A method of depreciation that allows for greater depreciation expense in the early years of an asset's life and less in the later years, compared to straight-line depreciation.

The total depreciation recorded for an asset or group of assets from the time they were placed in service until the date of the financial statement or tax return. This amount is recorded as a contra account to the related asset account, reducing the asset's book value on the balance sheet.

A federal tax designed to ensure that individuals, estates, trusts, and corporations with significant economic income pay a minimum level of income tax, regardless of deductions, exemptions, or other tax breaks they may otherwise be able to claim.

An increase in the value of an asset, such as a stock, bond, commodity, or real estate, over a period of time.

A legal process governed by federal statute in which an insolvent debtor's assets are liquidated and managed by a court-appointed trustee to satisfy debts to the greatest extent possible.

A bond is a type of long-term promissory note, issued as a security under federal or state laws, where the issuer borrows funds from the bondholder and agrees to pay back the principal amount at a specified maturity date, along with periodic interest payments.

The net amount that an asset or liability is recorded on the balance sheet, also known as the carrying value. It is calculated by deducting accumulated depreciation, amortization, or impairments from the original cost of the asset.

In financial and tax contexts, 'boot' refers to any additional cash or property added to a transaction to balance the value of exchanged properties, typically in transactions that are otherwise nontaxable.

An outlay of money to acquire or improve long-term assets such as buildings, machinery, or equipment, which are intended to be used in the operations of a business and are not intended for resale.

A capital gain is the profit realized from the sale or exchange of a noninventory asset, such as stocks, real estate, or other investments, where the sale price exceeds the asset's original purchase price. These gains are usually treated favorably under tax laws, often at a lower rate than ordinary income.

The net amount at which an asset or liability is valued on a company's balance sheet, after accounting for depreciation, amortization, and impairment costs, as well as accumulated liabilities. Also known as book value.

An entity or individual that buys and sells securities for its own account, acting as a principal in the transaction. Dealers set bid prices for buying securities and ask prices for selling, thus making markets and taking on the associated risks.

A financial document representing a loan made by an investor to a borrower, which includes the terms of repayment and, typically, interest payments.

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. It is calculated by dividing total liabilities by shareholders' equity.

A trust that holds a real property, allowing it to qualify for a 1031 exchange and provide an opportunity for the investor to relinquished management responsibilities.

A non-cash accounting expense that allocates the cost of acquiring long-term assets over their useful life, representing the asset's wear and tear, obsolescence, or other declines in value over time.

The act of transferring money, property, or services in return for a combination of these items.

An accounting method of valuing inventory under which the costs of the first goods acquired are the first costs charged to expense, commonly known as First In, First Out.

The nominal value of a security or financial instrument as stated by the issuer, which is the amount due to be paid at maturity. It does not fluctuate with market value.

The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts.

A fiduciary is a person or entity who holds a legal or ethical relationship of trust with one or more other parties, typically taking care of money or assets for another person. A fiduciary must act in the best interest of the party whose assets they are managing.

A financial gain is the profit realized when the revenue received from a transaction exceeds the costs or when a security is sold for more than its purchase cost. The gain represents the difference between the sale price and the original cost.

A business arrangement where two or more individuals, known as general partners, manage the business and are equally liable for its debts and obligations. There are no limited partners in a general partnership.

Goodwill is an intangible asset that represents the premium paid over the fair value of the net identifiable assets (tangible and intangible) and liabilities of an entity during its acquisition.

A transaction or series of transactions undertaken to reduce the risk of an investment, often by taking an offsetting position in a related security.

A debt security that a company has the intent and ability to hold until its maturity date, at which point it is expected to be paid in full.

The duration between the acquisition and the sale or disposition of an asset by a taxpayer.

An asset that lacks physical substance and is identifiable as a non-monetary asset without physical substance. This includes assets such as patents, trademarks, copyrights, goodwill, and brand recognition.

The price paid for borrowing money, typically expressed as a percentage rate over a period of time, which compensates the lender for the use of their money and reflects the rate of exchange of present consumption for future consumption.

The discount rate at which the present value of future cash flows equals the initial investment outlay, used to evaluate the profitability of potential investments.

Intrinsic value refers to the inherent, true value of an asset, determined by fundamental analysis without reference to its market value. It is often calculated using data inputs in a valuation model.

