H
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.
G
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.)
Generally Accepted Accounting Principles (GAAP) - 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).
Generally Accepted Auditing Standards (GAAS) - Standards set by the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) which concern the AUDITOR"S professional qualities and judgment in the performance of his or her AUDIT and in the actual report.
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.
Government Accountability Office (GAO) - Accounting and auditing office of the
Governmental Accounting Standards Board (GASB) - Group that has authority to establish standards of financial reporting for all units of state and local government.
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.
Gross Income - The beginning point for the determination of income, including income from whatever sources derived. (Also see ADJUSTED GROSS INCOME.)
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.
F
401(k) Plan - EMPLOYEE BENEFIT PLAN authorized by INTERNAL REVENUE CODE section 401(k), whereby an employer establishes an account for each participating employee and each participant elects to deposit a portion of his or her salary into the account. The amount deposited is not subject to income tax. This is the most common type of salary reduction plan.
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.
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
Financial Accounting Standards Board (FASB) - Independent, private, non-governmental authority for the establishment of ACCOUNTING principles in the
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
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.
E
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 benefits that are determinable and based on such factors as age, years of service, and compensation; or (2) defined contribution plans - provide an individual account for each participant and benefits based on items such as amounts contributed to the account by the employer and employee and investment experience. This type includes PROFIT-SHARING PLANS, EMPLOYEE STOCK OWNERSHIP PLANS and 401(k) PLANS.
Employee Stock Ownership Plan (ESOP) - Stock bonus plan of an employer that acquires SECURITIES issued by the plan sponsor.
Encumbrance - (1) MORTGAGE or other lien on the entity"s ASSETS; (2) Anticipated EXPENDITURE; (3) Uncompleted or undelivered portion of a purchase commitment.
Engagement Completion Document - A document whereby the AUDITOR identifies all significant findings or issues. The document should be as specific as necessary in the circumstances for a reviewer to gain a thorough understanding of the significant findings or issues.
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.
D
Date of Auditors"/Accountants" Report - Last day the AUDITORS perform fieldwork and the last day of responsibility relating to significant events subsequent to the financial statement date.
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 Design - This exists when a control necessary to meet the control ive is missing or an existing control is not properly designed so that even if the control operates as designed, the control ive is not always met.
Deficiency in Operation - This 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.
