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NYSSPCA - Accounting title
Category: Economy and Finance > Accountaning Terminology
Date & country: 23/08/2008, USA
Words: 510


Favorable Variance
- Excess of actual REVENUE over projected revenue, or actual costs over projected costs.

Fiduciary
- Person who is responsible for the administration of property owned by others. Corporate management is a FIDUCIARY with respect to corporate ASSETS which are beneficially owned by the stockholders and CREDITORS. Similarly, a TRUSTEE is the fiduciary of a TRUST and partners owe fiduciary responsibility to each other and to their creditors.

FIFO
- See FIRST IN, FIRST OUT.

Filing of Returns
- Taxpayers meeting statutory requirements MUST file various returns on the prescribed forms. And they must be filed timely or the y may not be considered as filed.

Financial Accounting Standards
- Official promulgations, known as STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, by the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) which are part of GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) in the United States.

Financial Institution
- Organization engaged in any of the many aspects of finance including commercial banks, thrift institutions, investment banks, securities brokers and dealers, credit unions, investment companies, insurance companies, and REAL ESTATE INVESTMENT TRUSTS.

Financial Statements
- Presentation of financial data including BALANCE SHEETS, INCOME STATEMENTS and STATEMENTS OF CASH FLOW, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for a period then ended.

First in, First out (FIFO)
- ACCOUNTING method of valuing INVENTORY under which the costs of the first goods acquired are the first costs charged to expense. Commonly known as FIFO.

Fiscal Year
- Period of 12 consecutive months chosen by an entity as its ACCOUNTING period which may or may not be a calendar year. Fixed Asset - Any tangible ASSET with a life of more than one year used in an entity's operations.

Floor
- Term used when discussing INVENTORIES. Inventory cannot be valued lower than the 'floor' which is the net realizable value of the inventory less an allowance for a normal profit margin.

Forecast
- Prospective FINANCIAL STATEMENTS that are an entity's expected financial position, results of operations, and cash flows.

Foreclosure
- Seizure of COLLATERAL by a CREDITOR when DEFAULT under a loan agreement occurs.

Foreign Corporation
- A corporation which is not organized under the laws of ones territories or states. Taxing of foreign corporations depends on whether the corporation has Nexus or effectively connected income in that state.

Foreign Currency Translation
- Restating foreign currency in equivalent dollars; unrealized gains or losses are postponed and carried in Stockholder's Equity until the foreign operation is substantially liquidated.

Foreign Tax Credit
- A U.S. taxpayer that pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determinable us dollar amount. This is usually done on the annual individual tax return and there is s specific form provided for this.

Form 8-K
- SEC filing which is a filing that must be made on the occurrence of an event that is deemed to be of significant importance to SECURITY holders.

Form 10-K
- SEC filing which is the ANNUAL REPORT due 90 days after the registrant's BALANCE SHEET date.

Form 10-Q
- SEC filing which is the quarterly report due 45 days after each of the first three quarter.ends of each fiscal year.

Franchise
- Legal arrangement whereby the owner of a trade name, franchisor, contracts with a party that wants to use the name on a non-exclusive basis to sell goods or services, franchisee. Frequently, the franchise agreement grants strict supervisory powers to the franchisor over the franchisee which, nevertheless, is an independent business.

Fraud
- Willful misrepresentation by one person of a fact inflicting damage on another person.

Fund Accounting
- Method of ACCOUNTING and presentation whereby ASSETS and LIABILITIES are grouped according to the purpose for which they are to be used. Generally used by government entities and not-for-profits. (See RESTRICTED FUND and UNRESTRICTED FUND.)

Future Contract
- Transferable agreement to deliver or receive during a specific future month a standardized amount of a commodity.

GAAP
- See GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

GAAS
- See GENERALLY ACCEPTED AUDITING STANDARDS.

Gain
- Excess of REVENUES received over costs relating to a specific transaction.

GAO
- See GOVERNMENT ACCOUNTABILITY OFFICE.

GASB
- See GOVERNMENTAL ACCOUNTING STANDARDS BOARD.

General Ledger
- Collection of all ASSET, LIABILITY, owners EQUITY, REVENUE, and expense accounts.

General Partnership
- PARTNERSHIP with no limited partners. (See LIMITED LIABILITY PARTNERSHIP and LIMITED PARTNERSHIP.)

Gift
- A valid transfer of property from one taxpayer to another without consideration or compensation. A gift may be subject to the unified estate and gift transfer tax.

