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Superglossary - Accounting Category: Economy and Finance > Accounting Date & country: 16/12/2013, USA Words: 614

Direct Write-Off Method
The recording of actual losses from uncollectible accounts as expenses during the period in which ac

Disclaimer Of Opinion
A disclaimer indicating the auditor was unable to satisfy himself or herself that the overall financ

Discount
The amount charged by a financial institution when a note receivable is discounted

Discount Period
The time between the date a note is sold to a financial institution and its maturity date.

Discount Rate
The interest rate charged by a financial institution for buying a note receivable.

Discounting A Note Receivable
The process of the payee's selling notes to financial institution for less than the maturity value.

Disposable Income
Income remaining after income and payroll taxes are deducted from gross pay

Diversification
The process of spreading assets among different investments to reduce the risk of a decline in value

Diversified Companies
Companies operating in more than one line of business.

Dividend
A payment to shareholders that a company

Dividend Payment Date
The date on which a corporation pays dividends to its shareholders.

Dividend Payout Ratio
A measure of the percentage of earnings paid out in dividends

Dividends
These are payments to the shareholders of a limited company.

Dividends Account
The account used to reflect periodic distributions of earnings to the owners (stockholders) of a cor

Dividends In Arrears
Missed dividends for past years that preferred stockholders have a right to receive under the cumula

Dollar Cost Averaging
Investing regular sums of money (e.g., $50) at regular time intervals (e.g., quarterly) regardless o

Double-Entry Accounting
A system of recording transactions in a way that maintains the equality of the accounting equation.

Double-Entry Book-Keeping
A system which accounts for every aspect of a transaction - where it came from and where it went to.

Drawings
Distribution to the owner(s) of a proprietorship or partnership

Drawings
The money taken out of a business by its owner(s) for personal use. This is entirely different to wa

Drawings Account
The account used to reflect periodic withdrawals of earnings by the owner (proprietor) or owners (pa

Earned Income
Payment received for work, such as wages, salaries, commissions, and tips.

Earnings Per Share (EPS)
The amount of net income (earnings) related to each share of stock

Effective Tax Rate
A tax rate that reflects the percentage of the actual tax liability to the accounting income generat

Effective-Interest Amortization
A method of systematically writing off a bond premium or discount that takes into consideration the

Electronic Data Processing (EDP)
A term referring to the use of computers in recording, classifying, manipulating, and summarizing da

Employee Benefit
Something of value that an employee receives in addition to a wage or salary. Examples include healt

Employer-Sponsored Savings Plan
A government-approved program through which an employer can assist workers in building their persona

Encumbrance
A liability (eg. a mortgage is an encumbrance on a property). Also, any money set aside (ie. reserve

Endorsement
Signature on the back of the check, entitling the payee to either receive or transfer payment.

Entity
An organizational unit (a person, partnership, or corporation) for which accounting records are kept

Entrepreneur
A person who starts a business.

Entry
Part of a transaction recorded in a journal or posted to a ledger.

Equal Credit Opportunity Act (1974)
Federal law that ensures that consumers are given an equal chance to receive credit. Prohibits discr

Equity
The value of the business to the owner of the business (which is the difference between the business

Equity Financing
Acquiring funds in the form of investments by owners (proprietor, partner, or stockholder).

Equity Securities
Shares of ownership in a corporation that can change significantly in value and that provide for a r

Error Of Commission
A double-entry term which means that one or both sides of a double-entry has been posted to the wron

Error Of Ommission
A double-entry term which means that a transaction has been ommitted from the books entirely.

Error Of Original Entry
A double-entry term which means that a transaction has been entered with the wrong amount.

Error Of Principle
A double-entry term which means that one or both sides of a double-entry has been posted to the wron

Exchange Gain Or Loss
The gain or loss incurred when the exchange rates are different on the purchase and payment dates or

Exchange Rate
The value of one currency in terms of another.

Exclusions
Gross receipts that are not subject to tax and are not included in gross income, such as interest on

Expenses
Goods or services purchased directly for the running of the business. This does not include goods bo

External Auditors
Independent CPAs who are retained by organizations to perform audits of financial statements.

External Audits
Audits conducted by CPAs who are independent of the client company.

Extraordinary Items
Nonoperating gains and losses that are unusual in nature, infrequent in occurrence, and material in

Factor
To sell accounts receivable at a discount before they are due.

