the cost of producing goods or services that a business has sold.

Collection Period: The average time it takes for a business to collect the accounts receivable it has issued.

Commissions Expense: The cost of paying commissions to sales personnel.

Commitments: Contracts that obligate a company to take some action in the future.

Common Costs: Costs that are shared by two or more departments or activities.

Common Stock: The most common type of ownership in a company, with the holders having voting rights and the opportunity to share in the profits of the company.

Common Stock Account: An account used to track the issuance and retirement of the common stock of a company.

Common Stock Dividend Distributable: The amount of money a company has available to distribute to its common stockholders in the form of dividends.

Common-Size Balance Sheet: A balance sheet in which all of the assets and liabilities are expressed as a percentage of total assets and total liabilities, respectively.

Common-Size Financial Statement: A financial statement in which all of the amounts are expressed as a percentage of a single amount.

Common-Size Income Statement: An income statement in which all of the amounts are expressed as a percentage of sales.

Comparability: The ability to compare financial statements of different companies over time.

Comparative Balance Sheet: A balance sheet that includes financial information from two or more periods.

Comparative Financial Statements: Financial statements that include financial information from two or more periods.

Comparative Income Statement: An income statement that includes financial information from two or more periods.

Compensated Absences: An employee benefit that pays an employee for time off from work.

Compensating Balances: Funds that a business is required to maintain in its bank account to receive certain services from a bank.

Compilation: A service provided by an accountant in which financial statements are assembled from the client’s records.

Compiled Financial Statements: Financial statements that are prepared by an accountant based on the client’s records.

Compound Interest: Interest that is earned on both the principal and accumulated interest.

Compound Journal Entry: A journal entry that involves more than two accounts.

Compounding of Interest: The process of earning interest on both the principal and accumulated interest.

Comprehensive Income: The total change in equity of a company from non-owner sources.

Comptroller: The person responsible for overseeing the financial operations of an organization.

Conceptual Framework: A set of concepts used to guide the development of accounting standards.

Condensed Balance Sheet: A balance sheet that includes only the most important information.

Condensed Financial Statements: Financial statements that include only the most important information.

Condensed Income Statement: An income statement that includes only the most important information.

Conformity Rule: A principle of accounting that requirjjjjjjes entities to follow the same accounting methods from period to period.

Conservatism: The principle of accounting that requires that losses be recorded more quickly than gains.

Consigned Goods: Goods that are owned by one party but held by another party.

Consignee: The party that receives and holds goods owned by another party.

Consignment: An arrangement in which one party (the consignor) gives possession of goods to another party (the consignee) for sale.

Consignor: The party that gives possession of goods to another party for sale.

Consistency: The principle of accounting that requires entities to use the same accounting methods from period to period.

Consistent: An accounting method that is used from period to period.

Consolidated Financial Statements: Financial statements that combine the financial information of two or more companies.

Constant-Dollar: A method of adjusting financial statements for inflation.

Constraints: Limitations on the resources available to a business.

Construction Work-in-Progress: The costs associated with construction projects that are not yet complete.

Consumer Price Index: A measure of the average cost of a basket of goods and services used by households.

Contingent Gain: A potential future gain that will occur only if a certain event occurs.

Contingent Liability: A potential future liability that will occur only if a certain event occurs.

Contingent Loss: A potential future loss that will occur only if a certain event occurs.

Continuing Operations: Activities that are expected to continue for an indefinite period of time.

Continuous Budget: A budget that is updated on a continuous basis.

Contra Account: An account that is used to reduce the balance of another account.

Contra Asset Account: An account used to offset the balance of an asset account.

Contra Equity Account: An account used to reduce the balance of an equity account.

Contra Expense Account: An account used to reduce the balance of an expense account.

Contra Inventory Account: An account used to reduce the balance of an inventory account.

Contra Liability Account: An account used to reduce the balance of a liability account.

Contra Owner's Equity Account: An account used to reduce the balance of an owner's equity account.

Contra Revenues Account: An account used to reduce the balance of a revenues account.

Contractual Interest Rate: The interest rate specified in a loan agreement.

Contributed Capital: Funds that are contributed to a business by its owners.

Contribution Approach Income Statement: An income statement that shows the contribution of each revenue source and expense to net income.

Contribution Margin: The difference between sales and variable expenses.

Contribution Margin per Unit: The difference between the selling price per unit and the variable cost per unit.

Contribution Margin Ratio: The ratio of contribution margin to sales.

Contributions: Funds that are given to a business by its owners or other entities.

Control Account: An account that summarizes the balances of several related accounts.

Controller: The person responsible for overseeing the financial operations of an organization.

Controller's Cushion: Funds that are set aside in a controller’s reserve account to cover any potential errors or omissions in a company’s financial statements.

Controller's Reserve: Funds that are set aside in a controller’s reserve account to cover any potential errors or omissions in a company’s financial statements.

Conversion Costs: The costs associated with converting raw materials into finished goods.

Convertible Bond: A bond that can be converted into stock at the option of the bondholder.

Convertible Preferred Stock: Preferred stock that can be converted into common stock at the option of the stockholder.

COO: Chief Operating Officer, the highest-ranking operating executive in an organization.

Copyright: A legal protection that prevents others from copying or using a creative work without permission.

Corporation: A legal entity that is separate from the individuals who own it.

Correcting Entry: A journal entry that is used to correct an error in an account.

Correlation: A measure of the strength of the relationship between two variables.

COS: Cost of Sales, the cost of producing goods or services that a business has sold.

Cost: The amount of money required to purchase a good or service.

Cost Accounting: The process of collecting, analyzing, and reporting cost information.

Cost Behavior: The way in which costs change in response to changes in activity.

Cost Center: An organizational unit that incurs costs but does not generate revenues.

Cost Flow Assumption: The assumption used to determine the order in which costs are recognized in the income statement.

Cost Method of Recording Treasury Stock: An accounting method used to record the purchase, sale, and retirement of treasury stock.

Cost Object: Anything for which costs can be assigned.

Cost of Capital: The rate of return that a business must earn in order to cover its costs.

Cost of Carrying Inventory: The costs associated with holding inventory, such as storage, insurance, and taxes.

Cost of Goods Available for Sale: The total cost of the goods available for sale during a period.

Cost of Goods Purchased: The cost of goods that have been purchased during a period.

Cost of Goods Sold: The cost of producing goods or services that a business has sold.

Cost of Products Sold: The cost associated with the production or purchase of goods that have been sold in a given period of time.

Cost of Sales: All costs associated with the sale of goods, including direct, indirect, fixed, and variable costs.

Cost Principle: An accounting concept which states that assets should be recorded at their original cost, rather than their current value.

Cost Ratio: A ratio which measures the cost of goods sold in relation to the total revenue earned.

Cost-Volume-Profit (CVP): A financial analysis that looks at the relationship between cost, volume, and profit.

Coupon Bond: A type of bond which pays a fixed rate of interest to the bondholder, usually semi-annually.

CPA: Certified Public Accountant.

Cr.: Abbreviation of "credit," typically used on financial documents to denote a transaction that increases an account balance.

Credit (as in debit and credit): A transaction that increases an account balance.

Credit (as in debt, not cash): A loan or line of credit extended to a customer or individual.

Credit Balance: The amount of an account that is still owed.

Credit Line: A line of credit extended to a customer or individual.

Credit Memo: A document that credits a customer's account with a specific amount of money.

Credit Memorandum: A document that credits a customer's account with a specific amount of money.

Credit Sales: Sales that are made on credit, rather than cash.

Credit Terms: The terms and conditions of a loan or line of credit, including the interest rate and repayment schedule.

Creditor: An individual or entity to whom money is owed.

Crossfoot: A method of double-checking a column of figures by adding the numbers across the page and then down the page.

CSV: Comma-separated values. A type of file format used to store data in a tabular form.

Cumulative Preferred Stock: A type of preferred stock in which the dividend accumulates if it is not paid out in a given period.

Current Assets: Assets that are expected to be converted into cash within one year.

Current Liabilities: Liabilities that are expected to be paid within one year.

Current Maturity of Long-Term Debt: The amount of a company's long-term debt that is due to be paid within the current year.

Current Portion of Long-Term Debt: The amount of a company's long-term debt that is due to be paid within the current year.

Current Ratio: A liquidity ratio that measures a company's ability to pay short-term debts.

Current Value: The current market value of an asset or liability.

Current Year's Net Income: The net income earned by a company in the current fiscal year.

Customer Deposits: Funds deposited by customers that are held in trust by a business.

CVP: Cost-volume-profit. A financial analysis that looks at the relationship between cost, volume, and profit.

Cycle Counting: A method of inventory control which involves counting only a portion of the inventory on a regular basis.

D

Days' Sales in Accounts Receivable: The average number of days that a business takes to collect payment on credit sales. It is calculated by dividing the accounts receivable balance by the average daily sales for the period.

Days' Sales in Inventory: A measure of the number of days of inventory held by a business. It is calculated by dividing the average inventory balance by the cost of goods sold for the period.

DCF: The discounted cash flow (DCF) analysis is a method of valuing a company, project, or asset using the concepts of the time value of money. It is based on the principle that the value of an asset is the present value of all future cash flows it is expected to generate.

Death Spiral: A death spiral is a situation in which a downward spiral of decreasing stock prices causes a loss of investor confidence, resulting in further price declines.

Debenture Bond: A debenture bond is a type of bond issued by a company as a form of long-term debt. It is typically unsecured, meaning it is not backed by any collateral.

Debit (as in Debit and Credit): A debit is an accounting entry that indicates a sum of money has been taken out of (or debited from) a particular account.

Debit Balance: A debit balance is an account balance that is the result of more debits than credits.

Debit Card: A debit card is a payment card used to make purchases with money taken directly from a linked bank account.

Debit Memorandum: A debit memorandum is an accounting document used to record an outgoing payment from a company’s bank account.

Debt Extinguishment: Debt extinguishment is the process of eliminating a debt liability.

Debt Financing: Debt financing is the process of raising money by borrowing from lenders and using the funds to finance business activities.

Debt Issue Costs: Debt issue costs are expenses incurred when a company issues debt securities.

Debt Ratio: The debt ratio is a financial ratio that measures the amount of leverage used by a company. It is calculated by dividing total liabilities by total assets.

Debt Service: Debt service is the total amount of money that a company must pay each year to service its debt.

Debt to Equity Ratio: The debt to equity ratio is a financial ratio that measures a company’s financial leverage. It is calculated by dividing total liabilities by total equity.

Debt to Total Asset Ratio: The debt to total asset ratio is a financial ratio that measures a company’s financial leverage. It is calculated by dividing total liabilities by total assets.

Debtor: A debtor is an entity that owes money to another entity.

Decentralization: Decentralization is the process of distributing decision-making authority away from a central authority and delegating it to lower-level managers.

Declaration Date: The declaration date is the date on which a company's board of directors announces the amount of a dividend to be paid to shareholders.

Declining-Balance Method of Depreciation: The declining-balance method of depreciation is an accelerated depreciation method that assumes the asset will lose a constant percentage of its book value each year.

Deferral: A deferral is an accounting transaction in which a payment or expense is delayed and recognized at a future date.

Deferral-Type Adjusting Entry: A deferral-type adjusting entry is an accounting transaction that delays the recognition of an expense or revenue until a later date.

Deferred Charge: A deferred charge is an expense that will not be recognized immediately, but rather over a period of time.

Deferred Debits: Deferred debits are amounts owed by a company that are not due to be paid until a later date.

Deferred Expense: A deferred expense is an expense that has been incurred but not yet paid.

Deferred Income Taxes: Deferred income taxes are taxes that have not yet been paid but will be due at a future date.

Deferred Revenues: Deferred revenues are revenues that have been earned but not yet received.

Deficit: A deficit is an excess of expenses over revenues.

Defined Benefit Pension Plan: A defined benefit pension plan is an employer-sponsored retirement plan that provides a specified monthly benefit at retirement.

Defined Contribution Pension Plan: A defined contribution pension plan is an employer-sponsored retirement plan in which contributions are made by the employer and/or the employee.

Delivery Equipment: Delivery equipment is equipment used to transport goods from one place to another.

Delivery Expense: Delivery expense is the cost of transporting goods from one place to another.

Demand Deposits: Demand deposits are funds held in a bank account that can be withdrawn on demand.

Departmental Overhead Rate: The departmental overhead rate is the rate used to calculate the overhead costs allocated to a particular department.

Dependent Variable: A dependent variable is a variable that is affected by the changes in another variable.

Depletion: Depletion is the gradual exhaustion of natural resources.

Depletion Expense: Depletion expense is an accounting expense that is used to account for the gradual depletion of natural resources.

Depositor: A depositor is a person who deposits money into a bank account.

Deposits: Deposits are funds placed into a bank account.

Deposits in Transit: Deposits in transit are deposits that have been received by the bank but have not yet been recorded in the company’s books.

Depreciable Cost: Depreciable cost is the cost of an asset that is subject to depreciation.

Depreciated: Depreciated is the amount of an asset’s value that has been lost due to wear and tear over time.

Depreciation: Depreciation is the process of allocating the cost of an asset over its useful life.

Depreciation - Accelerated: Accelerated depreciation is an accounting method that allows for the accelerated deduction of expenses for tax purposes.

Depreciation - Double Declining Balance: Double declining balance is an accelerated depreciation method that assumes the asset will lose a larger percentage of its book value in the early years of its life.