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. Each of the participants is responsible for profits, losses, and costs associated with the venture.

Debt securities issued by companies with higher than normal credit risk, classified as 'non-investment grade' bonds. These securities typically offer a higher rate of interest to compensate for the increased risk.

In the context of top heavy plans, a key employee is defined as 1) an officer of the employer earning more than $130,000; 2) an individual who owns more than 5 percent of the employer; or 3) an individual who owns more than 1 percent of the employer and has compensation greater than $150,000.

Physical or mental effort exerted during work or tasks.

A business structure where one or more general partners manage the business and are personally liable for partnership debts, while one or more limited partners contribute capital and share profits but their liability is limited to the extent of their investment.

A financial arrangement in which a lender provides a sum of money to a borrower with the expectation that the borrower will return the amount over a specified period, often with interest.

A profit realized from the sale or exchange of a capital asset held for more than one year, subject to long-term capital gains tax, which is typically lower than the tax on short-term gains.

A debt that falls due more than one year in the future, or beyond the normal operating cycle, and is typically to be paid out of noncurrent assets.

The percentage of tax applied to an individual's or entity's income for each additional dollar of income.

The price at which an asset would trade in a competitive auction setting, often used to refer to the current price of a stock or bond on the open market.

The significance of an omission or misstatement of accounting information that, in the context of surrounding circumstances, could influence the judgment of a reasonable person relying on the information.

Net Asset Value (NAV) is the market value per share of a mutual fund or an exchange-traded fund (ETF). It is calculated by dividing the total value of all the assets in the portfolio, minus any liabilities, by the number of shares outstanding.

Notes receivable are written promissory notes that represent money owed to an entity, typically due within one year, and are recognized as assets on the balance sheet.

A value assigned to assets or liabilities that is not based on cost or market value, often used in financial contracts to specify the quantities upon which payments are based.

A written document that outlines the governance and operational guidelines of a Limited Liability Company (LLC), serving a similar purpose to corporate bylaws or a partnership agreement.

Operating profit or loss is the difference between a company's revenues and its related costs and expenses, derived exclusively from its regular business activities, before deductions for interest and taxes.

An option is a financial derivative that gives the buyer the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price (strike price) within a specified time period.

The portion of stockholders' equity that comes from the capital contributed by investors through the purchase of stock at issuance, excluding any capital generated from earnings or donations.

The original sum of money borrowed in a loan, or the amount of the investment, exclusive of any interest or dividends. It also refers to the party whose interests are represented by an agent in a principal-agent relationship.

A Qualified Intermediary refers to a person that acts as an intermediary qualified under certain sections of the U.S. Internal Revenue Code to undertake specified activities.

An audit opinion that states the financial statements are fairly presented in accordance with Generally Accepted Accounting Principles (GAAP), except for the effect of a matter to which a qualification relates, often due to a scope limitation or inability to obtain sufficient appropriate audit evidence.

A liquidity metric that measures a company's ability to cover its current liabilities with its most liquid assets, without relying on the sale of inventory.

Accumulated undistributed earnings of a company retained for future needs or for future distribution to its owners.

A financial metric that measures the profitability of a company relative to its total assets, calculated by dividing net income by average total assets. This ratio indicates how efficiently a company is using its assets to generate earnings.

A financial ratio that measures the profitability of a company in relation to the shareholders' equity, calculated by dividing net income by average shareholders' equity.

A provision in statutes and regulations that offers protection from adverse legal action or penalties if specific conditions are met, particularly when a legal requirement is ambiguous or carries a risk of unintended violation.

A financial arrangement in which a property owner sells an asset, typically real estate, to a buyer and then leases it back from the buyer. This enables the seller to continue using the asset while converting it into capital.

A principle in accounting where a business is considered distinct and separate from its owners, creditors, and other businesses, allowing for independent financial and legal transactions.

A financial transaction where an investor sells an asset they do not currently own, typically securities, with the intention of repurchasing them later at a lower price. The investor borrows the asset to make the sale and later buys it back to return it to the lender.

An encumbrance placed on property as security for unpaid taxes, giving the taxing authority a legal claim against the property until the debt is paid.

A tax shelter is a legal arrangement where certain investments or financial decisions are made to reduce, defer, or eliminate tax liabilities.