Going Concern
- Assumption that a business can remain in operation long enough for all of its current plans to be carried out.

Going Public
- Activities that relate to offering a private company's shares to the general investing public including registering with the SEC.

Goodwill
- Premium paid in the acquisition of an entity over the fair value of its identifiable tangible and intangible ASSETS less LIABILITIES assumed.

Governing Documents
- Official legal documents that dictate how an entity is operated. The governing documents of a CORPORATION include ARTICLES OF INCORPORATION and BYLAWS; a PARTNERSHIP includes the partnership agreement; a TRUST includes the trust agreement or trust indenture; and an LLC includes the ARTICLES OF ORGANIZATION and OPERATING AGREEMENT.

Grantee
- Person to whom property is transferred.

Grantor
- (1) Person who transfers property. (2) Person who creates a trust.

Greenmail
- Any amount a corporation pays to a shareholder to directly or indirectly buy back its stock.

Guaranty
- Legal arrangement involving a promise by one person to perform the obligations of a second person to a third person, in the event the second person fails to perform.

Head of Household
- An individual entitled to special tax rates that fall midway between single rates and married filing joint rates, if they fit the qualifying profile.

Hedge
- A financial term for a specific type of commodities planning and trading.

Historical cost
- Original cost of an asset to an entity.

Holding Period
- The time in which a taxpayer acquires property and the date on which it is sold.

Hope Scholarship Credit
- A maximum allowable credit of $1,500 per student for each of the first 2 years of post-secondary education. It is allowable after all additional requirements are met.

Improvement
- EXPENDITURE directed to a particular ASSET to improve its performance or useful life.

Imputed Interest
If no interest or an unrealistic amount of interest is charged in a salve involving certain kinds of deferred payments, then the transaction will be treated as if the realistic rate of interest had been used. The difference between the realistic interest and the interest actually used is referred to as imputed interest.

Income
- Inflow of REVENUE during a period of time. (See NET INCOME.)

Income Statement
- Summary of the effect of REVENUES and expenses over a period of time.

Income Tax Basis
- (1) For tax purposes, the concept of basis determines the proper amount of gain to report when an ASSET is sold. Basis is generally the cost paid for an asset plus the amounts paid to improve the asset less deductions taken against the asset, such as DEPRECIATION and AMORTIZATION. (2) For accounting purposes, a consistent basis of accounting that...

Independence Standard Board (ISB)
- This is the private sector standard-setting body governing the independence of AUDITORs from their public company clients. It came about from discussions between the AICPA, other accounting representatives and the SEC.

Individual Retirement Account (IRA)
An IRA is a personal savings plan that allows an individual to make cash contributions per year dependent on the individual's adjusted gross income and participation in an employer's retirement plan. Under a traditional IRA these earnings are not taxable until the time of withdrawal from the plan.

Inheritance
As distinguished from a BEQUEST or devise, an inheritance is property acquired through laws of descent and distribution from a person who dies without leaving a will. The value of property inherited id excluded from a taxpayers gross income, but if the property inherited produces income it is included in gross income. A taxpayer's basis in inherite...

Initial Public Offering (IPO)
- When a private company goes public for the first time.

Insolvent
- When an entity's LIABILITIES exceed its ASSETS.

Installment
- Partial payment.

Installment Method
- Tax ACCOUNTING method of reporting GAIN on the sale of an ASSET exchanged for a RECEIVABLE. In general, the gain is reported as the note is paid off.

Intangible Asset
- Asset having no physical existence such as trademarks and patents. (See TANGIBLE ASSET.)

Interest
- Payment for the use or forbearance of money.

Interim Financial Statements
- FINANCIAL STATEMENTS that report the operations of an entity for less than one year.

Internal Audit
- AUDIT performed within an entity by its staff rather than an independent certified public accountant.

Internal Control
- Process designed to provide reasonable assurance regarding achievement of various management objectives such as the reliability of financial reports.

Internal Rate of Return
- Method that determines the discount rate at which the present value of the future CASH FLOWS will exactly equal investment outlay.

Internal Revenue Code
- Collection of tax rules of the federal government. Also referred to as Title 26 of the United States Code.

Internal Revenue Service (IRS)
- Federal agency that administers the INTERNAL REVENUE CODE. The IRS is part of the United States Treasury Department.

Internet/World Wide Net
- The Internet is the unregulate wild west show of computer networks connected together throughout the world. The World Wide Web or WWW, is part of the Internet.

Inventory
- Tangible property held for sale, or materials used in a production process to make a product.

