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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 uses income tax accounting rules while GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) does not. (See OTHER COMPREHENSIVE BASIS OF ACCOUNTING.)
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 inherited property is the fair market value at the time of death.
Initial Public Offering (IPO) - When a private company goes public for the first time.
Inquiry - A procedure that consists of seeking information, both financial and non financial, of knowledgeable persons throughout the company. It is used extensively throughout the audit and often is complementary to performing other procedures. Inquiries may range from formal written inquiries to informal oral inquiries.
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 ives such as the reliability of financial reports.
Internal Control Over Financial Reporting - A process designed by, or under the supervision of the company"s principal executive and principal financial officers or persons performing similar functions and effected by the company"s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
1. Pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the assets of the company.
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company.
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company"s assets that could have a material effect on the financial statements.
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.
International Accounting Standards Committee, the (IASC) - is an independent private sector body, formed in 1973, with the ive of harmonizing the accounting principles which are used in businesses and other organizations for financial reporting around the world. Its members are 143 professional accounting bodies in 104 countries.
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:
1. The energy credit;
2. The rehabilitation credit; and
3. The reforestation credit.
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 withdrawn.