A tax imposed by the government on the transfer of ownership of property, including gifts and estates, as transactions occur.

Interest that has been collected on a loan by a financial institution but cannot yet be recognized as earnings because the principal of the loan has not been outstanding for a sufficient period.

A legal obligation where all business owners are personally responsible for all debts of the business, without any limit on the amount for which they are liable.

Total costs that change in direct proportion to changes in productive output or any other measure of volume.

A loan whose interest rate changes over its life in relation to the level of an index, allowing for fluctuating payments.

A security issued by a corporation that gives the holder the right to purchase a specific amount of stock at a specified price within a certain time frame. Warrants are similar to call options but are issued directly by the company and have longer durations.

An inventory costing method used under the periodic inventory system that calculates the cost of ending inventory and the cost of goods sold based on the weighted average cost of all items available for sale during the period.

The income return on an investment, such as dividends or interest, expressed as a percentage of the investment's cost or current market value.

A graph that illustrates the relationship between interest rates and the maturities of debt securities of the same credit quality, showing how these rates vary with different maturity dates.

A bond on which the holder receives only one payment at maturity, which includes both the principal and the interest accrued from issuance to maturity.

Transferee liability refers to the legal responsibility where an individual or entity may be held liable for another taxpayer's unpaid taxes due to the transfer of assets or property from the delinquent taxpayer to the transferee.

Transferred basis is the carryover of the basis of property from one entity to another, such as from a donor to a recipient, or from one business structure to another. This occurs in various transactions including gifts, transfers in trusts, transfers to controlled corporations, contributions to partnerships, and liquidating distributions from a corporation.

A company officer responsible for the management of the organization's finances, including the receipt, custody, investment, and disbursement of funds. In public companies, the treasurer also oversees the maintenance of a market for its securities and manages corporate borrowings.

A place or department where the funds and revenues of a government, corporation, or institution are managed and safeguarded.

A short-term government debt obligation issued at a discount from its face value, but pays no interest. It matures in a year or less and is used to finance the national debt.

A long-term government debt security issued by the U.S. Treasury, with a maturity period typically exceeding five years, and which pays periodic interest to the holder until maturity.

Direct financial obligations issued by the United States government to finance national debt and other government-related activities.

A government debt security issued by the U.S. Treasury that matures between one and ten years from issuance and earns periodic interest payments until maturity.

Stock that has been issued and subsequently reacquired by the issuing company. It may be held indefinitely, retired, reissued upon the exercise of stock options, or resold.

A long-term direction in which a market, commodity, or security is observed to move, which can be upward, downward, or sideways.

Trend Analysis is a form of horizontal analysis where percentage changes in related financial statement items are calculated over multiple periods to identify patterns of growth, decline, or stability.

A financial statement that lists the balances of all ledgers' debit and credit accounts to ensure that the total debits equal the total credits, indicating that the accounts are accurately balanced.

An agreement between a debtor and creditor that modifies the terms of a debt that is unlikely to be repaid under the original terms. The restructuring may include alterations to payment schedules, interest rates, or the transfer of assets as partial or full settlement of the debt.

A fiduciary relationship in which one party, known as the grantor, transfers the legal title of an asset to another party, called the trustee, who is entrusted with managing and disposing of the asset according to specific instructions for the benefit of a third party, the beneficiary.

A trustee is a person or entity legally appointed to manage and hold title to the assets in a trust on behalf of the beneficiaries, according to the terms of the trust document.

The rate at which inventory or assets of a business are replaced or sold within a given period.

The Uniform Accountancy Act (UAA) is a regulatory framework developed jointly by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). It aims to enhance interstate reciprocity, facilitate cross-state practice by CPAs, meet the evolving needs of the accounting profession, respond to market demands, and protect the public interest.

The portion of the bond discount that has not yet been amortized. This discount represents the difference between the face value of a bond and the lower price at which it was issued or sold by the company, which has not yet been expensed in the profit and loss statement over the bond's life.

The portion of the purchase price of securities that exceeds their par value, which has not yet been expensed over the life of the investment.

Financial statements that have not been examined and verified by an independent Certified Public Accountant (CPA) through a detailed audit process.

