Copy of `NYSSPCA - Accounting title`
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NYSSPCA - Accounting title
Category: Economy and Finance > Accountaning Terminology
Date & country: 23/08/2008, USA
Words: 510
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Contingent Liability- Potential LIABILITY arising from a past transaction or a subsequent event.
Continuing Operations- Portion of a business entity expected to remain active.
Contra Account- ACCOUNT considered to be an offset to another account. Generally established to reduce the other account to amounts that can be realized or collected.
Control Risk- Measure of risk that errors exceeding a tolerable amount will not be prevented or detected by an entity's internal controls.
Controls Tests- Tests directed toward the design or operation of an internal control structure policy or procedure to assess its effectiveness in preventing or detecting material misstatements in a financial report.
Convertible Stock- Stock that may be exchanged for other SECURITIES of the issuer.
Corporation- Form of doing business pursuant to a charter granted by a state or federal government. Corporations typically are characterized by the issuance of freely transferable CAPITAL STOCK, perpetual life, centralized management, and limitation of owners' LIABILITY to the amount they invest in the business.
Cost Accounting- Procedures used for rationally classifying, recording, and allocating current or predicted costs that relate to a certain product or production process.
Cost Recovery Method- METHOD OF REVENUE RECOGNITION which recognizes profits after costs are completely recovered. Generally used only when the total amount of collections is highly uncertain. In tax, the ACCOUNTING METHOD used to depreciate ASSETS.
CPA- See CERTIFIED PUBLIC ACCOUNTANT.
CPE- See CONTINUING PROFESSIONAL EDUCATION.
Credit- Entry on the right side of a DOUBLE-ENTRY BOOKKEEPING system that represents the reduction of an ASSET or expense or the addition to a LIABILITY or REVENUE. (See DEBIT.)
Credit Agreement- Arrangement in which one party borrows or takes possession in the present by promising to pay in the future.
Credit Balance- BALANCE remaining after one of a series of bookkeeping entries. This amount represents a LIABILITY or income to the entity. (See BALANCE.)
Creditor- Party that loans money or other ASSETS to another party.
Current Asset- ASSET that one can reasonably expect to convert into cash, sell, or consume in operations within a single operating cycle, or within a year if more than one cycle is completed each year.
Current Liability- Obligation whose LIQUIDATION is expected to require the use of existing resources classified as CURRENT ASSETS, or the creation of other current liabilities.
Current Value- (1) Value of an ASSET at the present time as compared with the asset's HISTORICAL COST. (2) In finance, the amount determined by discounting the future revenue stream of an asset using COMPOUND INTEREST PRINCIPLES.
Death Benefit- Amounts received under a life insurance contract and paid by reason of the death of the insured. (Although most death benefits are paid at termination of life, certain plans now pay accelerated death benefits while the insured is still alive, i.e.: an AIDS patient might possibly receive accelerated death benefit)
Debit- Entry on the left side of a DOUBLE-ENTRY BOOKKEEPING system that represents the addition of an ASSET or expense or the reduction to a LIABILITY or REVENUE. (See CREDIT.)
Debit Balance- BALANCE remaining after one or a series of bookkeeping entries. This amount represents an ASSET or an expense of the entity. (See BALANCE.)
Debt- General name for money, notes, BONDS, goods or services which represent amounts owed.
Debt Security- Document which is evidence of an obligation or LIABILITY.
Debt Service Fund- Fund whose PRINCIPAL or INTEREST is set aside and accumulated to retire DEBT.
Debtor- Party owing money or other ASSETS to a CREDITOR.
Decedent- Individual who has died.
Defalcation- To misuse or embezzle funds.
Default- Failure to meet any financial obligation. Default triggers a CREDITOR'S rights and remedies identified in the agreement and under the law.
Defeasance- Annulment of a contract or deed; a clause within a contract or deed that provides for annulment.
Deferred Charge- Cost incurred for subsequent periods which are reflected as ASSETS.
Deferred Income- Income received but not earned until all events have occurred. Deferred income is reflected as a LIABILITY.
Deferred Income Taxes- ASSETS or LIABILITIES that arise from timing or measurement differences between tax and accounting principles.
Deficiency in DesignThis exists when a control necessary to meet the control objective is missing or an existing control is not properly designed so that even if the control operates as designed, the control objective is not always met.
Deficiency in OperationThis exists when a properly designed control does not operate as designed, or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.
Deficit- Financial shortage that occurs when LIABILITIES exceed ASSETS.
