A small amount of CASH that a company keeps on hand to pay for minor expenses in an office. Process for arriving at a comprehensive plan to solve an individual’s personal, business, and financial problems and concerns. The recognition that NET INCOME for any PERIOD less than the life of the business, although tentative, is still a useful estimate of net income for that period.

EXPENDITURE directed to a particular ASSET to improve its performance or useful life. A technique for analyzing FINANCIAL STATEMENTS that involves the computation of changes in both dollar amounts and percentages from the previous year to the current year. BOND with a long-term, high-premium, COMMON STOCK conversion feature and also offering a fairly competitive interest rate.

An individual entitled to special tax rates that fall midway between single rates and married filing joint rates, if they fit the qualifying profile. Collection of all ASSET, LIABILITY, owners EQUITY, REVENUE, and expense accounts. Excess of REVENUES received over costs relating to a specific transaction. Conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. The highest level of such principles are set by the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB).

• MUTUAL FUND with a fixed number of shares outstanding that may be bought or sold.
• All individuals, TRUSTS, and estates qualify for an exemption unless they are claimed as a dependent on another individual’s tax return.
• Each taxpayer is allocated an initial base amount based on his or her filing status determining the credit.
• Arrangement in which one party borrows or takes possession in the present by promising to pay in the future.
• Also, other amounts paid by stockholders and charged to EQUITY ACCOUNTS other than CAPITAL STOCK.

Magnitude of an omission or misstatements of ACCOUNTING information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would change or be influenced. Stocks and other negotiable instruments which can be easily bought and sold on either listed exchanges or over-the-counter markets. DEBTS or OBLIGATIONS owed by one entity (DEBTOR) to another entity (CREDITOR) payable in money, goods, or services. 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.

Amount, net or CONTRA ACCOUNT balances, that an ASSET or LIABILITY shows on the BALANCE SHEET of a company. Sophisticated model of the relationship between expected risk and expected return. Funds used by a not-for-profit organization to account for all resources used for the development of a land improvement or building addition or renovation. Sophisticated model of the relationship between expected risk and expected return. Financial plan that serves as an estimate of future cost, REVENUES or both.

Discounted Cash Flow

Whether you are starting your first company or you are a dedicated entrepreneur diving into a new venture, Bizfluent is here to equip you with the tactics, tools and information to establish and run your ventures.

Instead, the basis in the newly acquired stock or securities is the same basis as of the stock or securities sold, adjusted by the difference in price of the stock or securities. Investor-owned TRUST which invests in real estate and, instead of paying income tax on its income, reports to each of its owners his or her pro rata share of its income for inclusion on their income tax returns. This unique trust arrangement is specifically provided for in the INTERNAL REVENUE CODE. The costs of organizing a trade or business or for profit activity before it begins active business.

A business that is treated as distinct from its creditors, customers, and owners. U.S. government BOND issued in face value denominations ranging from $50 to $10,000. Concept in statutes and regulations whereby a person who meets listed requirements will be preserved from adverse legal action. Frequently, safe harbors are used where a legal requirement is somewhat ambiguous and carries a risk of punishment for an unintended violation.

• A shipping term that means that the seller bears transportation costs to the place of delivery.
• (2) Any records developed by a CERTIFIED PUBLIC ACCOUNTANT (CPA) during an audit.
• Goods bought for personal or household use, as distinguished from capital goods or producer’s goods, which are used to produce other goods.
• A company can falsify its financial statements by overstating its revenue, not recording expenses, and misstating assets and liabilities.
• A FINANCIAL STATEMENT for external reporting that presents only the major categories of information.

Now suppose the CEO of a publicly-traded company knowingly makes false statements about the firm’s prospects. The Securities and Exchange Commission (SEC) may well charge that CEO with fraud. However, it is not accounting fraud because no financial records were falsified. When an accountant finds an understated or overstated balance, he needs to conduct research to discover the error.

Available money on hand to pay bills when they are due and to take care of unexpected needs for CASH. The use of borrowed funds to increase the profit from an investment. Owner of property, the temporary use of which is transferred to another (LESSEE) under the terms of a LEASE. Individual or firm that extends money to a borrower with the expectation of being repaid, usually with INTEREST. Doctrine that interference of government in business and economic affairs should be minimal.

Spot Market

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. Raising the money by issuing shares of COMMON STOCK or PREFERRED STOCK. The process by which the payee transfers ownership of a CHECK to a bank or another party by writing his or her name on the back of it. Total income taxes expressed as a percentage of NET INCOME before taxes. Rate of change in the gross national product, as expressed in an annual percentage. Process of divulging accounting information so that the content of FINANCIAL STATEMENTS is understood.

An investment strategy aimed at long-term capital appreciation with low risk; moderate; cautious; opposite of aggressive behavior; show possible losses but wait for actual profits. Change in EQUITY of a business enterprise during a period from transactions and other events and circumstances from sources not shown in the income statement. The period includes all changes in equity except those resulting from INVESTMENTS by owners and distributions to owners. Ownership shares of a CORPORATION authorized by its ARTICLES OF INCORPORATION.

Coverdell Education Savings Account (Education IRA)

An entity that holds a fixed pool of mortgages and issues multiple classes of interests in itself to investors. A qualified REMIC is generally taxed like a partnership, unless it takes contributions after its start up day or engages in a prohibited transaction. The amount of PROFIT or INTEREST earned on an INVESTMENT, usually expressed as a percentage, such as an interest; the COST OF CAPITAL; the cost of money. Written authorization to a vendor to deliver specified goods or services at a stipulated price. Document authorizing someone other than the shareholder to exercise the right to vote the stock owned by the shareholder. Used to measure the percentage of each sales dollar that results in NET INCOME.

Gross Sales

Transfer of money, property or services in exchange for any combination of these items. Activities that involve management judgments or assumptions in formulating account balances in the absence of a precise means of measurement. what is operating cash flow 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.

Using the previous inventory example, an accountant determines the balance is $17,000; the balance should be $15,000, however, resulting in an overstated amount. Another account will also have an error, due to the requirements for double-entry accounting. A wash sale occurs if stock or securities are sold at a LOSS and the seller acquires substantially identical stock or SECURITIES 30 days before or after the sale. Stock or securities for this purpose includes contracts or operations to acquire or sell stock or securities. It does not matter if the total 60 day period begins in one tax year and ends in another.

A person who owns a BOND certificate issued by a government or CORPORATION. Individuals responsible for overseeing the affairs of an entity, including the election of its officers. The board of a CORPORATION that issues stock is elected by stockholders.

Process of identifying and monitoring business risks in a manner that offers a RISK / RETURN relationship that is acceptable to an entity’s operating philosophy. Right granted by the Federal Consumer Credit Protection Act of 1968 to void a CONTRACT within three business days with full refund of any down payment and without penalty. Accounting service that provides some assurance as to the reliability of financial information. In a review, a CERTIFIED PUBLIC ACCOUNTANT (CPA) does not conduct an examination under GENERALLY ACCEPTED AUDITING STANDARDS (GAAS).