Depreciation - Straight Line: Straight-line depreciation is the most basic and commonly used method of calculating depreciation expenses. It assumes that an asset will lose the same amount of value each year over its useful life.

Depreciation - Sum of the Years' Digits: Sum-of-the-years'-digits is an accelerated depreciation method that assumes the asset will lose a larger percentage of its book value in the early years of its life.

Depreciation Expense: Depreciation expense is the amount of an asset’s cost that is allocated as an expense each year over its useful life.

Depreciation Expense: Equipment: Depreciation expense: equipment is the amount of an equipment asset’s cost that is allocated as an expense each year over its useful life.

Depreciation Methods: Depreciation methods are methods used to allocate the cost of an asset over its useful life.

Differential Cost: Differential cost is the difference in cost between two courses of action.

Differential Revenue: Differential revenue is the difference in revenue between two courses of action.

Direct Allocation Method: The direct allocation method is an allocation method in which costs are directly traced to the cost item being allocated.

Direct Cost: A direct cost is a cost that can be directly associated with the production of a product or service.

Direct Costing: Direct costing is an accounting method in which only variable costs are allocated to products or services.

Direct Labor Efficiency Variance: The direct labor efficiency variance is the difference between the actual number of labor hours worked and the number that should have been worked based on the standard hours allowed for the output produced.

Direct Labor Price Variance: The direct labor price variance is the difference between the actual cost of labor and the standard cost of labor.

Direct Labor Quantity Variance: The direct labor quantity variance is the difference between the actual number of labor hours worked and the standard number of labor hours allowed for the output produced.

Direct Labor Rate Variance: The direct labor rate variance is the difference between the actual cost of labor and the standard rate of pay used to calculate the standard cost of labor.

Direct Labor Usage Variance: The direct labor usage variance is the difference between the actual number of labor hours worked and the standard number of labor hours allowed for the output produced.

Direct Materials: Direct materials are materials that are used directly in the production of a product or service.

Direct Materials Efficiency Variance: The direct materials efficiency variance is the difference between the actual quantity of direct materials used and the standard quantity of direct materials allowed for the output produced.

Direct Materials Inventory: Direct materials inventory is the inventory of materials that will be used directly in the production of a product or service.

Direct Materials Price Variance: The direct materials price variance is the difference between the actual cost of direct materials and the standard cost of direct materials.

Direct Materials Quantity Variance: The direct materials quantity variance is the difference between the actual quantity of direct materials used and the standard quantity of direct materials allowed for the output produced.

Direct Materials Usage Variance: The direct materials usage variance is the difference between the actual quantity of direct materials used and the standard quantity of direct materials allowed for the output produced.

Direct Method: The direct method is an inventory valuation method in which the cost of goods sold is calculated directly from the cost of the goods purchased.

Direct Write-Off Method: The direct write-off method is an accounting method in which bad debts are written off directly against the accounts receivable balance.

Disclosure: Disclosure is the act of making information public.

Discontinued Operations: Discontinued operations are operations that have been terminated or are no longer in use.

Discount on Bonds Payable: The discount on bonds payable is the difference between the face value of the bonds and the amount of money received upon their sale.

Discount on Notes Payable: The discount on notes payable is the difference between the face value of the notes and the amount of money received upon their sale.

Discount on Notes Receivable: The discount on notes receivable is the difference between the face value of the notes and the amount of money received upon their sale.

Discount Rate: The discount rate is the rate used to discount future cash flows to present value.

Discounted Cash Flow Model: The discounted cash flow (DCF) model is a financial valuation method used to estimate the value of a company, project, or asset using the concepts of the time value of money.

Discounted Cash Flow Technique: The discounted cash flow (DCF) technique is a financial valuation method used to estimate the value of a company, project, or asset using the concepts of the time value of money.

Disposal of Fixed Assets: Disposal of fixed assets is the sale or other transfer of ownership of fixed assets.

Dividend: A dividend is a portion of a company’s profits that is distributed to shareholders.

Dividend Declaration Date: The dividend declaration date is the date on which a company's board of directors announces the amount of a dividend to be paid to shareholders.

Dividend Payment Date: The dividend payment date is the date on which a company pays its shareholders the declared dividend.

Dividend Payout Ratio: The dividend payout ratio is a financial ratio that measures the percentage of a company's earnings that is paid out as dividends.

Dividend Yield: The dividend yield is a financial ratio that measures the return on investment from dividends.

Dividends Declared: Dividends declared is the amount of dividends that a company has declared to be paid to shareholders.

Dividends in Arrears: Dividends in arrears are dividends that have been declared but not yet paid.

Dividends Payable: Dividends payable is the amount of dividends that a company has declared but not yet paid.

Divisions: Divisions are units within a company that are responsible for different areas of the business.

Dollar-Value LIFO Retail Method: The dollar-value LIFO retail method is a method of inventory valuation that uses the last-in, first-out (LIFO) inventory flow assumption but values the inventory at current retail prices.

Dollar-Value Retail Method: The dollar-value retail method is a method of inventory valuation that uses the average cost method but values the inventory at current retail prices.

Donated Capital: Donated capital is money donated by an individual or organization to a company or other entity.

Donor: A donor is an individual or organization that has given money to a company or other entity.

Donor Restriction: A donor restriction is a condition put on a donation by the donor.

Donor-Imposed Condition: A donor-imposed condition is a condition put on a donation by the donor.

Donor-Imposed Restriction: A donor-imposed restriction is a condition put on a donation by the donor.

Double-Declining Balance Method of Depreciation: The double-declining balance method of depreciation is an accelerated depreciation method that assumes the asset will lose a larger percentage of its book value in the early years of its life.

Double-Entry Accounting: Double-entry accounting is an accounting method in which each transaction is recorded in two accounts.

Downward Demand Spiral: A downward demand spiral is a situation in which a decrease in demand for a product or service results in a decrease in prices, which then further decreases demand.

Draw: A draw is an amount of money taken out of a company’s profits by an owner or partner.

Drawing Account: A drawing account is an account used to record the draws taken out of a company’s profits by an owner or partner.

Dues: Dues are payments made to a club, organization, or association.

Duplicate Payment: A duplicate payment is a payment made in error that is more than the amount due.

E

Early Payment Discount: A discount offered by a supplier to a customer if payment is made before a specified date.

Earned: Income that has been received in exchange for goods or services.

Earnings Per Share (EPS): A company's earnings divided by its number of outstanding shares of common stock.

Earnings Quality: The accuracy of a company's reported earnings, taking into account factors such as accounting principles used, estimates made, and one-time items.

EBITDA: Earnings before interest, taxes, depreciation, and amortization.

Economic Entity Assumption: The assumption that the financial activities of a business entity can be separated from those of its owners and other entities.

Economic Life: The period of time in which an asset is productive, from the time it is acquired until it is retired.

Economic Lot Size: The optimal order quantity of a product that minimizes costs.

Economic Order Quantity (EOQ) Model: A formula used to calculate the optimal order quantity of a product that minimizes costs.

Effective Interest Rate: The annual rate of interest that is actually paid or earned, taking into account the effect of compounding.

Effective Interest Rate Method of Amortization: A method of amortizing a loan that uses the effective interest rate to calculate the periodic payments.

Efficiency Variance: The difference between the actual cost of production and the standard cost of production.

EFT: Short for Electronic Funds Transfer, a system of transferring money electronically without the use of checks or other paper documents.

Eighty/Twenty Rule: A rule of thumb that states that 20% of a company's customers account for 80% of its sales.

Electronic Funds Transfer (EFT): A system of transferring money electronically without the use of checks or other paper documents.

Employee Fringe Benefits: A type of compensation given to employees in addition to their salaries, such as health insurance and vacation time.

Employer Payroll Taxes: Taxes imposed by the federal, state, and local governments on employers for the wages paid to their employees.

Employer's Tax Guide: A guide published by the Internal Revenue Service (IRS) that provides information on how to comply with federal tax laws.

Endowment: A permanent fund established by a donor or donors to provide support for an organization or institution.

Endowment Fund: A fund established by a donor or donors to provide support for an organization or institution.

Entity as a Whole: A concept that states that the financial activities of a business entity can be separated from those of its owners and other entities.

EOM: Short for End of Month, the last day of a calendar month or fiscal month.

EOQ: Short for Economic Order Quantity, the optimal order quantity of a product that minimizes costs.

EPS: Short for Earnings Per Share, a company's earnings divided by its number of outstanding shares of common stock.

Equipment: An asset that is used in the operations of a business, such as computers, furniture, and machinery.

Equipment Rental Expense: The cost of renting equipment for a period of time.

Equity: Ownership interest in a company, represented by common and preferred stock.

Equity Financing: The sale of a company's stock to raise capital.

Equity Section of the Balance Sheet: The section of the balance sheet that lists a company's equity accounts, such as common stock, preferred stock, and retained earnings.

Equivalent Units: Units of production that are partially complete at the end of an accounting period.

Equivalent Units of Production: Units of production that are partially complete at the end of an accounting period.

Escrow: A transaction in which a third party holds and regulates payment of the funds required for two parties involved in a given transaction.

Estimates: Predictions of the future, based on past experience and current conditions.

Estimating Inventory: Estimating the amount of inventory that a business has on hand.

Ex-Dividend: The date on which a security's dividend is no longer eligible for the current dividend payment.

Exchange of Dissimilar Nonmonetary Assets: A transaction in which one entity exchanges nonmonetary assets of different types or different values with another entity.

Exchange of Similar Nonmonetary Assets: A transaction in which one entity exchanges nonmonetary assets of the same type and same value with another entity.

Exempt Employee: An employee who is exempt from overtime pay requirements under the Fair Labor Standards Act.

Expanded Accounting Equation: An accounting equation that includes stockholders' equity in addition to assets, liabilities, and owner's equity.

Expected Value: The expected return on an investment, calculated by multiplying the probability of each outcome by its corresponding payoff.

Expenditure: Money spent on goods or services.

Expenses: The cost of goods or services used in the operations of a business.

Expenses and Losses: The costs associated with the operations of a business, including expenses and losses.

Expenses by Function: A classification of expenses according to their purpose or function.

Expired Costs: Costs that have been incurred but have not yet been paid.

Exploding the Bills of Materials: The process of listing all of the components of a product that are required to produce it.

Extension or Extend: To delay the due date of a payment or loan.

External Financial Reporting: Financial reporting done by an organization to its external stakeholders, such as shareholders, creditors, and regulators.

External Reporting: Financial reporting done by an organization to its external stakeholders, such as shareholders, creditors, and regulators.

Extinguishment of Debt: The discharge of a debt by its repayment.

Extraordinary Repair: A repair that is not part of the routine maintenance of a fixed asset.

F

Factoring Accounts Receivable: A process in which a company sells its accounts receivable to a third-party company at a discount. The third-party company pays the company a portion of the receivables and then collects the full amount from the customer.

Factory Burden: The indirect costs associated with running a factory, such as overhead and other expenses.

Factory Overhead: The indirect costs associated with running a factory, such as utility costs, rent, and insurance.

Fair Market Value: The price that a willing buyer and a willing seller can agree upon in an arm's-length transaction.

FAS: Financial Accounting Standards, a series of pronouncements issued by the Financial Accounting Standards Board (FASB).

Favorable Variance: A situation in which actual results are better than expected or budgeted results.

Federal Income Tax Withholdings Payable: An account that records the amount of federal income taxes that an employer is required to withhold from its employees’ wages for payment to the government.

Federal Unemployment Tax: A federal tax imposed on employers to fund state unemployment benefits.

Fees Earned: An account that records the fees that a company has earned but has not yet received.

FEI: Financial Executives International, a professional association for financial executives.

FG Inventory: The inventory of finished goods held by a company.

Financial Accounting: The process of recording, measuring, and analyzing financial information.

Financial Leverage: The degree to which an organization uses debt to finance its operations.

Financial Ratios: Ratios used to measure an organization’s financial performance and health.

Financial Reporting: The process of providing financial information to external parties, such as shareholders and creditors.

Financial Statement Analysis: The process of analyzing an organization’s financial statements to assess its past performance and predict its future performance.

Financial Statements: Documents that summarize an organization’s financial performance and position.

Financial Statements of Nonprofits: Financial statements of nonprofit organizations that provide information about the organization’s financial position and performance.

Financing Activities: Activities related to the acquisition and repayment of debt and the issuance and repurchase of equity.

Finished Goods Inventory: The inventory of finished products held by a company.

First In, First Out (FIFO): An inventory cost flow assumption that assumes that the first units of inventory purchased are the first units sold.

Fiscal Year: An accounting period of 12 months that does not necessarily coincide with the calendar year.

Fixed Assets: Tangible assets that are used in the production of goods or the delivery of services and are expected to last more than one year.

Fixed Costs: Costs that remain the same regardless of the level of production or sales.

Fixed Expenses: Expenses that remain the same regardless of the level of production or sales.

Fixed Manufacturing Overhead Applied: The overhead costs that are applied to the cost of goods manufactured.

Fixed Manufacturing Overhead Budget Variance: The difference between the budgeted amount of overhead costs and the actual amount of overhead costs incurred.

Fixed Manufacturing Overhead Incurred: The actual overhead costs incurred in the production of goods.

Fixed Manufacturing Overhead Volume Variance: The difference between the budgeted amount of overhead costs and the actual amount of overhead costs incurred as a result of differences in production volume.

Fixed Overhead Budget Variance: The difference between the budgeted amount of overhead costs and the actual amount of overhead costs incurred.