Defined Benefit Plan- See EMPLOYEE BENEFIT PLAN.
Defined Contribution Plan- See EMPLOYEE BENEFIT PLAN.
Demand Loan- Loan repayable on demand. Also known as a CALL LOAN.
Dependent Care Expenses- Qualified child care expenses will allow a taxpayer this computed credit against tax. The amounts can be found on the individual forms as the limitations and computation may change each tax year.
Depletion- Method of computing a deduction to ACCOUNT for a reduction in value of extractable natural resources.
Deposit Method- Related to the sales of real estate, under this method the seller does not recognize any profits, does not record a note RECEIVABLE, and continues to reflect the property and related DEBT in the seller's FINANCIAL STATEMENTS, recording the buyer's initial investment and subsequent payments as a deposit.
Depreciation- Expense allowance made for wear and tear on an ASSET over its estimated useful life. (See ACCELERATED DEPRECIATION and STRAIGHT-LINE DEPRECIATION.)
Derivatives- Financial instruments whose value varies with the value of an underlying asset (such as a stock, BOND, commodity or currency) or index such as interest rates. Financial instruments whose characteristics and value depend on the characterization of an underlying instrument or asset.
Detection Risk- Risk that the AUDITOR will not detect a material misstatement.
Disbursement- Payment by cash or check.
Disclaimer of Opinion- Statement by an AUDITOR indicating inability to express an opinion on the fairness of the FINANCIAL STATEMENTS provided and the reason for the inability. The auditor is required to disclaim depending on the limitation in scope.
Disclosure- Process of divulging accounting information so that the content of FINANCIAL STATEMENTS is understood.
Discontinued Operations- Portion of a business that is planned to be or is discontinued.
Discount- Reduction from the full amount of a price or DEBT.
Discount Rate- Rate at which INTEREST is deducted in advance of the issuance, purchasing, selling, or lending of a financial instrument. Also, the rate used to determine the CURRENT VALUE, or present value, of an ASSET or income stream.
Discounted Cash Flow- Present value of future cash estimated to be generated.
Discretionary Trust- Arrangement in which the TRUSTEE has the authority to make INVESTMENT decisions and has control over investments within the framework of the TRUST instrument.
Dissolution- Termination of a CORPORATION.
Distribution Expense- Expense of selling, advertising, and delivery of goods and services.
Distributions- Payment by a business entity to its owners of items such as cash ASSETS, stocks, or earnings.
Dividends- Distribution of earnings to owners of a CORPORATION in cash, other ASSETS of the corporation, or the corporation's CAPITAL STOCK.
Documentation Completion DateA complete and final set of audit documentation should be assembled for retention as of a date not more than 45 days after the report release date.
Double-Entry Bookkeeping- Method of recording financial transactions in which each transaction is entered in two or more accounts and involves two-way, self-balancing posting. Total DEBITS must equal total CREDITS.
Dual Dating- Dating of the ACCCOUNTANTS' or AUDITORS' REPORT when a subsequent event disclosed in the FINANCIAL STATEMENTS occurs after completion of the field work but before issuance of the report. For example, 'January 3, 19xx, except for Note x, as to which the date is March 10, 19xx.'
Due Date- Each governing agency and its forms scheduled reporting and most importantly payments have a required due date. It is this date that if most files timely may result in a penalty, fine, and commence interest charges.
Due Diligence- (1) Procedures performed by underwriters in connection with the issuance of a SECURITIES EXCHANGE COMMISSION (SEC) registration statement. These procedures involve questions concerning the company and its business, products, competitive position, recent financial and other developments and prospects. Also performed by others in connection with ac...
Earned Income- Wages, salaries, professional fees, and other amounts received as compensation for services rendered.
Earned Income Credit- A refundable tax credit for eligible low income workers, subject to computations based on qualifying children and phase in and phase out income levels.
Earnings Per Share (EPS)- Measure of performance calculated by dividing the net earnings of a company by the average number of shares outstanding during a period.
Effective Tax Rate- Total income taxes expressed as a percentage of NET INCOME before taxes.
EITF- See EMERGING ISSUES TASK FORCE.
Emerging Issues Task Force (EITF)- Assists the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and provides guidance on early identification of emerging issues affecting financial reporting and problems in implementing authoritative pronouncements.
Employee Benefit Plan- Compensation arrangement, generally in writing, used by employers in addition to salary or wages. Some plans such as group term life insurance, medical insurance and qualified retirement plans are treated favorably under the tax law. Most common qualified retirement plans are: (1) defined benefit plans - a promise to pay participants specified be...
