Business Term Definitions

A-C

D-L

M-Z

Acceleration Clause: A loan contract clause stating that if you are in default, your creditor can demand payment of the entire balance of your loan at once, before its scheduled maturity.

"S" corporation: A specific IRS designation which allows a corporation to be taxed similarly to a partnership, yet retain limited liability for its shareholders.

10-K is the audited annual report that most reporting companies file with the Securities Exchange Commission (SEC). It provides a comprehensive overview of the registrant's business. The report must be filed within 90 days after the end of the company's fiscal year.

10-Q is a report filed quarterly to the Securities Exchange Commission (SEC) by most reporting companies. It includes unaudited financial statements and provides a continuing view of the company's financial position during the year. The report must be filed for each of the first three fiscal quarters of the company's fiscal year and is due within 45 days of the close of the quarter.

13TH PERIOD in the fiscal year is the period used for fiscal year-end adjusting entries (periods 1-12 being the months in the fiscal year).

2. Sustainable Growth Rate (showing the degree to which a company can grow using retained earnings to fund growth).

3% RULE see THREE PERCENT RULE.

401 (K) PLAN is a retirement plan in the United States that allows qualified employees to contribute money from their paychecks into a tax-sheltered account.

4-4-5 CALENDAR, in budgeting and accounting, is the breakdown of each month into weeks by counting the number of times Friday occurs within each month, e.g., Jan = 4 weeks, Feb = 4 weeks, Mar = 5 weeks, Apr = 4 weeks, May = 4 weeks, Jun = 5 weeks… etc. to total 52 weeks in a 12 month period. Every third month, Friday will occur 5 times. All other months, Friday will occur 4 times. In the months where Friday occurs 5 times, it is considered a 5 week month. Whereas, the 4 Friday months will be considered as 4 week months.

A&E can mean either Appropriation & Expense or Analysis & Evaluation.

A&P is an acronym for Administrative and Personnel.

ABA (Accredited Business Accountant or Accredited Business Advisor), in the US, is a national credential conferred by Accreditation Council for Accountancy and Taxation to professionals who specialize in supporting the financial needs of individuals and small to medium sized businesses. ABA is the only nationally recognized alternative to the CPA. Most accredited individuals do not perform audits. Generally, they are small business owners themselves. In addition to general accounting work, CPAs are also heavily schooled in performing audits; however, only a small fraction of America's businesses require an audit. In general, a CPA has majored in accounting, passed the CPA examination and is licensed to perform audits. An ABA has majored in accounting, passed the ABA comprehensive examination and in most states is not licensed to perform audits.

ABATEMENT - The reduction of a gift under will because of insufficiency of assets to satisfy all the gifts after the legal obligations of the estate (debts, taxes, charges, and claims) have been paid in full. The general rule is that all gifts of the same class shall abate proportionately, unless otherwise provided.

ABC FIRE EXTINGUISHER: Chemically based devices used to eliminate ordinary combustible, flammable liquid, and electrical fires.

absolute advantage  the ability to produce a specific product more efficiently than any other nation

ABSTRACT OF TITLE- A summary of all essential facts relating to the title to a parcel of real property.

ACCELERATED COST RECOVERY SYSTEM - A method for determining depreciation using statutory percentages of the cost basis of property over a given life as opposed to the declining balance method, straight-line depreciation or sum--of-the-digits method; a term frequently found in tax returns.

Accelerated depreciation. A depreciation method that allows larger deductions in the early years of an asset's "life" and smaller deductions at the end of the period. (See "Straight-line depreciation.")

Accelerated Depreciation. A method of calculating depreciation where deductions are higher in the early years of the asset's life. Contrasted with straight-line depreciation where deductions are equal for each year of the life of the asset.

ACCELERATED REMAINDER- The property which passes to the remainder-man through the failure of the income or preceding beneficiary.

ACCELERATION - The advancement of the interest where a trust is created for one beneficiary for life or for a term of years and for another in remainder, and the trust fails as to the interest for life or the term.

Acceleration Clause. A clause (often in mortgages or other loans) where some action will occur ahead of schedule as a result of some other action. For example, an acceleration clause in a loan may mean that the full amount is due immediately if the debtor misses two monthly payments in a row.