Fixed Overhead Spending Variance: The difference between the budgeted amount of overhead costs and the actual amount of overhead costs incurred as a result of differences in spending.

Fixed Rate Loan: A loan with an interest rate that remains constant throughout the life of the loan.

Flexible Budget: A budget that is adjusted for changes in activity levels.

Float: The amount of money that is available for a company to use, but is not yet recorded in the company’s accounting records.

Flow-Through Contributions: Contributions that are not subject to taxation and are passed through to the recipient organization.

FOB: Free On Board, a term used in international trade to indicate when ownership of a shipment is transferred from the seller to the buyer.

FOB Destination: A term used in international trade to indicate when ownership of a shipment is transferred from the seller to the buyer at the destination.

FOB Shipping Point: A term used in international trade to indicate when ownership of a shipment is transferred from the seller to the buyer at the point of shipment.

Foot: The bottom line of a financial statement.

Footnotes: Additional information that accompanies a financial statement to provide additional details on items reported in the statement.

For-Profit Organization: An organization that is operated to generate a profit.

Free Cash Flow: The cash flow available for a company to use after it has paid all of its expenses, taxes, and dividends.

Free Cash Flow Per Share: The amount of cash flow available for a company to use per share of stock outstanding.

Free On Board (FOB): A term used in international trade to indicate when ownership of a shipment is transferred from the seller to the buyer.

Freight-In: The cost of shipping goods from a supplier to a company.

Freight-Out: The cost of shipping goods from a company to its customers.

Fringe Benefit Rate: The rate used to allocate the cost of fringe benefits to different departments or activities.

Fringe Benefits: Benefits provided to employees in addition to their salaries, such as health insurance and vacation time.

Full Costing: An accounting method that includes all direct and indirect costs associated with producing a good or service.

Full Disclosure Principle: The concept that all material information should be disclosed to investors.

Fully Depreciated: An asset that has been depreciated to the point that its book value is equal to its salvage value.

Functional and Natural Matrix: A chart that shows the relationship between the functional areas of an organization and the natural resources used by those areas.

Functional Basis: An accounting method that allocates costs to cost centers based on the activities performed in each cost center.

Functional Expense Classification: An accounting method that allocates expenses to different departments or activities based on the functions they perform.

Fundraising Expenses: Expenses associated with raising funds for an organization.

Funds Flow Statement: A financial statement that shows the sources and uses of funds during a period of time.

Furniture and Fixtures: Tangible assets used in the production of goods or the delivery of services and expected to last more than one year.

Future Value of 1 Table: A table that shows the future value of a single amount of money at different interest rates over different periods of time.

Future Value of an Annuity Due: The future value of a series of payments that are made at the beginning of each period.

Future Value of an Ordinary Annuity: The future value of a series of payments that are made at the end of each period.

G

Gain Contingency: A gain contingency is an accounting term used to describe an event or outcome that may result in an economic benefit to an entity. The benefit may be realized in the form of cash or other assets, or in the form of reduced costs or liabilities.

Gain on Retirement of Bonds: A gain on retirement of bonds is a financial gain that is realized when bonds are paid off early. The gain is the difference between the face value of the bonds and the discounted price of the bonds.

Gain on Sale of Assets: A gain on sale of assets is a type of capital gain that is realized when an asset is sold for a price that is higher than its original cost.

Gain or Loss on the Sale of a Long-Term Asset: A gain or loss on the sale of a long-term asset is the difference between the proceeds from the sale of the asset and the asset's original purchase price.

Gains: Gains refer to the profits or income that a company or individual earns on the sale of goods or services, or on investments.

Garnishment: Garnishment is a legal process by which a creditor can take control of a debtor's wages or other assets to satisfy a debt.

Garnishment Payable: Garnishment payable is an obligation of a business to pay a portion of an employee's wages to a creditor.

General Journal: A general journal is an accounting record that is used to track the financial transactions of a business.

General Journal Entry: A general journal entry is an accounting transaction that is recorded in the general journal.

General Ledger: The general ledger is an accounting record that contains all of a company's financial transactions.

General Ledger Account: A general ledger account is an account in the general ledger that is used to track the financial transactions of a business.

Generally Accepted Accounting Principles (GAAP): Generally Accepted Accounting Principles (GAAP) are a set of standards and guidelines for financial accounting that are issued by the Financial Accounting Standards Board.

Going Concern Assumption: The going concern assumption is an accounting principle that assumes a business will continue to operate in the foreseeable future.

Good Output: Good output is the result of an economic activity that meets or exceeds the expectations of the stakeholders.

Goods in Transit: Goods in transit are goods that are in the process of being shipped from one location to another.

Goodwill: Goodwill is an intangible asset that is created when a company acquires another company at a price that is higher than the fair market value of the assets that were acquired.

Gross: Gross is the total amount of money received before any deductions or expenses are taken out.

Gross Margin: Gross margin is the difference between the cost of goods sold and the net sales revenue.

Gross Profit: Gross profit is the difference between the cost of goods sold and the net sales revenue.

Gross Profit Method of Estimating Inventory: The gross profit method of estimating inventory is an accounting technique used to estimate the value of a company's inventory.

Gross Profit Percentage: Gross profit percentage is a measure of profitability that is calculated by dividing the gross profit by the net sales revenue.

Gross Profit Ratio: Gross profit ratio is a measure of profitability that is calculated by dividing the gross profit by the total sales revenue.

Gross Salaries: Gross salaries are the total amount of money that an employee earns before any deductions or contributions are taken out.

Gross Sales: Gross sales are the total amount of money received from the sale of goods or services before any deductions or expenses are taken out.

Gross Wages: Gross wages are the total amount of money that an employee earns before any deductions or contributions are taken out.

H

Health Insurance Expense: This is an expense that a business incurs when it pays for health insurance coverage for its employees. It includes premiums, deductibles, and co-payments that are required by the health insurance policy.

Held-to-Maturity Securities: Held-to-maturity securities are investments that a company acquires and holds until they mature. These securities are typically debt instruments, such as bonds, that have a fixed maturity date and a predetermined interest rate.

Historical Cost: Historical cost is an accounting method in which the value of a company's assets are recorded at their original purchase price. This means that any changes in the value of the asset due to inflation or other market conditions are not reflected in the financial statements.

Holding Costs: Holding costs are costs associated with keeping an inventory item in stock. This includes the cost of storage, insurance, taxes, and any other costs associated with holding the item.

Holding Gain: A holding gain is an increase in the value of an asset due to changes in the market or other external factors. Holding gains are usually reported as income on the income statement.

Holding Loss: A holding loss is a decrease in the value of an asset due to changes in the market or other external factors. Holding losses are usually reported as an expense on the income statement.

Holiday, Vacation, Sick Days Expense: This is an expense that a business incurs when it pays its employees for vacation, holiday, or sick days. It includes the cost of wages and benefits that are paid to employees during these days.

Holiday, Vacation, Sick Days Payable: This is an amount that a business owes to its employees for vacation, holiday, or sick days. It includes the amount of wages and benefits that are owed to employees but have not yet been paid.

Horizontal Analysis: Horizontal analysis is an accounting technique used to compare financial information from different periods. This analysis is used to determine if there have been any significant changes in a company's financial performance over time.

Hurdle Rate: A hurdle rate is the minimum rate of return that must be achieved for a project or investment to be considered worthwhile. It is usually set by senior management and serves as a benchmark for assessing the performance of investments.

F

Illusory Profits: An illusory profit is a type of accounting profit that does not reflect the true economic performance of a business. It occurs when a business records a profit on its financial statements, but in reality, the business has not generated any economic value.

Impairment: Impairment is an accounting term used to describe a permanent decline in the value of an asset. It is an indicator that an asset has declined in value beyond what is expected due to normal use and wear.

Impairment of Long-Lived Assets: Impairment of long-lived assets is an accounting term used to describe a permanent decline in the value of a long-term asset. It is an indicator that an asset has declined in value beyond what is expected due to normal use and wear.

Implicit Interest Rate: An implicit interest rate is the assumed rate of return that is not explicitly stated in a financial contract or agreement. It is the rate that is implied by the terms of the agreement and is used to calculate the present value of the agreement.

Imprest Amount: Imprest amount is a term used in accounting to refer to a preset amount of money that is made available for a specific purpose. It is usually set aside in a dedicated account and is replenished when the money is spent.

Imputed Interest: Imputed interest is an accounting term used to describe interest that is not actually paid out but is instead assumed to have been paid in a transaction. It is used to calculate the amount of interest that would have been paid if the transaction had been done at an arm's length rate.

In-Kind: In-kind is a term used to describe a transaction where goods or services are exchanged instead of money. This type of transaction is common in barter systems and other alternative forms of payment.

In-Process Inventory: In-process inventory is inventory that is in the process of being manufactured or converted from raw materials into finished goods. It is considered to be intermediate inventory and is valued at its market value or cost, whichever is lower.

Income: Income is money or other forms of compensation that is earned or received by an individual or business. It can come in the form of wages, salaries, dividends, interest, royalties, or other forms of payment.

Income from Operations: Income from operations is a term used to describe the net income that is generated from a company's core business activities, excluding any income or expenses from outside sources.

Income Statement: An income statement is a financial statement that reports a company's financial performance over a specific period of time. It typically shows revenues, expenses, and profits or losses.

Income Statement Account: An income statement account is an account on a company's income statement that is used to record income and expenses related to the company's operations.

Income Summary Account: An income summary account is an account on a company's income statement that is used to record income and expenses that are not related to the company's core operations.

Income Tax Code: The income tax code is a set of laws, regulations, and rules that govern how income taxes are calculated and paid. It is enforced by the CRA.

Income Tax Depreciation: Income tax depreciation is an accounting method used to calculate the amount of depreciation that can be claimed as a tax deduction for a given asset.

Income Tax Expense: Income tax expense is the amount of income tax that a company must pay in a given period. It is calculated by multiplying the taxable income for the period by the applicable income tax rate.

Income Taxes Payable: Income taxes payable is a liability account on a company’s balance sheet that is used to record the amount of income taxes that the company owes to the government.

Incremental Cost: Incremental cost is the additional cost that is incurred when an action or decision is taken. It is the difference between the cost of the action and the cost of not taking the action.

Incremental Income Tax Rate: The incremental income tax rate is the difference between the marginal tax rate and the effective tax rate. It is the additional tax that is paid on each additional dollar of income earned.

Incremental Revenue: Incremental revenue is the additional revenue generated by a decision or action. It is the difference between the revenue generated by the action and the revenue that would have been generated without the action.

Incurred: Incurred is an accounting term used to describe an expense that has been incurred but not yet paid. It is an indicator that a liability has been created and will need to be paid in the future.

Indenture: An indenture is a legal document that outlines the terms of a debt agreement. It is used to specify the amount of the debt, the interest rate, and the repayment terms.

Independent Contractor: An independent contractor is a person or entity that provides services to another person or entity under a contractual agreement. The contract typically outlines the scope of the services to be provided and how the contractor will be compensated.

Independent Variable: An independent variable is a variable in an experiment that is manipulated by the researcher. It is the factor that is changed to observe the effect it has on the dependent variable.

Indirect Cost: Indirect cost is an expense that cannot be directly attributed to a specific cost object. It is a cost that is associated with a variety of activities and is difficult to allocate to a specific activity or product.

Indirect Factory Costs: Indirect factory costs are costs that are incurred in the production of a product but cannot be directly attributed to the production of the product. Examples of indirect factory costs include depreciation, utilities, and insurance.

Indirect Labor: Indirect labor is labor that is not directly involved in the production of a product or service. Examples of indirect labor include administrative staff, janitorial staff, and maintenance staff.

Indirect Manufacturing Costs: Indirect manufacturing costs are costs that are incurred in the production of a product but cannot be directly attributed to the production of the product. Examples of indirect manufacturing costs include depreciation, utilities, and insurance.

Indirect Materials: Indirect materials are materials that are used in the production of a product but are not part of the final product. Examples of indirect materials include packaging materials, cleaning supplies, and office supplies.

Indirect Method of SCF: The indirect method of statement of cash flows is a method of preparing a statement of cash flows that adjusts net income to exclude non-cash items and adjusts operating activities to include cash receipts and payments.

Industry Practices: Industry practices are the standard procedures and processes that are typically used in a particular industry. They are often determined by industry associations, regulatory bodies, and other industry stakeholders.

Inelastic Demand: Inelastic demand is a type of demand in which the quantity of a product or service that is demanded is not affected by changes in price. This type of demand is often seen in industries where demand is considered to be inelastic.

Information: Information is data or knowledge that has been processed and organized in a meaningful way. It is used to make decisions, solve problems, and gain insight into a particular subject.

Insolvent: Insolvent is a term used to describe a financial situation in which a person or entity is unable to pay its debts as they come due. It is a sign of financial distress and indicates that the person or entity is unable to meet its financial obligations.

Institute of Management Accountants: The Institute of Management Accountants (IMA) is a professional organization of management accountants, finance professionals, and other finance-related individuals. It is dedicated to providing education, resources, and networking opportunities to its members.

Insurance: Insurance is a contract between an insurer and an insured in which the insurer agrees to pay the insured for any losses that are covered by the policy in exchange for a premium.

Insurance Expense: Insurance expense is the amount of money that a company must pay for an insurance policy. It is a non-operating expense that is recorded on the income statement as an expense.