Investment
- EXPENDITURE used to purchase goods or services that could produce a return to the investor.

Investment Tax Credit
This is a component of the general business credit and consists of the following:

Involuntary Conversions
This is a conversion of property where it is in whole or part destroyed, stolen, seized, requisitioned or condemned (or where there is a threat or imminence of requisition or condemnation).

IPO
- See INITIAL PUBLIC OFFERING.

IRS
- See INTERNAL REVENUE SERVICE.

Issuer
This term means an issuer, the securities of which are registered under Section 12 of the Securities Exchange Act of 1934, or that is required to file reports under Section 15(d) of that Act, or that files or has filed a registration statement with the SEC that has not yet become effective under the Securities Act of 1933 and that it has not withdr...

Jeopardy
If the IRS believes that collection of tax appears to be in jeopardy (danger of being uncollected), it may immediately assess and collect such tax. The intermediate steps are bypassed.

Joint Return
A return filed by married taxpayers or surviving spouses.

Joint Venture
- When two or more persons or organizations gather CAPITAL to provide a product or service. Often carried out as a PARTNERSHIP.

Journal
- Any book containing original entries of daily financial transactions.

Junk Bonds
- DEBT SECURITIES issued by companies with higher than normal credit risk. Considered 'non-investment grade' bonds, these SECURITIES ordinarily yield a higher rate of interest to compensate for the additional risk.

Keogh Plan
Also known as an HR 10, this is a qualified retirement plan for self employed who do not incorporate their business. If qualifications are met the taxpayer may receive a deduction for contributions made.

Key Employee
For purposes of rules that apply to top heavy plans, a key employee:

Key Person Insurance
- Business-owned life insurance contract typically on the lives of principal officers that normally provides for guaranteed death benefits to the company and the accumulation of a cash surrender value.

Kiting
- Writing checks against a bank account with insufficient funds to cover them, hoping that the bank will receive deposits before the checks arrive for clearance.

Last in, First out (LIFO)
- ACCOUNTING method of valuing inventory under which the costs of the last goods acquired are the first costs charged to expense. Commonly known as LIFO.

Lease
- Conveyance of land, buildings, equipment or other ASSETS from one person (LESSOR) to another (LESSEE) for a specific period of time for monetary or other consideration, usually in the form of rent.

Leasehold
- Property INTEREST a LESSEE owns in the leased property.

Ledger
- Any book of accounts containing the summaries of debit and credit entries.

Lessee
- Person or entity that has the right to use property under the terms of a LEASE.

Lessor
- Owner of property, the temporary use of which is transferred to another (LESSEE) under the terms of a LEASE.

Letter of Credit
- Conditional bank commitment issued on behalf of a customer to pay a third party in accordance with certain terms and conditions. The two primary types are commercial letters of credit and standby letters of credit.

Leveraged Buy Out
- Acquisition of a controlling INTEREST in a company in a transaction financed by the issuance of DEBT instruments by the acquired entity.

Leveraged Lease
- Transaction under which the LESSOR borrows funds to acquire property which is leased to a third party. The property and lease rentals are security for the LESSOR'S indebtedness.

Liability
- DEBTS or obligations owed by one entity (DEBTOR) to another entity (CREDITOR) payable in money, goods, or services.

Lifetime Learning Credit
This allows a credit for 20 percent of qualified tuition and fees paid by the taxpayer with respect to one or more students for any year that the HOPE SHCOLARSHIP CREDIT is not claimed.

LIFO
- See LAST IN, FIRST OUT.

Limited Liability Company (LLC)
- Form of doing business combining limited liability for all owners (called members) with taxation as a PARTNERSHIP. An LLC is formed by filing ARTICLES OF ORGANIZATION with an appropriate state official. Rules governing LLCs vary significantly from state to state.

Limited Liability Partnership (LLP)
- GENERAL PARTNERSHIP which, via registration with an appropriate state authority, is able to enshroud all its partners in limited liability. Rules governing LLPs vary significantly from state to state.

Limited Partnership
- PARTNERSHIP in which one or more partners, but not all, have limited liability to creditors of the partnership.

Liquid Assets - Cash,
cash equivalents, and marketable SECURITIES.

Liquidation
- Winding up an activity by distributing its ASSETS to the appropriate parties and settling its DEBTS.

Listed Property
Limits are imposed on the DEPRECIATION deduction a taxpayer may claim on certain listed property as follows:

LLC
- See LIMITED LIABILITY COMPANY.

LLP
- See LIMITED LIABILITY PARTNERSHIP.