Acceptance of bill of exchange: Recognition of a legal obligation to pay the amount on a term bill of exchange at a specified future date (maturity date).

acceptance sampling is sampling to determine whether internal control compliance is greater than or less than the tolerable deviation rate.

accessory equipment  standardized equipment used in a firm’s production or office activities

ACCOUNT – A term commonly used within the advertising business to refer to the corporate entity employing an advertising agency. MJM's account roster includes a wide variety of businesses and service organizations.

Account a record of a business transaction. When you buy something on credit, the company you are dealing with sets up an "account". This means it sets up a record of what you buy and what you pay. You will do the same thing with any customers to whom you extend credit.

ACCOUNT COORDINATOR – The advertising agency employee responsible for much of the day-to-day business of servicing an account. Motto Advertising takes pride in the expertise and dedication of our account coordinators, who assist account executives and oversee traffic, production and media scheduling within the agency.

ACCOUNT EXECUTIVE (A/E) – The agency employee responsible for a client’s marketing and administrative efforts. At Motto Advertising, account executives deal directly with the client, vendors and the media. Our AE’s are all highly experienced and have more autonomy than at most other agencies.

account executive (or stock broker)  an individual—sometimes called a stock broker or registered representative—who buys and sells securities for clients

account payee only words often written on crossed cheques, which direct the bank to pay the cheque only to the bank account of the payee.

Account:  A record that holds the results of financial transactions.

accountability  the obligation of a worker to accomplish an assigned job or task

accountant a qualified person who is skilled at managing and analysing business financial records.

Accountant's Equation:  The equation that is the basis of the Balance Sheet: Assets = Liabilities + Owners' Equity. (Also, the response to "What does 1 + 1 equal?": "What do you want it to equal?")

Accountant's Opinion. If a independent certified public accountant is requested to audit a company's books, he will issue a opinion as to the condition of the financial statements. There are several degrees of opinion from clean to adverse. A clean opinion doesn't mean that every number is correct, only that the financials fairly represent the position of the company. An adverse opinion means the financials don't represent the position of the company. A disclaimer means the auditor can't (for any number of reasons) express an opinion on the statements.

ACCOUNTING - (1) The record of an account showing the transactions therein. (2) The submission of such a record to the court or to the beneficiaries of a trust or estate by the fiduciary.

Accounting - The recording, classifying, summarizing and interpreting in a significant manner and in terms of money, transactions and events of a financial character.

accounting and review services are official pronouncements covering compilation and review engagements. Compilation is presenting in the form of financial statements information that is the representation of management (owners) without expressing assurance. Review is inquiry and analytical procedures to provide the accountant a basis for expressing limited assurance that there are no material modifications that should be made to the statements for them to be in conformity with U.S. generally accepted accounting principles or, if applicable, another comprehensive basis of accounting.

Accounting Controls. Methods and procedures intended to safeguard assets, authorize transactions, and ensure the accuracy of financial records.

accounting data includes journals, ledgers and other records such as spreadsheets that support financial statements. It may be in computer readable form or on paper.

accounting equation  the basis for the accounting process: assets = liabilities + owners’ equity

Accounting Equation. Simply stated, assets are equal to liabilities plus owners' equity.

accounting estimate An approximation of a financial statement element. Accounting estimates are often included in historical financial statements because measurement of some amounts is uncertain pending outcome of future events and relevant data about events that have occurred cannot be accumulated on a timely, cost-effective basis.

Accounting Method. Any number of approaches for calculating the income of an entity. Usually applied to the general means of recognizing income and expenses, e.g., cash or accrual. But it can also apply to method of keeping inventories, etc.

ACCOUNTING PERIOD A period of time, (month, quarter, year), for which a financial statement is produced.

Accounting period The time period between successive closings of the books of a business. An accounting period usually is a month, three months (a quarter), or a year (a fiscal year or a calendar year) corresponding to the tax year used by the business.

accounting principles are alternative ways of reporting and disclosing information in financial statements and related footnotes.