Intangible Assets: Intangible assets are non-physical assets that have a value but cannot be seen, touched, or held. Examples of intangible assets include intellectual property, goodwill, and brand recognition.

Interest Earned: Interest earned is the amount of interest that a company or individual has earned on an investment or loan. It is recorded on the income statement as income.

Interest Expense: Interest expense is the amount of money that a company must pay for interest on a loan or other debt. It is a non-operating expense that is recorded on the income statement as an expense.

Interest Income: Interest income is the amount of money that a company or individual receives in interest payments. It is recorded on the income statement as income.

Interest Payable: Interest payable is a liability account on a company’s balance sheet that is used to record the amount of interest that the company owes.

Interest Receivable: Interest receivable is an asset account on a company’s balance sheet that is used to record the amount of interest that the company is owed.

Interest Revenues: Interest revenues are the revenues that a company receives from interest payments. It is recorded on the income statement as income.

Interim Financial Statement: An interim financial statement is a financial statement that covers a period of less than one year. It is used to provide financial information to investors and creditors between annual financial statements.

Internal Rate of Return: The internal rate of return (IRR) is a measure of the rate of return that an investment is expected to generate. It is calculated by taking into account the present value of the expected future cash flows of the investment.

Interperiod Tax Allocation: Interperiod tax allocation is the process of allocating income taxes to different accounting periods. It is used to ensure that the income tax expense reported on the income statement is accurate and reflects the actual amount of income tax that is due.

Interpretations: Interpretations are formal opinions issued by the International Accounting Standards Board (IASB) or other standard-setting bodies that provide guidance on how to apply a particular accounting standard.

Intraperiod Tax Allocations: Intraperiod tax allocations are the amounts of income taxes that are allocated between different components of an income statement. They are used to ensure that the income tax expense reported on the income statement is accurate and reflects the actual amount of income tax that is due.

Inventoriable Cost: Inventoriable cost is the cost associated with a product that is included in the cost of inventory. It is the cost of materials, labor, and overhead that is directly attributable to the production of the product.

Inventory: Inventory is the items that a business holds for sale or use in the production of goods and services. It is typically recorded on the balance sheet as an asset.

Inventory Carrying Costs: Inventory carrying costs are the costs associated with storing and maintaining inventory. They include storage costs, insurance costs, and other costs associated with holding inventory.

Inventory Conformity Rule: The inventory conformity rule is a rule that states that the cost of inventory must be recorded at the lower of cost or market value.

Inventory Cost Flow Assumption: The inventory cost flow assumption is the assumption that is used to determine the cost basis for inventory. It specifies the order in which inventory is recorded and the cost that is used to value the inventory.

Inventory Extension: An inventory extension is an estimate of the amount of inventory on hand at the end of an accounting period. It is calculated by taking the beginning inventory, adding the purchases and subtracting the sales.

Inventory Holding Costs: Inventory holding costs are the costs associated with storing and maintaining inventory. They include storage costs, insurance costs, and other costs associated with holding inventory.

Inventory Shrinkage: Inventory shrinkage is the loss of inventory due to theft, damage, spoilage, or other factors. It is an expense that is recorded on the income statement and is deducted from the cost of goods sold.

Inventory Turnover Ratio: The inventory turnover ratio is a measure of how efficiently a company is managing its inventory. It is calculated by dividing the cost of goods sold by the average inventory balance.

Inventory Valuation: Inventory valuation is the process of determining the value of a company’s inventory. It is typically done at the end of the accounting period and is used to record the inventory on the balance sheet.

Inventory: FG: Inventory: finished goods (FG) is inventory that has been completed and is ready for sale. It is considered to be the final stage of production and is typically recorded on the balance sheet as an asset.

Inventory: Materials: Inventory: materials is inventory that consists of raw materials that are used to produce a product. It is typically recorded on the balance sheet as an asset.

Inventory: WIP: Inventory: work-in-process (WIP) is inventory that is in the process of being manufactured or converted from raw materials into finished goods. It is considered to be intermediate inventory and is valued at its market value or cost, whichever is lower.

Investing Activities: Investing activities are activities that involve the purchase or sale of long-term assets. Examples of investing activities include the purchase of property, plant, and equipment, the purchase of investments, and the sale of investments.

Investment Centers: An investment center is an organizational unit within a company that is responsible for managing investments. It is responsible for the analysis and evaluation of the investments and the development of strategies to maximize returns.

Investment in Another Company: An investment in another company is an investment that is made by one company in another company. This type of investment is usually done to gain a financial interest in the other company or to gain access to the other company’s resources.

Investment Revenues: Investment revenues are the revenues that a company receives from investments. It is recorded on the income statement as income.

Investment Securities: Investment securities are investments that are bought and sold on the open market. Examples of investment securities include stocks, bonds, and mutual funds.

Investments: Investments are the funds that are invested in financial instruments with the goal of generating a return. Examples of investments include stocks, bonds, mutual funds, and real estate.

Invoice: An invoice is a document that is used to record the sale of goods or services. It typically includes the name of the customer, the items purchased, the amount due, and the payment terms.

J

Job Cost Record: A record of the costs associated with a particular job or project.

Job Costing: A method of costing that tracks the expenses associated with a particular job or project.

Job Order Cost Sheet: A form used to track the costs associated with a particular job or project.

Job Order Costing: A method of costing that assigns costs to jobs or projects.

Job Order System: A system for managing the work orders associated with a particular job or project.

Joint Cost: The cost of producing two or more products together in one production process.

Joint Product: A product produced in a joint production process with other products.

Journal: A book of original entries that record the financial transactions of a business.

Journal Entry: An entry in a journal that summarizes the details of a financial transaction.

Journalize: The process of recording a financial transaction in the journal.

Just-In-Time (JIT): A manufacturing system that minimizes inventories by producing goods only as they are needed.

L

Labor Efficiency Variance: The difference between the actual labor cost incurred and the expected labor cost.

Labor Rate Variance: The difference between the actual rate paid for labor and the expected rate.

Labor Variances: The differences between actual labor costs and expected labor costs.

Landlord: An individual or entity that owns a property and rents it to another individual or entity.

Last In, First Out (LIFO): An inventory cost flow assumption that assumes that the most recently acquired items are the first to be sold.

Lawsuit Payable: A liability held by an entity for a potential lawsuit.

Lead Time: The amount of time between when an order is placed and when it is received.

Learning Curve: A graph showing the relationship between the amount of experience gained and the amount of time needed to complete a task.

Lease: A contractual agreement between a lessor and a lessee that gives the lessee the right to use an asset owned by the lessor in exchange for rent payments.

Leaseback: An arrangement in which a company sells an asset and then leases it back from the buyer.

Leasehold Improvements: Alterations made to a leased asset that increase its value.

Least-Squares Regression Method: A statistical method used to identify the relationship between two or more variables.

Ledger: A bookkeeping system used to record financial transactions.

Legal Capital: The amount of money a company is required to retain in order to meet its financial obligations.

Lend: To provide money or other assets to another person or entity.

Lender: An individual or entity that provides money or other assets to another person or entity.

Lessee: An individual or entity that leases an asset from the lessor.

Lessor: An individual or entity that owns a property and rents it to another individual or entity.

Letter of Credit: A document issued by a financial institution that guarantees payment of a specified amount to the beneficiary.

Leverage: The use of debt or other borrowed funds to increase the potential return on an investment.

Liabilities: Debts or other financial obligations of an entity.

Lien: A legal claim against an asset that must be paid before the asset can be sold or transferred.

LIFO Conformity Rule: A rule that requires companies to use the same inventory cost flow assumption for both financial statement and tax purposes.

LIFO Liquidation of Layer: The process of selling off inventory that was acquired at a different cost than the current inventory.

LIFO Reserve: An amount equal to the difference between the current inventory cost and the cost of inventory acquired in prior periods.

Limited Liability Company: A business structure that combines the limited liability of a corporation with the taxation of a partnership.

Line of Credit: An agreement between a lender and a borrower that allows the borrower to draw on the lender’s funds up to a certain amount.

Linear Programming: A mathematical technique used to optimize a problem with multiple variables.

Liquidation of LIFO Layer: The process of selling off inventory that was acquired at a different cost than the current inventory.

Liquidity: The ability of an entity to convert its assets into cash quickly and easily.

Liquidity Ratios: Ratios used to measure an entity’s ability to pay its short-term debts.

LLC: Limited Liability Company; a business structure that combines the limited liability of a corporation with the taxation of a partnership.

Loan Amortization Schedule: A schedule detailing the payments required to pay off a loan over a set period of time.

Loans Receivable: Money owed to an entity by other individuals or entities.

Lock-Box System: A system used by businesses to streamline their accounts receivable process by having customers pay their invoices to a third-party financial institution.

Long-Lived Assets: Assets that are expected to last for a long period of time.

Long-Term Assets: Assets that are expected to be held for a period of more than one year.

Long-Term Investments: Investments that are expected to last for a long period of time.

Long-Term Liabilities: Debts and other financial obligations that are not due within one year.

Loss: A decrease in the value of an asset or a decrease in the amount of profits or income.

Loss Contingency: A potential loss that may or may not occur in the future.

Loss from Labor Strike: The amount of money lost due to a labor strike.

Loss from Lawsuit: The amount of money lost due to a lawsuit.

Loss from Reducing Inventory to NRV: The amount of money lost when inventory is reduced to its net realizable value.

Loss on Sale of Assets: The amount of money lost when an asset is sold below its book value.

Losses: Decreases in the value of assets or decreases in the amount of profits or income.

Lost Opportunity: Potential profits or income that were not realized due to a missed opportunity.

Lower of Cost or Net Realizable Value: An accounting principle that requires an entity to record an asset at the lower of its cost or its net realizable value.

M

Management Accounting: The practice of analyzing and providing financial information to decision makers within an organization in order to improve the overall performance of the organization.

Management and General Expenses: The expenses associated with running a business such as rent, salaries, and other administrative and operational costs.

Management's Discussion and Analysis: A document required by the SEC that provides an overview of a company's financial performance and outlook for the future.

Managerial Accounting: The practice of providing financial information to decision makers within an organization in order to improve the overall performance of the organization.

Manual System: A system of recording and processing information using paper documents and manual processes.

Manufacturing Cell: A manufacturing system in which several machines are arranged in a line and used to produce a single product or a family of related products.

Manufacturing Costs: The costs associated with producing a product such as labor, materials, overhead, and other costs.

Manufacturing Overhead: The costs associated with running a manufacturing operation such as rent, utilities, insurance, and other related costs.

Manufacturing Support Costs: The costs associated with providing support to a manufacturing operation such as engineering, research and development, marketing, and other related costs.

Margin of Safety: The difference between the actual or expected level of sales and the break-even point.

Marginal Cost: The additional cost associated with producing one additional unit of output.

Marginal Revenue: The additional revenue generated by increasing output by one unit.

Markdown: A reduction in the price of a product.

Markdown Cancellation: The reversal of a markdown.

Market Interest Rate: The rate of interest charged by lenders in the market.

Market Share: The percentage of the total market for a given product or service that is held by a company.

Marketable Debt Securities: Debt securities that can be sold on the open market.

Marketable Equity Securities: Equity securities that can be sold on the open market.

Marketable Securities: Securities that can be bought and sold on the open market.

Markup: An increase in the price of a product.

Markup Cancellation: The reversal of a markup.

Matching Principle: The principle that states that expenses should be matched with the revenue that they generate.

Materiality: A concept used to determine the threshold at which certain information should be disclosed.

Materials Inventory: The inventory of raw materials used in the production of goods.

Materials Price Variance: The difference between the actual price paid for materials and the budgeted price for materials.

Materials Quantity Variance: The difference between the actual quantity of materials used and the budgeted quantity of materials used.

Materials Usage Variance: The difference between the actual usage of materials and the budgeted usage of materials.

Matrix Format: A way of organizing information into rows and columns.

Medicare Tax: A payroll tax used to fund the Medicare program.

Membership Dues: Fees paid by members to organizations in order to maintain their membership.

Memo Entry: An internal entry in an accounting system used to record transactions for internal purposes.

Merchandise: Goods that are purchased for resale.

Merchandise in Transit: Merchandise that is shipped between two parties but has not yet been received.

Merchandise Inventory: The inventory of goods that are purchased for resale.

Merchandiser: A person or company that buys and sells merchandise.

MICR: A type of technology used to read and process checks.

Mid-Month Convention: An accounting method used to allocate the cost of long-term assets over the period of time in which they are used.

Mid-Year Convention: An accounting method used to allocate the cost of long-term assets over the period of time in which they are used.

MIS: Management Information System.

Miscellaneous Expense: Expenses that are not related to the normal operations of a business.

Mixed Costs: Costs that contain both variable and fixed components.

Mixed Expenses: Expenses that contain both variable and fixed components.

MM: A type of financial instrument that pays a fixed interest rate over a fixed period of time.

Monetary Asset: An asset that can be converted into cash quickly.

Monetary Unit Assumption: The assumption that the value of money remains constant over time.

Money Market Account: A type of savings account that pays interest on deposits.

Mortgage: A loan that is secured by a piece of real estate.

Mortgage Bond: A type of bond that is secured by a mortgage.

Mortgage Loan: A loan that is secured by a piece of real estate.

Mortgage Loan Payable: The amount of money owed on a mortgage loan.

Mortgage Loan Receivable: The amount of money that is owed to a lender on a mortgage loan.

Multicollinearity: A condition where two or more independent variables are highly correlated with each other.

