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.

The annual interest rate that accounts for compounding over a given period, representing the actual financial cost of borrowing or the earnings on savings.

The percentage of total income taxes paid relative to the net income before taxes.

A specialized group that assists the Financial Accounting Standards Board (FASB) by providing guidance on the early identification and resolution of emerging issues affecting financial reporting and the implementation of authoritative pronouncements.

A compensation arrangement, typically documented and utilized by employers in addition to wages, which may include benefits such as life insurance, medical insurance, and qualified retirement plans. These plans can be either defined benefit plans, promising specified benefits based on age, years of service, and compensation, or defined contribution plans, where benefits are based on contributions to individual accounts by both employer and employee, as well as investment returns. Common plans include profit-sharing, employee stock ownership plans, and 401(k) plans, often receiving favorable tax treatment.

An Employee Stock Ownership Plan (ESOP) is a stock bonus plan that allows employees to become owners of stock in the company they work for. This plan is often used as a corporate finance strategy and an employee benefit plan, where securities issued by the employer are acquired and held, typically in a trust, for the benefit of the employees.

An encumbrance refers to any claim, lien, charge, or liability attached to and binding real property that may lessen its value or obstruct the use of the property. This can include mortgages, leases, or restrictions that affect the property.

The value of goods available for sale at the end of an accounting period, which includes any merchandise that has not been sold.

The process by which the payee transfers ownership of a financial instrument, such as a check, to another party by signing their name on the back of it.

A document prepared by an auditor that summarizes all significant findings or issues encountered during an audit. This document provides detailed insights necessary for a reviewer to thoroughly understand the significant findings or issues identified during the audit process.

A person who initiates, organizes, and operates a new business venture and assumes the financial risks associated with it, often involving innovation and the potential for growth.

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Equity represents the ownership value in an entity, calculated as the residual interest in the assets of the entity after deducting its liabilities. It is reflected in the balance sheet as the difference between total assets and total liabilities and includes investments in stock markets and ownership interests in various forms of property.

An account in the equity section of the balance sheet that includes elements such as capital stock, additional paid-in capital, and retained earnings, representing the owner's claims on the assets of the business after all liabilities have been deducted.

The process of raising capital through the sale of shares in a company, which may include common stock or preferred stock.

A method of accounting used by an investor to account for long-term investments in equity securities of an affiliate where the investor has significant influence over the investee. The investor's cost basis is adjusted in proportion to their percentage of stock ownership based on the investee's retained earnings fluctuations. Significant influence is often presumed if the investor owns 20% or more of the voting stock.

Securities that represent ownership shares in a corporation or entity, including stocks and other instruments that confer legal rights to acquire or hold capital stock.

An unintentional mistake or omission that deviates from what should be done, often occurring due to oversight or a misunderstanding of information.

Funds, assets, or other property held by a third party, to be turned over to the grantee only after specific conditions are met.

A tax imposed on the total value of a deceased person's assets minus liabilities and certain allowable deductions, including funeral and administrative expenses.

The amount of tax liability a taxpayer anticipates owing for the current tax period, typically paid through quarterly installments.

Activities that involve management judgments or assumptions to formulate account balances when precise measurement is not available.

Underlying accounting data and other corroborating information that auditors use to support the assertions made in the financial statements.

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

A tax imposed on the manufacture, sale, or consumption of specific commodities within a country.

Income that is not subject to taxation under current tax laws, often due to specific exclusions provided by the tax code.

Income items that are explicitly exempted from being included in a taxpayer's gross income by the Internal Revenue Code or administrative actions, such as gifts, inheritances, and death proceeds from life insurance contracts.

An individual or institution appointed by a will and confirmed by a court to administer the estate of a deceased person, managing assets, paying debts, and distributing the remaining estate according to the terms of the will.

An organization that is generally exempt from paying federal income tax, which may include entities such as religious organizations, charitable organizations, and social clubs.

An amount of income that is not subject to tax, granted by the IRS to individuals, trusts, and estates, which reduces the gross income to arrive at taxable income. Exemptions can also be claimed for dependents unless they are claimed on another individual's tax return.

A tax imposed on individuals who renounce their citizenship or terminate their long-term residency, primarily if the termination is for the purpose of avoiding tax responsibilities.

The difference in perception between the public and Certified Public Accountants (CPAs) regarding the roles and responsibilities of accountants, particularly in the context of accounting and auditing services.

A payment made by a business or individual, which may involve cash disbursement, the assumption of a liability, or the surrendering of an asset.

An expense refers to the cost incurred for goods or services used in the generation of revenue, which is recorded in the accounting periods to which they are relevant.

The percentage of total investment that shareholders pay annually for mutual fund operating expenses, management fees, and other associated costs.

An auditor who possesses a deep understanding of audit activities, has comprehensive knowledge of the client's industry, and is well-versed in the accounting and auditing issues relevant to that industry.