Accounting Procedure. Similar to accounting method, but applied to more routine issues. For example, the method of computing depreciation, handling small capital expenditures.

accounting program  a software package that enables users to record and report financial information

Accounting Rate of Return. A method of computing the profitability where the total cash inflow over the life of the project is reduced by expenses. This amount is divided by the estimated life of the project to arrive at an annual return. That's divided by the investment's cost. The result is an average rate of return.

accounting  the process of systematically collecting, analyzing, and reporting financial information

Accounting:  A service that oversees, measures, and evaluates financial information for decision making purposes.

Accounts Payable - Short-term debts incurred as the result of day-to-day operations.

Accounts Payable - Trade accounts of businesses representing obligations to pay for goods and services received.

accounts payable is money you owe to suppliers and other business creditors as a result of purchases of stock and other expenses such as overheads and taxes.

Accounts Payable The amount a company owes for goods already received. An account in the general ledger representing the amount owed by the business to its creditors on open purchases of goods and/or services.

ACCOUNTS PAYABLE This represents what a business owes to its suppliers and other creditors at a given point in time.

accounts payable  short-term obligations that arise as a result of making credit purchases

Accounts Payable. A liability arising when a vendor provides goods or services that are not immediately paid for and where the liability is not formalized in writing but backed by the reputation and credit worthiness of the debtor. When a business using the accrual basis of accounting purchases goods or services the company reports an expense and an account payable. When payment is made the account payable is reduced.

Accounts Payable: The amount of money that you owe for goods or services that you bought.

Accounts Payable:  Amounts due from your business to your creditors. Generally these are short term liabilities (30-120 days), and are shown under the Current Liabilities section in the Balance Sheet. (What you owe to other folks.)

Accounts Receivable - monies due your business as the result of day-to-day operations.

Accounts Receivable - Trade accounts of businesses representing moneys due for goods sold or services rendered evidenced by notes, statements, invoices or other written evidence of a present obligation.

accounts receivable a record of what is owed to you. All of the credit "accounts" - the record of what each customer owes you - taken together are your "accounts receivable".

accounts receivable Debts due from customers from sales of products and services. Normally a current asset.

Accounts Receivable Financing. Financing where the company's accounts receivable are used as collateral. This type of financing is usually short-term in nature.

Accounts Receivable The amount a company is owed for goods it sold on credit. An account in the general ledger representing the amount due the business from its customers for goods and/or services sold on credit.

ACCOUNTS RECEIVABLE This represents the amount due to a business by its customers at a given point in time.

accounts receivable turnover  a financial ratio calculated by dividing net sales by accounts receivable

Accounts Receivable Turnover. Ratio obtained by dividing total credit sales by accounts receivable. The result indicates how many times the receivables have been collected during the period covered by the sales. It's a measure of how well the company is collecting it's accounts receivable.

Accounts Receivable Turnover:  A measure used to determine a company's average collection period for receivables. Usually computed by dividing net sales (or net credit sales) by average accounts receivable.

Accounts Receivable. Claims to cash on account that are expected to be paid within one year.

Accounts Receivable. For accrual basis businesses, transactions not paid in cash create an account receivable, an unsecured promise to pay in the future. The accounting entry is a debit to accounts receivable and a credit to sales. On payment, the account receivable is credited and cash is debited.

Accounts Receivable: The amount of money that people or companies owe you.

Accounts Receivable:  Amounts due to your business from your customers. Generally these amounts are short term receivables (30-120 days), and are shown under Current Assets section in the Balance Sheet. (What other folks owe you.)

accounts receivables  amounts that are owed to a firm by its customers

ACCRETION - The increase or extension of the boundaries, or the acquisition of land by the gradual or imperceptible action of natural forces as by the washing up of sand or soil from the sea or a river, or by a gradual recession of the water from the usual watermark.

Accrual Accounting - A method of reporting income when earned and expenses when incurred, as opposed to reporting income when received and expenses when paid.

ACCRUAL ACCOUNTING A method of bookkeeping in which income and expenses are allocated to periods to which they apply, regardless of when actually received or paid. For example, when an invoice is rendered, its value is added to income immediately, even though it has not been paid. (Also see CASH ACCOUNTING)

Accrual Accounting. Under this method of accounting, income is recognized when earned, whether or not collected, and expenses are recognized when events have occurred that determine that a liability exists and the amount of the liability can be ascertained with reasonable accuracy. For example, at December 31 you ship a customer 100 widgets. You have to record the income in that year, even though you won't get paid until the following year. If you were buying the widgets, you could accrue the expense in the tax year you ordered them. There are some special rules for tax purposes and there can be a significant divergence between recognition of income and expenses for tax and financial accounting purposes.