In the context of municipal bonds, underlying debt refers to the debt obligations of smaller government entities within the jurisdiction of a larger government entity, where the larger entity bears partial credit responsibility.

The specific security that must be delivered or received when a derivative contract, such as an option or futures contract, is exercised or settled.

A term used to describe securities or assets that are selling below their perceived intrinsic value, often assessed through fundamental analysis or by comparing the current market price to measures such as liquidation value.

To assume the risk of buying a new issue of securities from the issuing corporation or government entity and reselling them to the public, either directly or through dealers.

An account on the books of a lending institution that represents interest deducted in advance from a loan, which is recognized as income progressively over the life of the loan.

Payments received for services which have not yet been performed or income received before the corresponding service or work is provided.

Interest that has been collected on a loan by a financial institution but cannot yet be recognized as earnings because the principal of the loan has not been outstanding for a sufficient period.

Cash flows from an asset or investment that vary in amount over different periods.

A regulatory framework for the public accounting profession developed jointly by the American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA). It aims to enhance interstate reciprocity, facilitate cross-state practice by CPAs, meet the evolving needs of the profession, and protect the public interest.

A set of IRS regulations that require the capitalization of both direct costs and an allocable portion of indirect costs related to producing, acquiring, and holding property. These costs must be included in inventory and are not deductible as current expenses but are recovered through depreciation or amortization.

Shares of a corporation's stock that have been authorized in its charter but have not yet been issued to shareholders.

Any division of quantity accepted as a standard of measurement or exchange.

A legal obligation where all business owners are personally responsible for all debts of the business, without any limit on the amount for which they are liable.

An audit opinion that is not qualified for any material scope restrictions or departures from Generally Accepted Accounting Principles (GAAP). It is issued when the auditor finds no material weaknesses and there have been no restrictions on the scope of the auditor's work, indicating that the financial statements present a true and fair view of the financial position and performance of the entity.

Unrealized losses or gains on long-term investments refer to increases or decreases in the value of investments that have not yet been sold. These are reflected in the balance sheet and affect the company's net worth but do not impact the cash flow until the investments are actually sold.

A financial gain or loss that exists on paper, resulting from an investment that has not yet been sold or settled. The profit or loss remains unrealized until the asset is actually disposed of.

Resources of a not-for-profit entity that have no restrictions as to use or purpose, allowing the organization flexibility in applying these funds to fulfill its mission.

A bond issued based solely on the issuer's creditworthiness without specific collateral backing, relying on the general credit of the company.

The application of professional skepticism involves auditors adopting a questioning mind and a critical assessment of audit evidence when conducting an audit of internal control over financial reporting and the audit of the financial statements.

A consumption tax levied on the value added to a product at each stage of its production and distribution, as well as at the time of purchase by the ultimate consumer.

The process of determining the current value of an asset, whether it be a bond, stock, or any other financial asset, based on factors like market conditions, earnings, and asset values.

A method used in accounting to adjust the carrying value of an asset or liability to its estimated recoverable amount or settlement amount through the use of a contra account.

The monetary worth or importance of something, typically determined by its utility, demand, and supply factors.

A consumption tax levied on the incremental value added to a product at each stage of its production or distribution cycle, culminating in the final purchase by the consumer.

A life insurance annuity contract whose value fluctuates based on the performance of an underlying securities portfolio or other index of performance.

Total costs that change in direct proportion to changes in productive output or any other measure of volume.

Costs that vary in direct proportion to the number of units produced, including expenses such as raw materials and labor that increase or decrease with the production volume.

The portion of overhead costs that varies directly with the level of production or activity within a business.

A loan whose interest rate changes over its life in relation to the level of an index, allowing for fluctuating payments.

A statistical measure of the dispersion of a set of data points around their mean value, calculated as the average of the squared deviations from the mean. The square root of the variance is known as the standard deviation.

The rate at which money is spent or turns over in a specific period of time, affecting the amount of economic activity generated by a given money supply.

A vendor is a supplier or seller of goods or services, often involved in wholesale distribution, manufacturing, or importation.

Funds provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets.

A financial analysis technique that expresses each item in a financial statement as a percentage of a base figure, allowing for the assessment of relative financial condition and performance within the statement.

The process by which an employee accrues nonforfeitable rights over employer contributions made to the employee's retirement account or other benefit plans, based on years of service. Full vesting can occur over a specific period, commonly five years, or through a graded vesting schedule.