Fair Credit Billing Act (1975)
Federal law that covers credit card billing problems. It applies to all open-end credit accounts (e.

Fair Market Value
The current value of an asset, e.g., the amount at which an asset could be sold or purchased in an a

FIFO (First-In First-Out)
An inventory cost flow whereby the first goods purchased are assumed to be the first goods sold so t

Financial Accounting
The area of accounting concerned with reporting financial information to interested external parties

Financial Statements
Reports such as the balance sheet, income statement, and statement of cash flows, which summarize th

Financing Activities
Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing)

Fiscal Year
An entity's reporting year, covering a 12 month accounting period.

Fiscal Year
The term used for a business's accounting year. The period is usually twelve months which can begin

Fixed Assets
These consist of anything which a business owns or buys for use within the business and which still

Fixtures and Fittings
This is a class of fixed asset which includes office furniture, filing cabinets, display cases, ware

Flash Earnings
A news release issued by a company that shows its latest quarterly results.

Floor
The minimum market amount at which inventory can be carried on the books

Flow Of Funds
This is a report which shows how a balance sheet has changed from one period to the next.

FOB
An abbreviation of Free On Board. It generally forms part of an export contract where the seller pay

FOB (Free-On-Board) Destination
A business term meaning that the seller of merchandise bears the shipping costs and maintains owners

FOB (Free-On-Board) Shipping Point
A business term meaning that the buyer of merchandise bears the shipping costs and acquires ownershi

Franchise
An entity that has been licensed to sell the product of a manufacturer or to offer a particular serv

Freight Collect
The buyer pays the shipping costs.

Freight-In
An account used with the periodic inventory method for recording the costs of transporting into a fi

Functional Currency
The currency in which a subsidiary conducts most of its business

Garnishment
A court order requesting that an employer deduct a percentage of the employee

Gearing (Leverage)
The comparison of a company's long term fixed interest loans compared to its assets. In general two

General Ledger
See Nominal Ledger .

Going Concern
The idea that an accounting entity will have a continuing existence for the foreseeable future.

Goodwill
An intangible asset that exists when a business is valued at more than the fair market value of its

Government Transfer Payment
Payments by governments, such as social security, veterans

Grace Period
A time period during which a borrower can pay the full balance of credit due and not incur any finan

Gross Income
The taxable portion of a taxpayer's gross receipts.

Gross Loss
The balance of the trading account assuming it has a debit balance.

Gross Margin
The difference between the selling price of a product or service and the cost of that product or ser

Gross Margin Method
A procedure for estimating the amount of ending inventory

Gross Profit
The balance of the trading account assuming it has a credit balance.

Gross Sales
Total recorded sales before deducting any sales discounts or sales returns and allowances.

Gross Tax Liability
The amount of tax computed by multiplying the tax base (taxable income) by the appropriate tax rates

Growth And Acquisition (G and A)
Describes a way a company can grow. Growth means expanding through its normal operations, Acquisitio

Held-To-Maturity Securities
Debt securities purchased by an investor with the intent of holding the securities until they mature

Historical Cost
The dollar amount originally exchanged in an arm's-length transaction

Historical Cost
Assets, stock, raw materials etc. can be valued at what they originally cost (which is what the term

Historical Exchange Rate
The exchange rate that existed on the date of a transaction.

Identity Theft
Crime committed when someone gains access to and uses another person's credit card numbers, social s

Impersonal Accounts
These are accounts not held in the name of persons (ie. they do not relate directly to a business's

Imprest Petty Cash Fund
A petty cash fund in which all expenditures are documented by vouchers or vendors' receipts or invoi

Imprest System
A method of topping up petty cash. A fixed sum of petty cash is placed in the petty cash box. When t

Income
Money received by a business from its commercial activities. See Revenue, Compensation.

Income Taxes Payable
The amount expected to be paid to the federal and state governments based on the income before taxes

Independent Checks
Procedures for continual internal verification of other controls. indirect method

Inflation
An increase in the general price level of goods and services

Inland Revenue
The government department usually responsible for collecting your tax.

Insolvent
A company is insolvent if it has insufficient funds (all of its assets) to pay its debts (all of its

Insurance
Protection against the loss of life, health, home, car, or other valuables.

Intangible Assets
Assets of a non-physical or financial nature. An asset such as a loan or an endowment policy are goo