Accrual Based Accounting - an accounting method that enters income and expenses into the books at the time of contract versus when payment is received or expenses incurred.

Accrual Basis Accounting:  The practice of bookkeeping when income is recorded when earned and expenses are recorded when they are incurred. (Opposite of Cash Basis Accounting, the way you run your personal checkbook; personal finances are almost always cash basis. Believe it or not, Accrual Basis accounting turns out to be a truer way of showing the profitability of your business.)

Accrual method - reporting income when it is earned, though one may receive payment in a later year. Expenses are deducted in the tax year they are incurred, whether or not they are paid in the same year.

Accrual method (or accrual basis). One of two main accounting methods for determining when a transaction has tax significance. The accrual method says that a transaction is taxed when an obligation to pay or a right to receive payment is created (for example, at the time products are delivered, services rendered, billings sent, etc.). This method is used by all but the smallest businesses. (See "Cash method (or cash basis).")

Accrual Method An accounting method under which income is subject to tax after all events have occurred which fix the right to receive such income and deductions are allowed when all the events have occurred to fix the obligation to pay the debt.

accrual method of accounting — Used for most corporate financial statements. Revenues are counted during the time they’re earned, and expenses are counted during the time they’re incurred. Cash doesn’t need to change hands to be recorded. This is a fuller way of looking at financial health. It’s as if you kept records not just of checks you’d written and deposits you made, but also of what you owed on your credit cards and what you were owed by others. You can feel pretty rich if your checking account is flush, but if you owe thousands on your credit card and don’t take that into account, you can spend yourself into trouble.

Accrual-basis accounting In accrual-based accounting, revenues are recorded at the time they are earned (payment may be received in another period); and expenses are recorded when incurred (often not in the period when they are paid).

Accrual-basis income statement An income statement compiled from accrual-basis accounting. Revenues are credited in the accounting period when earned; expenses are charged in the accounting period when incurred. Compared to other types of income statements, the accrual-basis income statement usually gives the most accurate measures of income or loss.

Accruals Amounts owed to or owed by a business that have not yet been recorded in the books of the business.

Accrue. To record an item in the accounting books when using the accrual method of accounting. For example, you accrue income when the customer signs a contract, even though you won't receive any cash at that time. When you accrue an item of income or expense can depend on a number of factors including the entity's procedures. IRS requirements here frequently diverge from accounting rules.

Accrued Expense. An expense that has been incurred, but not yet paid in cash. Similar to accounts payable, but usually associated with nontrade vendors. For example, an electric bill.

Accrued Interest - The interest that has accumulated since the last interest payment up to, but not including, the settlement date and that is added to the contract price of a bond transaction. There are two methods for calculating accrued interest: the 30-day-month (360-da

Accrued Revenue. Income that has been earned (by the sale of goods or performance of services) but where payment has not been received in cash. Similar to accounts receivable.

Accumulated depreciation The total of depreciation amounts taken since the time a depreciable asset was put in service. (Charges for depletion of natural resources and amortization of intangibles also are accumulated and reported on the balance sheet.)

Accumulated Depreciation. The total depreciation taken on an asset since it was acquired.

acid-test ratio  a financial ratio calculated by subtracting the value of inventory from the current asset amount and dividing the total by current liabilities

Acid-Test Ratio. Also called the quick ratio, it's equal to the sum of cash, short-term investments and net current receivables divided by current liabilities. It's a measure of whether or not the business could pay all its current liabilities if they came due immediately.

ACKNOWLEDGMENT - (1) A declaration or avowal of ones act or of a fact to give it legal validity, especially before a duly qualified public officer. (2) The formal certificate made by an officer before whom one has acknowledged a deed or other legal instrument.

Acquisition - The acquiring of supplies or services by the federal government with appropriated funds through purchase or lease.

Acquisitions in relation to the GST, acquisitions include the things you buy (goods, services and anything else) for your business. They also include many other transactions, such as obtaining advice or information, taking out a lease of business premises or hiring business equipment.