Multiple Regression Analysis: A statistical technique used to predict the value of a dependent variable based on the values of multiple independent variables.

Multiple-Step Income Statement: An income statement that divides expenses into multiple categories.

N

Natural Basis: A method of accounting that records transactions based on when they occurred, rather than when cash payments or receipts occurred.

Natural Business Year: The fiscal year of a business that corresponds to a natural period, such as a calendar year or a fiscal year that begins at the end of a quarter.

Natural Expense Classification: The practice of classifying expenses by their nature, such as rent, wages, and advertising.

Natural Resources: Natural resources are materials from the environment that can be used to produce goods and services. Examples include land, water, plants, animals, air, and minerals.

Negative Owner's Equity: A situation in which the liabilities of a business exceed its assets.

Net: The amount remaining after deductions have been made from a total.

Net Assets: The difference between the total assets and total liabilities of a business.

Net Assets with Donor Restrictions: Assets that are restricted from use by an organization's donors.

Net Assets without Donor Restrictions: Assets that are not restricted from use by an organization's donors.

Net Book Value: The value of an asset after its accumulated depreciation is subtracted from its original cost.

Net Carrying Amount: The net book value of an asset adjusted for any impairment losses.

Net Cash Flow from Financing Activities: The net change in cash resulting from activities related to financing a business.

Net Cash Flow from Investing Activities: The net change in cash resulting from activities related to investing in a business.

Net Cash Flow from Operating Activities: The net change in cash resulting from activities related to operating a business.

Net Credit Sales: Sales of goods or services made on credit minus any returns or discounts.

Net Current Assets: The total of all current assets minus all current liabilities.

Net Income: The total revenue minus total expenses for a period of time.

Net Income Available for Common Stock: The amount of net income available to be paid to the owners of a business in the form of dividends.

Net Loss: The amount by which expenses exceed revenue for a period of time.

Net Method of Recording Accounts Payable: A method of recording accounts payable in which the total amount of accounts payable is recorded as a single entry.

Net of Tax: The amount of an expense or income after taxes have been deducted or added.

Net Operating Income (NOI): The income generated by a business before taxes, interest payments, and depreciation are deducted.

Net Pay: The total amount an employee takes home after all deductions have been made from their gross pay.

Net Payroll Payable: The sum of all payroll liabilities, such as taxes and benefits, that must be paid to employees.

Net Present Value (NPV): The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Net Purchases: The total amount of goods purchased minus any returns or discounts.

Net Realizable Value (NRV): The estimated selling price of an asset, minus any associated costs or liabilities.

Net Sales: The total amount of sales minus any returns or discounts.

Net Working Capital: The difference between a company's current assets and current liabilities.

Next-in, First-out Cost Flow Assumption: An inventory cost flow assumption that assumes that inventory purchased or produced first is sold first.

No-par Value Stock: Shares of stock that do not have a stated par value.

Nominal Account: An account that is used to accumulate transactions for a single period of time, such as a month or year.

Nominal Interest Rate: The interest rate as stated by the lender, before any fees or other costs are taken into account.

Noncash Expense: An expense incurred by a business that does not involve the exchange of cash.

Noncumulative Preferred Stock: A type of preferred stock in which dividends are not cumulative and must be paid out as declared.

Noncurrent Assets: Assets that are not expected to be converted into cash within one year.

Noncurrent Liabilities: Liabilities that are not expected to be paid within one year.

Nonexempt Employee: An employee who is subject to federal and state income taxes, Social Security taxes, and Medicare taxes.

Nonmanufacturing Overhead Cost: Costs associated with production that are not directly related to the manufacture of goods, such as rent and utilities.

Nonmonetary Asset: An asset that does not have a monetary value, such as goodwill or intellectual property.

Nonoperating Expense: An expense incurred by a business that is not related to its core operations.

Nonoperating Income/Revenue: Income or revenue generated by a business that is not related to its core operations.

Nonparticipating Preferred Stock: A type of preferred stock in which the holder does not have any rights to the company's profits.

Nonprofit Organization: An organization that is organized for purposes other than generating a profit.

Nontrade Receivables: Receivables that are not related to the sale of goods or services.

Normal Account Balance: The expected balance of an account at the end of an accounting period.

Normal Costing: A method of costing in which production costs are allocated to products based on the standard cost of each component.

Normal Operating Activities: The day-to-day activities of a business, such as sales, production, and administration.

Normal Spoilage: The expected amount of spoilage in a production process due to normal operations.

Not Sufficient Funds (NSF) Check: A check that cannot be paid due to insufficient funds in the check writer's account.

Not-for-Profit Organization: An organization that is organized for purposes other than generating a profit.

Notes Payable: Short-term debt obligations that are due within one year.

Notes Receivable: Short-term debt obligations that are due to the business within one year.

Notes to Financial Statements: Explanatory information included in a company's financial statements.

O

Objectives of Financial Reporting: The primary objectives of financial reporting are to provide information that is useful to existing and potential investors, creditors, and other stakeholders in making decisions about providing resources to the entity.

Objectivity: Objectivity is an accounting principle that requires financial statements to be free of bias and to be based on verifiable evidence.

Obsolescence: Obsolescence is a concept in accounting that refers to the decline in value of an asset over time due to technological advances, changes in consumer preferences, or other factors.

OEM: OEM stands for original equipment manufacturer and refers to a company that manufactures a product that is then sold to another company that adds its own branding, marketing, and sales.

Off Balance Sheet Financing: Off balance sheet financing is a form of financing in which a company does not include a liability on its balance sheet, but instead records the arrangement as a footnote disclosure.

Office Equipment: Office equipment is any type of equipment used in an office setting to help employees perform their jobs. Examples of office equipment include computers, printers, telephones, and furniture.

Office Equipment Expense: Office equipment expense is the cost incurred when purchasing or maintaining office equipment.

Office Supplies Expense: Office supplies expense is the cost incurred when purchasing or maintaining office supplies such as paper, pens, and other stationery.

Officers: Officers are individuals appointed by a company's board of directors to manage the day-to-day operations of the company.

Old-Age, Survivor, and Disability Insurance (OASDI): Old-age, survivor, and disability insurance (OASDI) is a form of social security in the United States that provides benefits for retired workers and survivors of deceased workers.

Omitted Dividends on Preferred Stock: Omitted dividends on preferred stock are dividends that have been declared but not paid on a company's preferred stock.

On Account: On account is an accounting term that refers to a customer's balance that is owed to a company.

On Consignment: On consignment is a term used to describe the arrangement between a consignor and a consignee. In this arrangement, the consignor provides goods or services to the consignee, who then sells the goods or services and keeps a portion of the proceeds.

On Credit: On credit is an accounting term used to describe a customer's balance that is owed to a company on credit terms.

Operating Activities: Operating activities are activities that generate revenue for a business. Examples of operating activities include the sale of goods or services, the collection of accounts receivable, and the payment of accounts payable.

Operating Cycle: The operating cycle is the time it takes for a company to purchase inventory, convert it into cash, and receive payment for it.

Operating Expenses: Operating expenses are expenses incurred during the normal operations of a business, such as rent, utilities, wages, and depreciation.

Operating Income: Operating income is the net income a company earns from its core business activities, such as the sale of goods or services, before taking into account non-operating income and expenses.

Operating Lease: An operating lease is a type of lease in which the lessee (the party renting the asset) is responsible for all maintenance, taxes, and insurance costs associated with the asset.

Operating Loss: An operating loss is a net loss resulting from the cost of operating a business.

Opportunity Cost: Opportunity cost is the cost of an opportunity forgone when making a decision.

Order Costs: Order costs are the costs associated with ordering and receiving goods or services, such as transportation and storage costs.

Ordinary Annuity: An ordinary annuity is a series of equal payments made at regular intervals for a specified period of time.

Ordinary Repairs: Ordinary repairs are costs incurred to maintain an asset in its ordinary operating condition, such as replacing worn parts or repairing minor damage.

Organic Growth: Organic growth is the growth of a company that is generated from its existing operations.

Organization as a Whole: An organization as a whole is the sum of its parts, including its employees, processes, and products.

Organization Chart: An organization chart is a diagram of an organization's structure that shows the reporting relationships among the different levels within the organization.

Organization-Sustaining Activities: Organization-sustaining activities are activities that are necessary for the functioning of an organization, such as training, research and development, and administrative tasks.

Other Accrued Expenses Payable: Other accrued expenses payable are expenses that have been incurred but not yet paid.

Other Assets: Other assets are assets that do not fall into any of the other categories on the balance sheet, such as prepaid expenses, deferred taxes, and non-current assets.

Other Current Assets: Other current assets are assets that are expected to be converted into cash within one year, such as accounts receivable, inventory, and prepaid expenses.

Other Current Liabilities: Other current liabilities are liabilities that are expected to be paid within one year, such as accounts payable, taxes payable, and accrued expenses.

Outlier: An outlier is an observation that is significantly different from other observations.

Output: Output is the result of a process or activity.

Outside Supplier: An outside supplier is a company that provides goods or services to another company.

Outsourcing: Outsourcing is the process of contracting with an outside company to provide goods or services that were previously provided by the company itself.

Outstanding Checks: Outstanding checks are checks that have been written and recorded on the company’s books but have not yet been cashed by the recipient.

Outstanding Shares of Common Stock: Outstanding shares of common stock are the number of shares of a company’s common stock that have been issued and are currently held by shareholders.

Overabsorbed: Overabsorbed is an accounting term used to describe a situation in which the costs of a product have been allocated to more units than were actually produced.

Overapplied Overhead: Overapplied overhead is an accounting term used to describe a situation in which overhead costs have been allocated to more units than were actually produced.

Overdraws: Overdraws are withdrawals from a bank account that exceed the account’s available balance.

Overhead Application: Overhead application is the process of allocating overhead costs to the products or services produced by a company.

Overhead Costs: Overhead costs are costs that are not directly related to the production of a product or service, such as rent, utilities, and insurance.

Overhead Variances: Overhead variances are the differences between actual and budgeted overhead costs.

Overstates: Overstates is an accounting term used to describe a situation in which a company has recorded an amount that is greater than the actual amount.

Overtime Pay: Overtime pay is the additional compensation an employee receives for working more than the agreed-upon number of hours.

Overtime Premium: An overtime premium is an additional amount of money an employer pays an employee for working more than the agreed-upon number of hours.

Owner's (Stockholders') Equity: Owner's (stockholders') equity is the residual interest in the assets of a company after subtracting liabilities.

Owner's Capital Account: An owner's capital account is an accounting record that tracks the changes in the owner's equity in a business.

Owner's Capital Account - Beg of Year: Owner's capital account - beg of year is an accounting record that tracks the beginning balance of the owner's capital account at the beginning of a year.

Owner's Drawing Account: An owner's drawing account is an accounting record that tracks the withdrawals the owner makes from his or her business.

Owner's Equity Accounts: Owner's equity accounts are accounts on a company's balance sheet that reflect the owner's investment in the company.

P

Paid Sick Days: Paid sick days are days off from work that an employee is granted in order to receive medical care or attend to personal or family health issues.

Paid Vacation Days: Paid vacation days are days off from work for which an employee is paid by their employer.

Paid-in Capital: Paid-in capital is the money that investors pay for shares of stock in a company when they purchase them. It is also referred to as contributed capital.

Paid-in Capital from Treasury Stock: Paid-in capital from treasury stock is the money that is generated when a company repurchases its own shares of stock from the public.

Paid-in Capital in Excess of Par Value: Paid-in capital in excess of par value is the amount of money that investors pay for shares of stock in a company that is greater than the par value of the stock.

Par Value: Par value is the face value or stated value of a security. It is the amount of money that is printed on the security, and it does not necessarily reflect the true market value of the security.

Participating Preferred Stock: Participating preferred stock is a type of preferred stock that entitles the holder to receive any dividends that are declared in excess of the stated dividend rate.

Partnership: A partnership is a business structure that is owned and operated by two or more individuals. It is a type of business entity that is separate from the owners and is taxed as a separate entity.

Pass-Through Contributions: Pass-through contributions are contributions that are made by an employer to an employee's retirement plan or health savings account.

Past Cost: Past cost is the cost incurred for products or services that have already been used or consumed.

Payable: Payable is an amount of money that is owed by a company to another party. It is a liability on a company's balance sheet.

Payback: Payback is the amount of time it takes for an investment to generate enough cash flow to cover its initial cost.

Payback Period: The payback period is the length of time it takes for an investment to generate enough cash flow to cover its initial cost.

Payee: A payee is the person or entity to whom a payment is made.

Payroll Accrual: The payroll accrual is an estimated amount of payroll expenses that a company records when they have not yet been incurred.

Payroll Tax Liability: Payroll tax liability is the amount of money that an employer is responsible for paying in taxes on behalf of their employees.

Payroll Taxes: Payroll taxes are taxes that are imposed on employers and employees in order to fund various government programs.

Payroll Taxes Payable: Payroll taxes payable is an account on a company’s balance sheet that represents the amount of money that the company owes in payroll taxes.

Payroll Withholdings: Payroll withholdings are amounts of money that are withheld from an employee’s salary or wages for the purpose of paying taxes or other deductions.

PCAOB: The Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation established by the Sarbanes-Oxley Act of 2002 to oversee the auditing of public companies in the United States.

Pension Expense: Pension expense is the amount of money that a company pays out each year in order to fund their employee pension plan.