A contract or transaction that can be legally declared invalid or annulled by one of the parties involved due to reasons such as fraud, coercion, misrepresentation, or incompetence.

Characterized by or subject to rapid and extreme fluctuations, often used to describe financial markets or securities that experience high volatility.

A statistical measure of the dispersion of returns for a given security or market index, often quantified as the standard deviation or variance between returns from that same security or market index. Volatility can reflect the degree to which the price of the security or market fluctuates over a short period, indicating the level of risk associated with price changes.

The total number of shares or contracts traded for a particular security, commodity, or financial instrument within a specific period.

Payment for labor or services typically calculated on an hourly, daily, or piecework basis, usually paid at regular intervals such as weekly or bi-weekly.

A method used by auditors to confirm their understanding of how internal control over financial reporting is designed and operates, by observing personnel, reviewing relevant documents, and tracing transactions from origination through the company's information systems up to their reflection in the financial reports.

A security issued by a corporation that gives the holder the right to purchase a specific amount of stock at a specified price within a certain time frame. Warrants are similar to call options but are issued directly by the company and have longer durations.

A wash sale occurs when an investor sells a stock or security at a loss and then purchases substantially identical stock or securities within 30 days before or after the sale. Losses from such sales are not deductible for tax purposes. However, the disallowed loss adds to the basis of the newly acquired stock or securities, thus adjusting the cost basis for future gain or loss calculations.

An inventory costing method used under the periodic inventory system that calculates the cost of ending inventory and the cost of goods sold based on the weighted average cost of all items available for sale during the period.

The sale of goods in large quantities, typically to a retailer or intermediary, who then sells the items to the end consumer.

A middleman or distributor who primarily sells products to retailers, other merchants, and industrial, commercial, and institutional users, rather than directly to consumers.

A term used to describe an agreement where a seller retains the liability and responsibility to handle any losses or uncollectible accounts resulting from a transaction.

The act of deducting or retaining a portion of an individual's income, typically by an employer, to cover potential tax liabilities or other statutory obligations. In the context of securities, it refers to the illegal retention of shares from a public offering to profit from selling them at a higher market price.

A withholding allowance is an exemption that reduces the amount of income tax withheld from an individual's wages, based on factors such as marital status, number of dependents, and anticipated tax deductions and credits. Taxpayers can claim withholding allowances by completing Form W-4 and submitting it to their employer.

A term used in finance to indicate that the seller or holder of a financial instrument is not liable for any defaults or non-payment by the debtor or issuer of the instrument.

An inventory account representing the costs of incomplete goods that are still in the process of being manufactured or produced.

The excess of current assets over current liabilities, indicating the short-term financial health and operational efficiency of a company.

A type of investment in oil and gas operations where the investor has direct participation and unlimited liability, as opposed to passive limited partnership shares.

Records maintained by auditors that document the procedures applied, tests performed, information obtained, and conclusions reached during the course of an audit.

A document or form used in accounting as a preliminary step for organizing, summarizing, and preparing financial statements and data.

A type of secondary financing for the purchase of real property that encompasses an existing mortgage while creating a new one. The new mortgage is larger, covering not only the remaining balance of the original mortgage but also the additional amount required by the borrower.

The process of charging an asset account to expense or loss, often due to the asset's impairment or irrecoverability.

The 'Yellow Book' refers to the 'Government Auditing Standards' issued by the Comptroller General of the United States, which outlines the auditing standards for government organizations, programs, activities, and functions, as well as for entities receiving government assistance.

The income return on an investment, such as dividends or interest, expressed as a percentage of the investment's cost or current market value.

A graph that illustrates the relationship between interest rates and the maturities of debt securities of the same credit quality, showing how these rates vary with different maturity dates.

The return on a bond calculated by assuming the bond will be redeemed by the issuer at the earliest call date specified in the indenture agreement.

The total return anticipated on a bond if the bond is held until its maturity date, considering all payments of principal and interest, adjusted for any premium or discount to the face value of the bond.

A bond on which the holder receives only one payment at maturity, which includes both the principal and the interest accrued from issuance to maturity.

A zero-coupon bond that can be converted into the common stock of the issuing company when the stock reaches a predetermined price.