ACTION CARDS – A mail-order device in which a set of postcards with order forms and return addresses for a variety of products and companies is wrapped in plastic and sent to demographically and/or psychographically selected potential customers.

ACTIVATION: When all or a portion of the recovery plan has been put into motion.

Active Corps of Executives (ACE)  a group of active managers who counsel small-business owners on a volunteer basis

Active Participation. Involvement in a rental real estate activity making management decisions. Requires no specific number of hours.

ACTIVE TRUST - A trust regarding which the trustee has some active duty to perform; opposed to bare, naked, or passive trust.

Activity. For the passive activity rules, it's the integral economic unit for measuring a taxpayer's level of participation in a trade or business. One location can have more than one business activity. For example, you might have an S corporation that sells computers at retail and does typesetting working out of the same location. The two may be separate activities. On the other hand, two or more related businesses can also be combined into one activity.

Actual Expenses - refers to car and truck expenses. Method used to deduct costs of operating and maintaining a car or truck in your business, for example, depreciation, gas, repairs, etc. Expenses must be divided between business and personal use if used in both.

ACTUARY - A statistician who computes insurance and pension rates and premiums on the basis of experience tables.

Actuary a mathematician whose work is mainly concerned with insurance and finance.

ad hoc committee  a committee created for a specific short-term purpose

Ad valorem: According to value.

ADB: Asia Development Bank, an international lending institution head quartered in Manila, Philippines.

Additional Paid-In Capital. Equity contributions to a corporation in excess of the amount of capital stock.

Add-On Interest. Interest that isn't paid by the debtor, but added to the principal amount.

ADJUDICATION - The decision of a competent court with regard to matters in dispute; to be distinguished from arbitration.

Adjustable Rate Mortgage (ARM): A contractual loan may have provision for adjustable rates. In the case of a home mortgage loan, the interest rate changes over time with movements in an index.

Adjusted basis. The cost of property (or a substitute figure-see "Basis") with adjustments made to account for depreciation (in the case of business property), improvements (in the case of real estate), withdrawals or reinvestment (in the case of securities, funds, accounts, insurance or annuities), etc. Adjusted basis is part of the computation for determining gain or loss on a sale or exchange and for depreciation.

Adjusted Basis. Used for determining depreciation and gain or loss on the disposition of an asset. Your adjusted basis in an asset is your beginning basis (see Basis, below), decreased by depreciation, depletion or any Sec. 179 expense taken or increased by capital additions. For example, you purchase a machine for $10,000 (your basis) and take a Sec. 179 expense deduction of $1,000 and depreciation of $2,000 in the first year. At the end of the year your adjusted basis is $7,000. Note. Even professionals often say basis when they really mean adjusted basis.

Adjusted Gross Income. Also known as AGI, it's your individual income before personal exemptions or standard or itemized deductions. It's the total of wages, interest, dividends, capital gains (or up to $3,000 in losses), profit or loss from real estate or pass-through entities (e.g., S corporation), pension income and certain other items less contributions to an IRA or Keogh plan, one-half of any self- employment income, and health insurance for self-employed individuals, and certain other deductions.

Adjusted gross income. The amount of income considered actually "available" to be taxed. Adjusted gross income is gross income reduced principally by business expenses incurred to earn the income and other specified reductions (such as alimony).

Adjusted Trial Balance. A list of all the ledger accounts with their adjustments and the adjusted balances.

adjusting entries are accounting entries made at the end of an accounting period to allocate items between accounting periods.

Adjusting Entry. An entry made at the end of the period to assign expenses to the period for which they were incurred and revenue to the period in which it was earned. They are also used to correct entries that could not be accurately made before the end of the year.

Adjustment Period: The length of time between interest rate changes on an ARM.

ADMINISTRATION - The care and management of an estate by a trustee or a guardian; to be distinguished from the settlement of an estate by an executor or an administrator.

administrative law  the regulations created by government agencies that have been established by legislative bodies

administrative manager  a manager who is not associated with any specific functional area but who provides overall administrative guidance and leadership

Advance Against Documents (AAD): A loan made on the security of the actual documents covering a shipment.

Advance payment: Trading method in which the buyer pays for the goods before they are dispatched. This is used where the buyer is of unknown credit worthiness and is unable to obtain a letter of credit. This is also used as a matter of convenience for small orders.