Pension Payable: Pension payable is an account on a company’s balance sheet that represents the amount of money that the company owes to its employees for their pension plans.

Period Cost: Period cost is an expense that is incurred in a certain period of time and is not directly related to the production of goods or services.

Periodic Average: Periodic average is a method of inventory valuation in which the cost of goods sold is calculated by taking the average cost of the goods purchased during a period of time.

Periodic FIFO: Periodic FIFO is a method of inventory valuation in which the cost of goods sold is determined by the first goods that were purchased during a period of time.

Periodic LIFO: Periodic LIFO is a method of inventory valuation in which the cost of goods sold is determined by the last goods that were purchased during a period of time.

Periodic System of Inventory: The periodic system of inventory is a method of inventory management in which the inventory is not tracked on a continuous basis but rather is tracked at the end of each period.

Periodicity: Periodicity is the concept that accounting periods are distinct and separate from one another and that each period should be accounted for separately.

Permanent Accounts: Permanent accounts are accounts on a company’s balance sheet that are not closed at the end of each accounting period.

Permanently Restricted Net Assets: Permanently restricted net assets are assets that are restricted by the donor for a specific use that cannot be changed or revoked.

Perpetual Average: Perpetual average is a method of inventory valuation in which the cost of goods sold is calculated by taking the average cost of the goods purchased over the life of the inventory.

Perpetual FIFO: Perpetual FIFO is a method of inventory valuation in which the cost of goods sold is determined by the first goods that were purchased over the life of the inventory.

Perpetual Inventory: Perpetual inventory is a method of inventory management in which the inventory is tracked on a continuous basis.

Perpetual Inventory Method: The perpetual inventory method is a method of inventory management in which the inventory is tracked on a continuous basis.

Perpetual LIFO: Perpetual LIFO is a method of inventory valuation in which the cost of goods sold is determined by the last goods that were purchased over the life of the inventory.

Perpetual System of Inventory: The perpetual system of inventory is a method of inventory management in which the inventory is tracked on a continuous basis.

PERT: The Program Evaluation and Review Technique (PERT) is a project management tool that is used to plan, organize, and control large projects.

Petty Cash: Petty cash is a small amount of funds that is kept on hand for the purpose of making small payments for office supplies and other minor expenses.

Petty Cash Receipt: A petty cash receipt is a document that is used to track the amount of money that is taken from the petty cash fund.

Petty Cash Replenishment: Petty cash replenishment is the process of replacing the money that has been taken out of the petty cash fund.

Petty Cash Voucher: A petty cash voucher is a document that is used to track the amount of money that is taken from the petty cash fund.

Phantom Profits: Phantom profits are profits that are generated on paper but not in reality. They occur when investors purchase stocks at a low price and then sell them at a higher price, but the stocks do not actually increase in value.

Physical Count: A physical count is a process in which the inventory is counted in order to verify the accuracy of the records.

Physical Inventory: Physical inventory is a process in which the inventory is counted in order to verify the accuracy of the records.

Physical Life: Physical life is the amount of time that an asset is expected to be used before it needs to be replaced.

Plant Assets: Plant assets are long-term assets that are used in the production of goods or services.

Plant-Wide Overhead Rate: The plant-wide overhead rate is a rate that is used to allocate overhead costs to products or services.

Pledged Asset: A pledged asset is an asset that is used as collateral for a loan.

POP: POP stands for Point of Purchase and is used to refer to the physical location where a customer makes a purchase.

POS: POS stands for Point of Sale and is used to refer to the physical location where a customer makes a purchase.

Post Balance Sheet Event: A post balance sheet event is an event that occurs after the balance sheet date but which affects the financial statements of the company.

Post-Closing Trial Balance: A post-closing trial balance is a listing of all the accounts and their balances after the closing entries have been made.

Postdated Check: A postdated check is a check that is written with a future date on it.

Posting: Posting is the process of entering transaction details into the accounting system.

Postretirement Benefits: Postretirement benefits are benefits that are provided to employees after they have retired from a company.

Predetermined Overhead Rate: The predetermined overhead rate is a rate that is used to allocate overhead costs to products or services.

Preferred Stock: Preferred stock is a type of stock that has a higher priority than common stock when it comes to the payment of dividends and the liquidation of assets.

Preferred Stock $100 Par: Preferred stock $100 par is a type of preferred stock that has a par value of $100 per share.

Preferred Stock Account: The preferred stock account is an account on a company’s balance sheet that represents the amount of money that has been invested in preferred stock.

Premium on Bonds Payable: The premium on bonds payable is the amount of money that a company pays in order to issue bonds at a price higher than the face value of the bonds.

Premium on Common Stock: The premium on common stock is the amount of money that a company pays in order to issue stock at a price higher than the par value of the stock.

Premium on Preferred Stock: The premium on preferred stock is the amount of money that a company pays in order to issue preferred stock at a price higher than the par value of the stock.

Prepaid Advertising: Prepaid advertising is an expense that is incurred in advance for advertising services that have not yet been provided.

Prepaid Asset: A prepaid asset is an asset that has been paid for but has not yet been used or consumed.

Prepaid Association Dues: Prepaid association dues are dues that are paid in advance to an association.

Prepaid Dues: Prepaid dues are dues that are paid in advance.

Prepaid Expense: A prepaid expense is an expense that is paid for in advance and is recorded as an asset until it is used or consumed.

Prepaid Insurance: Prepaid insurance is an insurance policy that is paid for in advance and is recorded as an asset until it is used or consumed.

Prepaid Rent: Prepaid rent is rent that is paid in advance and is recorded as an asset until it is used or consumed.

Prepayment-Type Adjusting Entry: A prepayment-type adjusting entry is an adjusting entry that is made when an amount is paid in advance for an expense that has not yet been incurred.

Present Value: Present value is the current value of a future amount of money.

Present Value Factors: Present value factors are used to calculate the present value of a future amount of money.

Present Value Model: The present value model is a mathematical model used to calculate the present value of a future amount of money.

Present Value of 1 Table: The present value of 1 table is a table that is used to calculate the present value of a future amount of money.

Present Value of a Single Amount: The present value of a single amount is the current value of a future amount of money.

Present Value of an Annuity: The present value of an annuity is the current value of a series of future payments.

Present Value of an Annuity Due Table: The present value of an annuity due table is a table that is used to calculate the present value of a series of future payments.

Present Value of an Ordinary Annuity: The present value of an ordinary annuity is the current value of a series of future payments.

Present Value of an Ordinary Annuity Table: The present value of an ordinary annuity table is a table that is used to calculate the present value of a series of future payments.

Present Value Table: The present value table is a table that is used to calculate the present value of a future amount of money.

Price Earnings Ratio: The price earnings ratio is a measure of a company’s profitability that is calculated by dividing the current price of a share of stock by the company’s earnings per share.

Price Variance: Price variance is the difference between the actual price of a good or service and the budgeted or expected price.

Primary Activities: Primary activities are activities that are directly related to the production of goods or services.

Prime Costs: Prime costs are the costs of direct materials and direct labor that are used in the production of goods or services.

Principal: Principal is the amount of money that is borrowed or invested.

Principal Payment: A principal payment is a payment that is made in order to reduce the amount of money that is owed on a loan or investment.

Principles and Guidelines: Principles and guidelines are general rules and regulations that are used to guide the process of accounting.

Prorate: Prorate is the process of dividing an amount of money or other asset proportionally according to a predetermined ratio.

Provision for Doubtful Accounts: The provision for doubtful accounts is an estimate of the amount of money that a company may not be able to collect on its accounts receivable.

Public Companies: Public companies are companies that are publicly traded on a stock exchange.

Public Company Accounting Oversight Board (PCAOB): The Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation established by the Sarbanes-Oxley Act of 2002 to oversee the auditing of public companies in the United States.

Publication 15: Publication 15 is a publication issued by the Internal Revenue Service (IRS) that contains information on the federal income tax laws applicable to employers and employees.

Publicly Traded Stock: Publicly traded stock is stock that is traded on a public stock exchange.

Purchase Allowance: A purchase allowance is a discount that is given to a customer for a purchase that is not satisfactory.

Purchase Commitments: Purchase commitments are agreements to purchase goods or services at a future date.

Purchase Discount: A purchase discount is a discount that is given to a customer for paying for a purchase within a certain period of time.

Purchase Order: A purchase order is a document that is used to order goods or services from a supplier.

Purchase Return: A purchase return is an amount of money that is refunded to a customer for a purchase that is not satisfactory.

Purchases: Purchases are goods or services that are bought by a company.

Purchases - Net: Purchases - net is the amount of money that is spent on goods or services after subtracting any discounts or returns.

Q

Quality of Earnings: Quality of earnings is a measure of a company's profitability that takes into account the quality of the company's accounting practices. It examines the sustainability of the company's earnings and how well the company is managing its operations.

Quantity Variance: Quantity variance is a measure of the difference between the actual number of units used or produced and the standard number of units that should have been used or produced. It is used to determine the efficiency of production in a manufacturing process.

Quarterly Earnings: Quarterly earnings refer to a company's financial performance for a three-month period. It includes income from operations, gains and losses from investments, and taxes.

Quick Assets: Quick assets are a company's most liquid assets. These include cash, cash equivalents, and short-term investments that can be quickly converted into cash.

Quick Ratio: The quick ratio is a measure of a company's financial health. It is calculated by dividing the company's quick assets by its current liabilities.

QuickBooks: QuickBooks is an accounting software program designed to help small businesses manage their finances. It offers features such as invoicing, payroll, and reporting.

Quoted amount: Quoted amount is the price that a buyer and seller agree upon for a particular product or service. It is a negotiated price that is not necessarily the market price for the product or service.

R

Raw Materials Inventory: Raw materials inventory is the total amount of materials and supplies used by a business to produce its goods or services. It includes both finished goods and work-in-process inventory, and it usually represents a substantial portion of a company's total assets.

Real Account: A real account is a general ledger account that does not close at the end of the accounting year. This means that the balances in the account are carried forward to the next year. Real accounts are also referred to as permanent accounts.

Receipts: Receipts are a record of money paid or received. They are commonly used in business transactions as proof of payment or as proof of receipt of goods or services.

Receiving Report: A receiving report is a document used to document the receipt of goods or services. It is used to track deliveries and verify that the goods or services received match what was ordered.

Reciprocal Method: The reciprocal method is an accounting method used to allocate costs between two related parties. It is based on the principle that each party should bear an equal share of the costs.

Reciprocal Services: Reciprocal services are services that are exchanged between two or more parties. These services may include the exchange of goods or services for goods or services, or the exchange of labor or services for goods or services.

Reconciliation of Bank Statement: Bank reconciliation is the process of comparing a company's bank account records to the records of its bank to ensure that the two sets of records are in agreement. This process is used to identify and correct errors and omissions that have occurred in the recording of transactions.

Record Date: A record date is the date used to determine who is entitled to receive a dividend, bonus, or other payment. On this date, the names of shareholders of record are added to the company's books and the amount of the dividend or bonus is determined.

Redemption of Bonds Payable: The redemption of bonds payable is the process of paying off a bond before its maturity date. This is usually done by the issuer of the bond, who makes a lump-sum payment to the bondholder.

Regression Analysis: Regression analysis is a statistical technique used to model the relationship between two or more variables. It is used to estimate the strength of the relationship between the variables and to predict the values of one variable based on the values of the other variables.

Regression Line: A regression line is the line of best fit that is estimated from a set of data points. It is used to predict the value of one variable based on the values of other variables.

Relative Sales Value Method of Allocating Cost: The relative sales value method of allocating cost is a method of cost allocation that assigns costs based on the relative sales value of the goods or services produced by a business.

Relevant Cost: Relevant cost is the cost of an action that is expected to change as a result of the decision being made. Relevant costs are considered when making decisions because they are likely to be affected by the decisions that are made.

Relevant Range: The relevant range is the range of inputs or outputs for which a relationship between two variables is valid. It is the range of inputs or outputs that can be expected to produce the same result as the inputs or outputs outside of the range.

Rent Expense: Rent expense is a type of expense that is incurred when a business rents property or equipment from another party. It is usually recorded as an operating expense on the income statement.

Rent Revenue/Income: Rent revenue or income is the income that a business earns from renting out property or equipment. It is usually recorded as a revenue on the income statement.

Reorder Point: A reorder point is the inventory level at which a company should order more of a given item. It is typically set at a point that ensures that the item is not out of stock but that it is also not kept in excess.

Repairs and Maintenance Expense: Repairs and maintenance expense is an operating expense that is incurred when a business repairs or maintains its equipment or property. It is usually recorded as an operating expense on the income statement.

Replacement Cost: Replacement cost is the cost of replacing an asset with a new asset of similar quality and utility. It is used in accounting to determine the value of an asset and is often used in insurance calculations.

Replenish: To replenish is to restock or refill an item or items that have been used or depleted. This can refer to both physical items such as inventory and intangible items such as account balances.

Replenishing Petty Cash: Replenishing petty cash is the process of adding money to a petty cash fund. This is typically done when the fund has been depleted due to the payment of expenses.

Required Rate of Return: The required rate of return is the rate of return that a company must earn in order to satisfy its investors or lenders. It is usually calculated as the expected rate of return that an investor or lender would require in order to invest or lend money to a company.

Research and Development Costs: Research and development costs are the costs incurred by a business in researching and developing new products or services. These costs can include salaries, materials, and other expenses related to the research and development process.

Residual: Residual is the amount of money left after all other expenses and liabilities have been paid. It is also known as net income or net profit.