Encumbrance- (1) MORTGAGE or other lien on the entity's ASSETS; (2) Anticipated EXPENDITURE; (3) Uncompleted or undelivered portion of a purchase commitment.
Equity- Residual INTEREST in the ASSETS of an entity that remains after deducting its LIABILITIES. Also, the amount of a business' total assets less total liabilities. Also, the third section of a BALANCE SHEET, the other two being assets and liabilities.
Equity Account- ACCOUNT in the EQUITY section of the BALANCE SHEET. Includes CAPITAL STOCK, ADDITIONAL PAID IN CAPITAL and RETAINED EARNINGS.
Equity Method of Accounting- Investors cost basis is adjusted up or down (in proportion to the % of stock ownership) as the investee's retained earnings fluctuation; used for long-term investments in equity securities of affiliate where holder can exert significant influence; 20% ownership or greater is arbitrarily presumed to have significant influence over the investee.
Equity Securities- CAPITAL STOCK and other SECURITIES that represent ownership shares, or the legal rights to purchase or acquire CAPITAL STOCK.
Error- Act that departs from what should be done; imprudent deviation, unintentional mistake or omission.
Escrow- Money or property put into the custody of a third party for delivery to a GRANTEE, only after fulfillment of specified conditions.
ESOP- See EMPLOYEE STOCK OWNERSHIP PLAN.
Estate Tax- Tax on the value of a DECENDENT'S taxable estate, typically defined as the decedent's ASSETS less LIABILITIES and certain expenses which may include funeral and administrative expenses.
Estimated Tax- Amount of tax LIABILITY a taxpayer may expect to pay for the current tax period. Usually paid through quarterly installments.
Evidential Matter- Underlying ACCOUNTING data and other corroborating information that support the FINANCIAL STATEMENTS.
Exchanges- Transfer of money, property or services in exchange for any combination of these items.
Excise Tax- Tax or duty on the manufacture, sale, or consumption of commodities.
Excluded Income- See EXCLUSIONS.
Exclusions- Income item which is excluded from a taxpayer's gross income by the INTERNAL REVENUE CODE or an administrative action. Common exclusions include gifts, inheritances, and death proceeds paid under a life insurance contract. Also known as excluded income.
Executor- Person appointed by a will to manage a DECENDENT'S estate.
Exempt Organization- Organization which is generally exempt from paying federal income tax. Exempt organizations include religious organizations, charitable organizations, social clubs, and others.
Exemption- Amount of a taxpayer's income that is not subject to tax. All individuals, TRUSTS, and estates qualify for an exemption unless they are claimed as a dependent on another individual's tax return. Exemptions also are granted to taxpayers for their dependents.
Expatriation Tax- Individuals that loose or terminate their residency within the 10 year period immediately preceding the close of a tax year, if the termination or loss is for the sole purpose of avoiding tax.
Expectation Gap- The difference in perception between the public and the CPA as a result of accounting and audit service.
Expenditure- Payment, either in cash, by assuming a LIABILITY, or by surrendering ASSET.
Experienced AuditorAn AUDITOR that has a reasonable understanding of audit activities and has studied the company's industry as well as the accounting and auditing issues relevant to the industry.
Exploration Expenditures- Unlimited deductions are allowed for a taxpayer's expenses incurred while searching for any ore or mineral deposit (except oil or gas).
Exposure Draft- Document issued by the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA), FINANCIAL ACCOUNTING STANDARDS BOARD (FASB), GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) or other standards setting authorities to invite public comment before a final pronouncement is issued.
Extension- Time granted by a taxing authority, such as the INTERNAL REVENUE SERVICE (IRS), a state or city, which allows the taxpayer to file tax returns later than the original due date.
External Reporting- Reporting to stockholders and the public, as opposed to internal reporting for management's benefit.
Extinguishment of Debt- To get rid of the liability by payment; to bring to an end.
Extraordinary Items- Events and transactions distinguished by their unusual nature and by the infrequency of their occurrence. Extraordinary items are reported separately, less applicable income taxes, in the entity's statement of income or operations.
Face Value- Amount due at maturity from a BOND or note.
Factoring- Selling a RECEIVABLE at a discounted value to a third party for cash.
FASB- See FINANCIAL ACCOUNTING STANDARDS BOARD (FASB).
Fair Market Value- Price at which property would change hands between a buyer and a seller without any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts.