Advances. Funds made available to another party. In the case of a loan, it's the disbursement of funds under a note. In tax parlance it often means something between a formalized loan and equity. For example, a shareholder puts money into a corporation with the intention of being paid back shortly.

adverse An audit opinion that the financial statements as a whole are not presented in conformity with U.S. GAAP.

ADVERSE POSSESSION - An occupation of land inconsistent with the right of the true owner.

ADVERTISEMENT – A paid public announcement appearing in the media.

ADVERTISING – Making known; calling public attention to a product, service, or company by means of paid announcements so as to affect perception or arouse consumer desire to make a purchase or take a particular action.

advertising agency  an independent firm that plans, produces, and places advertising for its clients

ADVERTISING MANAGER – A client representative responsible for overseeing marketing efforts related to product, including budgeting, creative activities and liaison with agency.

advertising media  the various forms of communication through which advertising reaches its audience

advertising  a paid, nonpersonal message communicated to a select audience through a mass medium

ADVERTORIAL – An advertisement that resembles a newspaper editorial or a television program but promotes a single advertiser’s product, service, or point of view.

Adviory Capacity:  Used to indicate that a shipper's agent or agent or reprentative is not empowered to make definitive changes or adjustments without approval of the group or individual represented.

advisory services are a consulting service in which the CPA develops the findings, conclusions, and recommendations presented for client consideration and decision making. This differs from attestation services where the CPA expresses a conclusion about reliability of a written assertion that is the responsibility of another.

Affidavit a declaration in writing on oath, made before a person legally qualified for the purpose.

Affiliates - Business concerns, organizations, or individuals that control each other or that are controlled by a third party. Control may include shared management or ownership; common use of facilities, equipment, and employees; or family interest.

affirmative action program  a plan designed to increase the number of minority employees at all levels within an organization

AFTER-BORN CHILD - A child born after the execution of the parent's will; to be distinguished from posthumous child.

AGATE LINE – A measure of advertising space, 1/14 of an inch in depth by one column in width. Thus there are 14 agate lines to the column inch. At Michael J. Motto Advertising, we precisely measure all of the classified ads we run and pay only for the exact size ad that runs. In this way we take thousands of dollars in linage corrections each month on behalf of our clients.

AGE GROUP – A target audience defined by age.

AGENCY – A company in the business of creating advertisements, packaging and names for products and services, as well as providing marketing and merchandizing advice and general business and promotional counsel to its clients.

agency shop  a workplace in which employees can choose not to join the union but must pay dues to the union anyway

agency  a business relationship in which one party, called the principal, appoints a second party, called the agent, to act on its behalf

Agent - (1) An individual or firm that effects securities transactions for the accounts of others. (2) A person licensed by a state as a life insurance agent. (3) A securities salesperson who represents a broker-dealer or issuer when selling or trying to sell sec

Agent A person authorized by another to act on their behalf. Thus, an agent can enter into contracts and other such legal binding functions on behalf of another. Usually, the corporation's officers act as corporate agents.

agent  a middleman that facilitates exchanges, represents a buyer or a seller, and often is hired permanently on a commission basis

Agent: A person who is authorized to act on behalf of another. A corporation acts only through its agents, whether they are directors, employees, or officers.

Agents. Middlemen that provide a risk-free procurement function by not taking title to the merchandise they buy or sell for their customers.

aggregate (aggregated) Constituting the whole. Aggregate expenses include expenses of all divisions combined for the entire year.

Aggregate Par Value Aggregate par value is the par value multiplied by the number of authorized shares. This amount is important in determining initial fees and annual franchise taxes in many states.

Aggregation. The combination of several business operations into a larger unit. Primarily used to combine passive trade or business undertakings into one or more activities in order to determine whether a taxpayer is a material participant.

Aging of Accounts Receivable. A way to estimate bad debts by analyzing individual accounts receivable according to the length of time they have been outstanding. For example, outstanding accounts may be split into those 30 days or less outstanding, 60 days or less outstanding, etc. The analysis includes arriving at the balance for all the accounts in a group.