Residual Income (RI): Residual income (RI) is the amount of income that is left after all expenses and liabilities have been paid. It is also known as net income or net profit.

Residual Value: Residual value is the estimated value of an asset at the end of its useful life. It is used to calculate the depreciation expense of an asset over its useful life.

Restricted Accounts: Restricted accounts are accounts that are not available to be used for general business purposes. These accounts may be restricted by law, by a contract, or by the owner of the funds.

Restricted Cash: Restricted cash is cash or cash equivalents that are held in an account and cannot be used for any purpose other than what was specified when the funds were deposited.

Restricted Retained Earnings: Restricted retained earnings are the portion of a company's retained earnings that is not available for use by the company. These funds are usually restricted by law or by a contract.

Restricted Support: Restricted support is financial support that is provided with specific restrictions or conditions. This type of support is often given to organizations or individuals that meet certain criteria.

Retail Method of Estimating Inventory: The retail method of estimating inventory is a method of estimating inventory used by retailers. It is based on the premise that the cost of goods sold is equal to the retail value of the goods sold.

Retained Earnings: Retained earnings are the portion of a company's net income that is not distributed to shareholders as dividends. It is reported on the balance sheet as a part of stockholders' equity.

Retained Earnings Statement: A retained earnings statement is a financial statement that shows the changes in a company's retained earnings over a period of time. It is used to track the amount of earnings that have been retained in the company as well as any distributions made to shareholders.

Retirement of Assets: Retirement of assets is the process of disposing of assets that are no longer being used by a business. This usually involves selling the assets or scrapping them for parts.

Retirement of Bonds: Retirement of bonds is the process of paying off a bond before its maturity date. This is usually done by the issuer of the bond, who makes a lump-sum payment to the bondholder.

Return on Average Common Stockholders' Equity: Return on average common stockholders' equity is a measure of a company's profitability. It is calculated by dividing the net income available to common stockholders by the average common stockholders' equity over a period of time.

Return on Capital Employed: Return on capital employed is a measure of a company's profitability. It is calculated by dividing the net income available to common stockholders by the capital employed.

Return on Investment (ROI): Return on investment (ROI) is a measure of the profitability of an investment. It is calculated by dividing the net income generated by the investment by the total amount of money invested.

Return on Stockholders' Equity: Return on stockholders' equity is a measure of a company's profitability. It is calculated by dividing the net income available to common stockholders by the total stockholders' equity.

Returned Check: A returned check is a check that is not honored by the bank because of insufficient funds in the account from which it was drawn.

Revenue Expenditure: Revenue expenditure is an expense that is incurred in the course of generating revenue. It is usually recorded as an operating expense on the income statement.

Revenue Recognition Principle: The revenue recognition principle is an accounting principle that states that revenue should be recognized when it is earned, rather than when it is received.

Revenues: Revenues are the income that a business earns from its operations. They are usually reported on the income statement as a source of income.

Revenues and Gains: Revenues and gains are the income that a business earns from its operations. They are usually reported on the income statement as a source of income.

Revenues from Service Charges: Revenues from service charges are the income that a business earns from providing services to its customers. They are usually reported on the income statement as a source of income.

Reversing Entry: A reversing entry is an accounting entry that is made to reverse a prior accounting entry. It is typically used to correct errors or to adjust the accounts to reflect the current period's transactions.

Revision of Depreciation Estimates: Revision of depreciation estimates is the process of changing the amount of depreciation that is recorded on an asset over its useful life. This is typically done when the useful life of the asset is extended or when changes in the market value of the asset occur.

RI: RI is an abbreviation for residual income. Residual income is the amount of income that is left after all expenses and liabilities have been paid.

ROCE: ROCE is an abbreviation for return on capital employed. Return on capital employed is a measure of a company's profitability. It is calculated by dividing the net income available to common stockholders by the capital employed.

ROI: ROI is an abbreviation for return on investment. Return on investment is a measure of the profitability of an investment. It is calculated by dividing the net income generated by the investment by the total amount of money invested.

Rolling Budget: A rolling budget is a budget that is updated on a regular basis. It is typically updated monthly or quarterly and is used to track and manage the financial performance of a business.

Rolling Horizon Budget: A rolling horizon budget is a budget that is updated on a regular basis. It is typically updated monthly or quarterly and is used to track and manage the financial performance of a business over time.

Root Cause: Root cause is the underlying cause of a problem or issue. It is the cause that is the origin of the problem and must be addressed in order to fix the issue.

Rubber Check: A rubber check is a check that is not honored by the bank because of insufficient funds in the account from which it was drawn.

Rule of 72: The rule of 72 is a quick way to estimate the amount of time that it will take for an investment to double in value at a fixed rate of return. It is calculated by dividing 72 by the rate of return.

S

Salary: A fixed, regular payment made by an employer to an employee, typically paid on a monthly basis.

Salaries Expense: An expense account that reflects the amount of salary paid out to employees during a period of time. It is a component of the payroll expenses that are reported in the income statement.

Salaries Payable: A liability account that records the amount of salary owed to employees at the end of a period. It is a component of the payroll expenses that are reported in the balance sheet.

Sales: The total amount of money received from the sale of goods or services.

Sales Allowance: A reduction in the cost of goods or services, given to the customer in order to make the sale more attractive.

Sales Commissions Expense: An expense account that is used to record the amount of money paid out in sales commissions.

Sales Discounts: A reduction in the cost of goods or services given to customers in order to make the sale more attractive.

Sales Forecast: An estimate of the amount of sales that a business expects to make in a future period.

Sales Journal: A book of original entry used to record the sales made by a business.

Sales Mix: The mix of goods and services sold by a business.

Sales Returns and Allowances: A reduction in the cost of goods or services, given to customers in order to make the sale more attractive.

Sales Revenues: The total amount of money received from the sale of goods or services.

Salvage Value of Fixed Assets: The estimated amount of money that a fixed asset will be able to be sold for at the end of its useful life.

Scattergraph: A graph that plots two variables against each other in order to examine the relationship between them.

SCF: Short-term Cash Flow.

SEC: The U.S. Securities and Exchange Commission is an independent agency of the U.S. federal government responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation.

Secondary Activities: Activities that are not essential to the primary operations of the business, such as marketing, advertising, and research and development.

Secured Bond: A bond that is backed by collateral, such as real estate or other assets.

Secured Creditor: A creditor who has a claim on a debtor's property in the event that the debtor is unable to pay the debt.

Secured Loan: A loan that is backed by collateral, such as real estate or other assets.

Segregation of Duties: The practice of assigning different tasks to different people in order to reduce the risk of fraud or errors.

Self Insurance: The practice of a business setting aside funds in order to cover losses that may occur without having to purchase insurance.

Self-Employed: A person who is not employed by another person or organization and who works for him or herself.

Selling and Administrative Expense: The expenses incurred in selling and administering the goods and services of a business.

Selling Expenses: The expenses incurred in selling the goods and services of a business.

Selling, General and Administrative Expenses: The expenses incurred in selling, general, and administrative activities of a business.

Semimonthly: Occurring twice per month.

Semivariable Costs: Costs that are composed of both fixed and variable components.

Semivariable Expenses: Expenses that are composed of both fixed and variable components.

Separation of Duties: The practice of assigning different tasks to different people in order to reduce the risk of fraud or errors.

Serial Bond: A bond that matures in installments over time, rather than all at once.

Service Charge Revenues: The revenues received from the sale of services.

Service Department: A department of a business that provides services to other departments or customers.

Service Mark: A trademark used to identify services, rather than goods.

Service Revenues: The total amount of money received from the sale of services.

Setup Cost: The cost associated with setting up a process or machine for production.

Setup Time: The amount of time required to set up a process or machine for production.

SFAS: Statement of Financial Accounting Standards.

SG&A: Selling, General, and Administrative expenses.

Shareholder: An individual or organization that owns shares in a corporation.

Shareholders' Equity: The residual interest in the assets of a corporation that remains after deducting its liabilities.

Short-term Asset: An asset that will be converted into cash or consumed within one year or the normal operating cycle, whichever is longer.

Short-term Liability: A liability that will be paid within one year or the normal operating cycle, whichever is longer.

Shrinkage: The loss of inventory or assets due to theft, damage, or other causes.

Simple Journal Entry: An accounting transaction that involves only one debit and one credit.

Simple Regression: A statistical technique used to analyze the relationship between two variables.

Single Payment: A payment made for a single transaction.

Single-Step Income Statement: An income statement that shows revenues and expenses on one line each.

Sinking Fund: A fund established by a business to accumulate money for a specific purpose, such as the retirement of a debt.

Slope of Cost Line: The rate of change in cost as the level of activity changes.

Social Security Taxes: Taxes imposed by the federal government on employers and employees to fund the Social Security program.

Sold: The exchange of goods or services for money or other consideration.

Sole Practitioner: A self-employed individual who has no employees and operates his or her own business.

Sole Proprietorship: A business owned and run by one individual.

Source Document: A document that serves as evidence of a financial transaction and is used to create the journal entry.

Special Journals: Journals used to record frequently occurring transactions.

Spending Variance: The difference between the actual spending and the budgeted spending.

Split-off Point: The point in the production process at which a product is ready to be sold or used in a different process.

Spoilage: The loss of inventory or assets due to theft, damage, or other causes.

Spot Price: The current market price of a commodity or security.

Stage 1 Allocation: The process of allocating the costs of a given activity to the activities that use it.

Stage 2 Allocation: The process of allocating the costs of a given activity to the activities that use it, after allocating the costs of the activity to the activities that produce it.

Stakeholder: An individual or organization that has an interest in the success or failure of a business.

Standard Cost: An expected or predetermined cost for a given activity or product.

Standard Cost per Unit of Input: The amount of money that is expected to be spent on inputs for a given activity or product.

Standard Cost per Unit of Product: The amount of money that is expected to be spent on producing a given product.

Standard Cost System: A system in which the costs of activities are measured and recorded using predetermined costs.

Standard Cost Variances: The difference between the actual cost and the standard cost of a given activity or product.

Standard Costing: A system in which the costs of activities are measured and recorded using predetermined costs.

State Boards of Accountancy: Professional organizations that are responsible for setting and enforcing the standards of accounting practice in their respective states.

State Income Tax Withholdings Payable: The portion of an employee's salary that is withheld by the employer to pay state income taxes.

State Unemployment Tax: A tax imposed by the state on employers to fund unemployment benefits.

Statement of Activities: A financial statement that shows the changes in net assets of a business over a period of time.

Statement of Cash Flows: A financial statement that shows the sources and uses of cash over a period of time.

Statement of Comprehensive Income: A financial statement that shows the net income of a business, as well as other comprehensive income, such as unrealized gains or losses.

Statement of Financial Accounting Standards: The official pronouncements issued by the Financial Accounting Standards Board.

Statement of Financial Position: A financial statement that summarizes a business's assets, liabilities, and equity at a specific point in time.

Statement of Functional Expenses: A financial statement that shows the expenses of a business classified according to their functions.

Statement of Income: A financial statement that shows the revenues and expenses of a business over a period of time.

Statement of Operations: A financial statement that shows the revenues and expenses of a business over a period of time.

Statement of Retained Earnings: A financial statement that summarizes the changes in retained earnings over a period of time.

Statement of Stockholders' Equity: A financial statement that summarizes the changes in stockholders' equity over a period of time.

Static Budget: A budget that is based on the expected sales and expenses for a given period of time.

Stock Certificate: A document that serves as evidence of ownership of shares in a corporation.

Stock Dividend: A dividend paid in the form of additional shares of stock rather than cash.

Stock Option: A right to purchase shares of stock at a predetermined price.

Stock Split: A division of the shares of a corporation into a larger number of shares, with the result that each shareholder owns a larger number of shares with a lower par value.

Stockholder: An individual or organization that owns shares in a corporation.

Stockholders' Equity: The residual interest in the assets of a corporation that remains after deducting its liabilities.

Stop Payment Order: An order given to a bank to stop payment on a check or other instrument.

Stores: An area in which supplies and materials are kept.

Straight-line Method of Amortization: A method of amortizing the cost of an asset over its useful life in equal periodic amounts.

Straight-line Method of Depreciation: A method of depreciating the cost of an asset over its useful life in equal periodic amounts.

Subchapter S Corporation: A corporation that is taxed as a pass-through entity, meaning that the income is passed through to the shareholders and reported on their individual tax returns.

Subsequent Event: An event that occurs after the balance sheet date but before the financial statements are issued.

Subsidiary Accounts: Accounts used to record transactions related to a specific item or activity.

Subsidiary Ledger: A ledger that contains detailed information about a specific account.

Sum-of-the-Years' Digits (SYD) Method of Depreciation: A method of depreciating the cost of an asset over its useful life in a decreasing periodic amount.

Sunk Cost: A cost that has been incurred and cannot be recovered.

Supplier: An individual or organization that provides goods or services to a business.

Supplier Invoice: An invoice sent by a supplier to a business for goods or services provided.

Supplies: Goods used in the production of other goods or services.

Supplies Expense: The cost of supplies used in the production of goods or services.

Supplies on Hand: The supplies that are currently in inventory.

Supporting Services Expenses: The expenses incurred in providing support services to a business.

Surrender Value: The amount of money that an insurance policyholder receives if they surrender their policy prior to maturity.

Suspense Account: An account that is used to record transactions that cannot be classified into a specific account.