Aging Schedule: A schedule showing the length of time an invoice has been outstanding or held. Aging schedules are normally created for Accounts Payable and Accounts Receivable. For example, an aging schedule for accounts receivable can show how many days an invoice has been outstanding. Aging schedules can also be created for inventory.

agreed-upon procedures An engagement where the client specifies procedures and the accountant agrees to perform those procedures. An accountant may accept an engagement limited to applying agreed-upon procedures to financial statement elements, where the scope of the engagement is not sufficient to express an opinion on the elements, if the users assume responsibility for sufficiency of the procedures, and use of the report is restricted to specified users.

aicpa American Institute of Certified Public Accountants. The professional organization of CPAs in the U.S. It is a private organization of CPAs, not an arm of the government. Each state issues CPA certificates, not the AICPA. Since each state makes its own laws, each state could prepare and grade their own CPA examination. However, each state uses the uniform CPA exam prepared and graded by the AICPA.

Air way bill: Transport document used in air freight. Serves as a receipt for the goods and evidence of carriage contract.  This is not a document of title and so is not needed by the consignee in order to claim the goods from the carrier.

AIRPLANE BANNER – A flag or banner bearing an advertisement that trails behind a low-flying airplane.

ALERT: Notification that a disaster situation has occurred - stand by for possible activation of disaster recovery plan.

alien corporation  a corporation chartered by a foreign government and conducting business in the United States

All risks insurance: Insurance covering risks set out in the Institute of London Underwriters Cargo Clauses A. Covers fire, theft, loss at sea, damage during loading, transhipment and discharge but NOT strikes, riots, civil commotion or war piracy.

Allocation Base. An approach for assigning a given cost to two or more departments of a business.

allocation Distribution according to a plan. Depreciation, amortization, and depletion are methods to allocate a cost to periods benefited.

All-or-None Bid. A bid for a number of different items in which the bidder will not accept a partial award, but only an award for all the items, services, etc. included in the bid.

allowance for bad debt — The amount of debt a company expects not to collect. This is subtracted from what the company is owed for goods it sold on credit (accounts receivable), so the balance sheet better reflects the company’s true economic health.

allowance for doubtful accounts A contra asset account with a credit balance used to reduce the carrying amount of accounts receivable to net realizable value. The allowance balance is the estimated total of uncollectible accounts included in accounts receivable.

allowance for sampling risk The difference between a sample estimate and the projected population characteristic at a specified sampling risk. This allowance is also the difference between the expected error rate and the tolerable deviation rate.

Alongside: The side of a ship.  Goods to be delivered "alongside" are to be placed on the dock or taken next to the ship within reach of the transport ship's tackle so that can be loaded aboard the ship.

ALTERNATE SITE: A location, other than the normal facility, used to process data and/or conduct critical business functions in the event of a disaster. SIMILAR TERMS: Alternate Processing Facility, Alternate Office Facility, Alternate Communication Facility.

Alternative minimum tax. An alternative tax system that says: your tax shall not go below this level. The alternative minimum tax works by negating (or minimizing) the effects of tax preferences or loopholes.

Amendment: Variation in the terms or conditions of any document.  In the case of Letters of credit, an amendment to a letter of credit is issued by the Issuing bank under the direction of the applicant, and is advised to the Advising bank, following the same route as the original LC.

american national standards institute (ansi) Without some semblance of a standardized language, computers could not easily communicate with each other. ANSI (pronounced "antsy") is the U.S.-based organization dedicated to developing industrywide standards for technology. ANSI works closely with other entities, such as the International Organization for Standardization (ISO) to facilitate the development of global standards. One widely used ANSI standard is ASCII (American standard code for information interchange), the most common format for computers and Internet text.

Amortise the gradual process of writing off the cost of an asset, or paying off a liability by means of a sinking fund, over a period of time.

Amortization - (1) The paying off of debt in regular installments over a period of time. (2) The ratable deduction of certain capitalized expenditures over a specified period of time.

Amortization - reduction of debt through installed payments.

Amortization The gradual reduction of debt by periodic payment sufficient to pay current interest and to eliminate the principal at maturity. This is also the term used for gradual reduction/writing off over a period of time in the book value of fixed or intangible assets, deferred charges and prepaid expenses, bond discount and bond premium, etc.

Amortization The reduction in the value of an intangible asset (a copyright, a patent, an address list, or other similar property) taken as an expense (written off) in each accounting period. (Compare to loan amortization, defined below.)

Amortization. The write-off of an amount spent for certain capital assets, similar to depreciation. This tax meaning is different from the common meaning of the term that describes, for example, payment schedules of loans.

Amortization. This is similar to straight-line depreciation, allowing a business or individual to write off an expenditure over a number of years. Amortization generally applies to intangible assets. For example, you purchase a business consisting of a machine with a fair market value of $10,000 and goodwill of $15,000. You can't expense (write off) the cost in the year acquired, but you can depreciate the machine using any of several methods, including one that provides greater deductions in the early years. The goodwill can only be amortized over 15 years using a straight-line method, or $1,000 per year.

Amortization: Repayment of a loan in installments of principal and interest, rather than interest-only payments.

Amortization:  The gradual and periodic reduction of an amount over time. It can apply to either the periodic write-down of an asset (see depreciation) or a gradual extinguishment of a debt (payments reducing loan principal).

Amortize. Process of rationally and systematically allocating cost of an asset over the expected life of the asset.

analytic process  a process in operations management in which raw materials are broken into different component parts

analytical procedure A comparison of financial statement amounts with the auditor's expectation. An example is the comparison of actual interest expense for the year (a financial statement amount) with an estimate of what that interest expense should be. The estimate can be found by multiplying a reasonable interest rate times the average balance of interest bearing debt outstanding during the year (the auditor's expectation). If actual interest expense differs significantly from the expectation the auditor explains the difference in the working papers.

analyze Identify and classify items for further study.

angel investors Wealthy individuals who choose to put substantial sums of their own money into startup companies. They are specifically not operating under the auspices of a venture capital fund. While their investments tend to be less than $1 million per venture, angel investors account for more than $20 billion annually in seed money, providing an important development layer for new technology and market ideas that might not otherwise get out of the gate.

Annual Meeting of Shareholders Nearly all states require a corporation to hold an annual meeting of shareholders at which time directors are elected and other corporate issues are voted on.

Annual Percentage Rate (APR): Cost of credit expressed as a yearly rate .

Annual Percentage Rate. A credit arrangement term that applies to the relative cost of credit stated as an annual percentage, i.e. the annual cost of credit.

Annual Report:  A report prepared by a business entity at the end of its calendar or fiscal year. It presents a company's financial position and operating results for use by interested parties, including potential investors, creditors, stockholders, and employees.

Annuity. The dictionary definition is a contract issued by an insurance company that pays an annuitant an amount periodically for a certain time for the remainder of his life. Common usage has expanded that definition to the point where you must dig deeper to understand the meaning. Variations include a deferred annuity where you make payments into a fund over a period of years (where tax on the fund's income is deferred), an immediate annuity (the original definition) or many other plans where a series of payments, either into or out of the fund, are involved.

anticipated Expected.

APEC: Asia Pacific Economic Cooperation, an organization of countries in Asia and elsewhere dedicated to increasing international trade.

Apostille Is a method of certifying a document for use in another country pursuant to the 1961 Hague Convention. With this certification by apostille, a document is entitled to recognition in the country of intended use, and no certification or legalization by the embassy or consulate of the foreign country where the document is to be used is required. With our international package, we include an apostilled copy of the certificate of incorporation for use in your desired country.

appellate court  a court that hears cases appealed from lower courts

applet A software program (or application) within a larger program that is designed for a specific task, such as the Java program embedded in Web browsers. Unlike applications, applets cannot be executed directly from the operating system. Well-designed applets can be executed from many different applications. This cross-platform compatibility, their small file size, and the fact that they cannot be used to gain access to a user's hard drive make applets ideal for small Internet applications accessible from a browser. See browser.

Applicable Federal Rates (AFRs). Minimum interest rates that must be charged on various transactions that involve payments over a number of years. If the parties to a transaction do not adhere to these rates, the IRS will impute the interest. (See "Imputed interest.")

Applicant: Buyer/importer in a letter of credit transaction, who applies to the Issuing Bank for a letter of credit in favor of the seller (beneficiary).  Other terms for this are, the accountee or accreditor.

application control Programmed procedure in application software designed to ensure completeness and accuracy of information.