SYD Depreciation Method: A method of depreciating the cost of an asset over its useful life in a decreasing periodic amount.

Systematic Expensing: The process of expensing an asset over its useful life in a systematic manner.

T

Take-Home Pay: The amount of a paycheck that is received after all deductions from income such as taxes and insurance have been taken out.

Tangible Constructed Asset: A physical asset that has been constructed for the purpose of producing income or providing a service.

Target Interest Rate: The interest rate that is desired or expected to be achieved by an investment or loan.

Tax Depreciation: A method of accounting for the reduction in an asset's value due to wear and tear over time.

Tax-Exempt: A financial transaction or asset that is not subject to taxation.

Taxes Payable: The amount of taxes owed by a business or an individual.

Temporarily Restricted Net Assets: Assets that have been restricted by an outside entity for a specific purpose, such as a grant or donation.

Temporary Accounts: Accounts that are used to record transactions that are expected to be reversed in a later period.

Temporary Help Expense: The cost of hiring temporary employees or contractors to complete a specific project or task.

Temporary Investments: Investments that are made with the expectation that the money will be used within a certain amount of time.

Temporary Marketable Securities: Securities that can be sold or traded in the short-term, usually with a maturity of one year or less.

Temporary Service Expense: The cost of obtaining services from a third-party for a specific project or task.

Term Bonds: Bonds that have a fixed maturity date and interest rate.

Term Insurance: An insurance policy that covers a fixed period of time, usually one to twenty years.

The Supplier of Goods and Services: A person or company that provides goods or services to another person or company.

Three-Way Match: A process used in accounting whereby three documents are matched and verified before a transaction is recorded.

Time Deposits: Deposits that are held for a specific period of time and cannot be withdrawn before the specified date.

Time Period Assumption: The assumption that transactions occur over a certain period of time, usually one year.

Time Restriction: A restriction on the amount of time a person or business can take to complete a certain task or process.

Time Value of Money: The concept that money available now is worth more than the same amount of money available in the future.

Time-and-a-Half: An overtime rate of pay, usually 1.5 times the normal rate.

Times Interest Earned: A measure of a company's ability to meet its interest payments, calculated as earnings before interest and taxes divided by interest expense.

Timing Differences: Differences between the timing of a transaction's recognition for financial reporting and tax purposes.

Tony Mandella, Capital: An accounting term referring to the capital invested by the owner of a business in order to finance the business.

Trade Accounts Payable: Money owed to a supplier of goods or services.

Trade Accounts Receivable: Money owed to a business by customers for goods or services rendered.

Trade Discount: A discount given to a customer for making payment within a specified period of time.

Trade Names: Names that are used to refer to a product or service.

Trade Payables: Money owed to suppliers for goods or services.

Trade Receivables: Money owed to a business by customers for goods or services rendered.

Trade-In of Similar Asset: The exchange of an existing asset of one type for a similar asset of another type.

Trademark: A word, phrase, symbol, or design that is used to identify and distinguish a product or service from others.

Traditional Costing: A method of accounting for the cost of production that uses predetermined overhead rates and predetermined prices for materials and labor.

Transaction Approach to Determining Net Income: A method of accounting that looks at individual transactions to calculate net income.

Transfer Price: The price charged by one company to another company for a good or service.

Transferred-In Cost: The cost of an asset transferred from one company to another.

Transportation-In: The cost of transporting goods into a business.

Transportation-Out: The cost of transporting goods out of a business.

Treasury Bills: Short-term debt securities issued by the government with a maturity of one year or less.

Treasury Stock: Stock that has been repurchased by the issuing company and is held in the company’s treasury.

Trend Analysis: The examination of a business’s financial performance over a period of time in order to identify trends and make predictions about future performance.

Trial Balance: A summary of a company’s ledger accounts that shows the total of all debit and credit balances.

Triple Net Lease: A type of lease in which the tenant is responsible for all expenses related to the property, such as taxes, insurance, and maintenance.

Turnover: The rate at which a company’s assets are used to generate revenue.

Turnover Ratios: Ratios that measure the speed at which a company’s assets are turned into sales or cash.

U

Unadjusted Trial Balance: A financial statement that lists all the accounts of a company, including the debit and credit balances that exist prior to adjusting entries being made.

Unamortized Bond Discount: The difference between the face value of a bond and the amount that was paid for the bond.

Unamortized Bond Premium: The difference between the face value of a bond and the amount that was received for the bond.

Unappropriated Retained Earnings: Earnings that have been retained by a company but have not been allocated to any specific purpose.

Uncleared Check: A check that has been written by a customer but has not yet been cleared by the bank.

Uncleared Cheque: A cheque that has been written by a customer but has not yet been cleared by the bank.

Uncollected Funds: Funds that have been received by a company but have not yet been collected from the customer.

Uncollectible Accounts Expense: An expense account used to record the estimated amount of money that a company will not be able to collect from its customers.

Undeposited Checks: Checks that have been received by a company but have not yet been deposited into the bank.

Under Absorbed: A situation in which the actual costs of production exceed the amount of revenue generated by selling the finished product or service.

Underapplied Manufacturing Overhead: The amount of manufacturing overhead that is not applied to the production of a product or service.

Underlying Principles/Guidelines: The basic principles or guidelines that are used to govern a company's business practices.

Understates: An understatement is the opposite of an overstatement; it is when a company reports an amount that is lower than the actual amount.

Underwriter: A person or entity that evaluates the risk of a potential investment and determines the offering price for the security.

Undiscounted Future Cash Flows: The expected future cash flows that have not been discounted to present value.

Unearned Premium Revenue: Revenue that a company has collected in advance for services that have not yet been performed.

Unearned Revenue(s): Revenue that a company has collected in advance for services that have not yet been performed.

Unemployment Compensation Tax: A tax paid by employers on wages paid to employees that are eligible for unemployment benefits.

Unemployment Tax Expense: Warehouse: A tax paid by employers for the costs associated with providing unemployment benefits to employees.

Unemployment Tax Payable: A liability account used to record the amount of unemployment taxes that must be paid to the government.

Unfavorable Variance: A variance that is unfavorable to the company and indicates that actual costs exceeded the budgeted costs.

United Way Payable: A liability account used to record the amount of money that a company has pledged to donate to the United Way.

Units of Activity Method of Depreciation: A depreciation method in which the cost of an asset is allocated over its estimated useful life based on the number of units of activity it is expected to generate.

Units of Production Method of Depreciation: A depreciation method in which the cost of an asset is allocated over its estimated useful life based on the number of units of production it is expected to generate.

Uncleared Cheque: A cheque that has been written by a customer but has not yet been cleared by the bank.

Unpaid Principal Balance: The amount of principal that is still outstanding on a loan.

Unpresented Check: A check that has been written by a customer but has not yet been presented to the bank for payment.

Unqualified Opinion: An opinion given by an auditor that states that the financial statements of a company present fairly, in all material respects, the financial position of the company.

Unrealized Holding Gain: An increase in the value of an investment that has not been realized through a sale or other transaction.

Unrealized Holding Loss: A decrease in the value of an investment that has not been realized through a sale or other transaction.

Unrelated Business Income Tax: A tax imposed on income generated from activities unrelated to the main business of a company.

Unrestricted Net Assets: Net assets that are not subject to any restrictions or limitations imposed by donors or other external parties.

Unsecured Bond: A bond that is not backed by any specific asset or collateral.

Unsecured Creditor: A creditor that has not been granted a security interest in any of the debtor's assets.

Unsecured Loan: A loan that is not backed by any specific asset or collateral.

Usage Variance: The difference between the actual use of a material or resource and the budgeted use.

Useful Life: The estimated amount of time that an asset is expected to be used by a company before it is retired from service.

Utilities Expense: An expense account used to record the costs associated with the use of utilities such as electricity, gas, and water.

Utilities Payable: A liability account used to record the amount of money owed to utility companies for services provided

V

Valuation Account: An accounting entry that records the value of an asset, such as a house or car, at a specific point in time.

Value Billing: A type of billing method where clients are charged based on the value of the services that are provided to them, rather than the time it took to complete the services.

Variable Cost: A cost that changes in proportion with changes in the level of production or sales.

Variable Cost Rate: The rate used to calculate the variable cost of producing a certain product or service.

Variable Cost Ratio: The ratio of variable costs to total costs.

Variable Costing: An accounting system that tracks only variable costs, such as direct materials and labor, in the cost of a product or service.

Variable Expenses: Expenses that vary in amount from month to month, such as utility bills and groceries.

Variable Manufacturing Overhead Applied: The amount of variable manufacturing overhead costs applied to a product or service.

Variable Manufacturing Overhead Cost: The cost of variable manufacturing overhead, such as costs associated with setting up production lines.

Variable Manufacturing Overhead Efficiency Variance: The difference between the standard variable manufacturing overhead cost and the actual variable manufacturing overhead cost.

Variable Manufacturing Overhead Incurred: The actual costs of variable manufacturing overhead incurred during the production of a product or service.

Variable Manufacturing Overhead Spending Variance: The difference between the standard variable manufacturing overhead cost and the actual variable manufacturing overhead cost.

Variable Overhead Efficiency Variance: The difference between the standard variable overhead cost and the actual variable overhead cost.

Variable Overhead Spending Variance: The difference between the standard variable overhead cost and the actual variable overhead cost.

Variance: The difference between the actual and planned or budgeted amounts.

Variance Analysis: An accounting technique used to analyze variances and identify their causes.

Variance Reports: Reports that show the differences between the actual and planned or budgeted amounts.

Vendor: An individual or company that provides goods or services to a business.

Vendor Invoice: An invoice sent by a vendor to a business for goods or services provided.

Vendors: Individuals or companies that provide goods or services to a business.

Vertical Analysis: An analysis technique that compares financial statements on a percentage basis.

Volume: The amount of goods or services a business produces or sells.

Volume Variance: The difference between the actual volume of goods or services produced or sold and the expected volume.

Volume-Based Allocation: An accounting method used to allocate costs based on the amount of goods or services produced.

W

Warranties: An agreement, usually written, that guarantees the quality of a product for a certain period of time.

Warranty Expense: An accounting term that refers to the cost that a company incurs when it honors a warranty.

Warranty Liability: An accounting term that refers to the amount of money a business may need to pay out in order to honor a warranty.

Warranty Payable: An accounting term that refers to the amount of money a business owes to another party in order to fulfill the terms of a warranty.

Weighted-Average Accumulated Expenditures on Self-Constructed Assets: An accounting term that refers to the total amount of money a business has spent on self-constructed assets over a period of time, weighted by the length of time the assets were in use.

Weighted-Average Cost Flow Assumption: An accounting term that refers to the method used to calculate the cost of inventory by taking into account the cost of the inventory items and the quantity of the items.

Weighted-Average Cost of Capital: An accounting term that refers to the rate of return a business expects to earn on its investments.

Weighted-Average Number of Shares of Stock Outstanding: An accounting term that refers to the total number of shares of a company’s stock that are currently in circulation, weighted by the length of time the shares have been outstanding.

White-Collar Worker: A person who works in an office or professional environment and typically performs administrative or other non-manual labor.

Whole Life Insurance: A type of life insurance that provides coverage for the entire life of the insured person and typically pays out a lump sum upon the insured person’s death.

Window Dressing: An accounting practice where a company attempts to make its financial statements look better than they actually are by changing the numbers in its favor.

WIP: An acronym for “Work in Progress,” which refers to the unfinished goods that are still in the process of being manufactured.

Withdrawals by Owner: An accounting term that refers to the funds taken out of a business by its owner.

Withholdings: Money that is taken out of an employee’s paycheck before they receive it, typically for taxes.

Work-in-Process Inventory: An accounting term that refers to the unfinished goods that are in the process of being manufactured.

Worker Compensation Insurance: A type of insurance that provides coverage for employees in case of injury or illness in the workplace.

Worker Compensation Insurance Expense: An accounting term that refers to the cost of providing worker compensation insurance.

Worker Compensation Insurance Payable: An accounting term that refers to the amount of money a business owes for the cost of providing worker compensation insurance.

Working Capital: An accounting term that refers to the amount of money a business has available to cover its short-term expenses.

Working Capital Ratio: An accounting ratio that measures a company’s ability to pay its short-term debts.

Write-Down: An accounting term that refers to the decrease in value of an asset due to market conditions or other factors.

Write-Off: An accounting term that refers to the removal of an asset or expense from a company’s books.

Write-Up: An accounting term that refers to the increase in value of an asset due to market conditions or other factors.

Write-Up Work: An accounting term that refers to the process of adjusting the book value of an asset or expense to reflect its current market value.

Y

Year-To-Date Net Income: Year-to-date net income is the net income of a company over the current fiscal year up to the present day. This includes any income or losses that have been incurred since the beginning of the year.

Yield: Yield is the rate of return on an investment or the amount of income generated from an investment. It is usually expressed as a percentage of the initial cost or market value of the investment.

Yield to Maturity: Yield to maturity is the rate of return that is earned when an investor holds an investment until its maturity date. This rate of return includes both the interest earned from the investment, as well as any capital gains or losses.

Z

Zero-Coupon Bond: A zero-coupon bond is a debt security that does not pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Zero-Based Budgeting: Zero-based budgeting is a type of budgeting process in which all expenses must be justified for each new period. In this approach, budgeters start from a “zero base” and every function within an organization is analyzed for its needs and costs. Any increase in budgeted expenses must be justified in terms of the added value it will bring to the organization.