Exploration expenditures refer to the costs incurred in the search for natural resources such as minerals, oil, or gas. These costs can include geological and geophysical surveys, exploratory drilling, and the evaluation of the technical feasibility and commercial viability of extracting the resources.

A document issued by standard-setting authorities such as the American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB), or Governmental Accounting Standards Board (GASB) to invite public comment before a final standard or regulation is issued.

In accounting and finance, an extension refers to the additional time granted by a taxing authority, such as the IRS, or through voluntary arrangements to restructure a firm's debt, allowing for a postponed payment or filing date beyond the original schedule.

The scope and depth of procedures an auditor applies to obtain evidence about the effectiveness of a company's internal controls over financial reporting, including the controls for all internal control components.

The process of providing financial information about a company to external stakeholders, such as investors, creditors, regulators, and the public, which is distinct from internal reports used for management's decision-making.

The process of completely discharging a debt obligation through payment or other financial settlement, effectively bringing the liability to an end.

Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence, reported separately on the income statement after accounting for taxes to highlight their impact on financial performance.

The Financial Accounting Standards Board (FASB) is an independent, private, non-governmental authority in the United States responsible for establishing and improving financial accounting and reporting standards.

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.

Indicates the point at which title to goods passes from the seller to the buyer, specifying the party responsible for freight charges and risk of loss during transportation.

A shipping term indicating that the seller is responsible for the transportation costs and risks until the goods reach the buyer's specified delivery location.

A shipping term that indicates that the buyer is responsible for the transportation costs and risk of loss from the point of origin.

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 financial transaction where a business sells its accounts receivable to a third party, known as a factor, at a discount in exchange for immediate cash.

A financial scenario where a business receives an advance from a factor that exceeds the value of its receivables, effectively creating a loan against anticipated inventory sales.

Various production-related costs that cannot be practically or conveniently traced to an end product, including indirect materials, indirect labor, and other indirect expenses incurred in the manufacturing process.

A federal law enacted in 1971 designed to regulate the collection, dissemination, and use of consumer information, including consumer credit information. It provides individuals with the right to view and correct inaccuracies in their credit reports and ensures that consumer reporting agencies maintain the confidentiality, accuracy, relevance, and proper utilization of the information.

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 financial measure indicating that actual revenues are higher than projected revenues or actual costs are lower than projected costs, resulting in a positive impact on a company's profitability.

Taxes levied by the federal government on the annual net income of individuals, businesses, and other legal entities.

One of the 12 regional banks that make up the Federal Reserve System, each responsible for implementing the central bank's monetary policy and regulating the financial institutions within its jurisdiction to ensure compliance with banking regulations.

The central banking system of the United States, established by the Federal Reserve Act of 1913, which includes 12 Federal Reserve Banks and is governed by the Federal Reserve Board. It is authorized to regulate monetary policy, supervise member banks, bank holding companies, and international operations of US banks, as well as US operations of foreign banks.

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.

The mandatory submission of specified forms by taxpayers who meet statutory requirements, completed in accordance with prescribed formats and within set deadlines to be recognized as valid.

The discipline concerned with the management, investment, and allocation of money and other financial assets, including the processes of acquiring and managing resources.

Official regulations issued by the Financial Accounting Standards Board (FASB), which are integral to Generally Accepted Accounting Principles (GAAP) in the United States. These standards guide the preparation of financial reports to ensure accuracy, consistency, and transparency.

An independent, private, non-governmental authority in the United States responsible for the establishment and interpretation of Generally Accepted Accounting Principles (GAAP).

An organization engaged in various financial activities, such as commercial banking, investment banking, securities trading, credit services, investment management, insurance provision, and real estate financing.

The use of borrowed capital (debt) to finance the purchase of assets with the objective of increasing potential returns to equity shareholders. Financial leverage is effective if the firm earns more on the assets purchased than the interest costs of the debt.

Financial statements are structured presentations of an entity's financial position and the transactions that led to changes in that position over a period. They typically include balance sheets, income statements, and cash flow statements, among others, to provide insights into the entity's financial health and operational results.

Products that have been completely manufactured and are ready to be sold to customers.

Finished Goods Inventory refers to the inventory account that contains products that have completed the manufacturing process and are ready for sale.

A business entity, often referred to as a company, which can engage in commercial, industrial, or professional activities. The term can also refer to a specific kind of instruction in trading where an order to buy or sell is given without the need for further confirmation.

An accounting method for inventory valuation where the costs of the earliest goods purchased are the first to be recognized in cost of goods sold, with the ending inventory costs based on the most recently purchased items.

A period of 12 consecutive months chosen by an entity as its accounting period, which may or may not align with the calendar year.

An investment contract sold by an insurance company that guarantees fixed payments to an annuitant either for life or for a specified period.

Tangible long-term assets used in the continuing operation of a business that are not expected to be converted into cash within a year. These assets are essential for the business's operations and are unlikely to change frequently.

Costs that do not vary with the level of production or sales, and remain constant regardless of changes in business activity levels within a certain range.

A predetermined price at which goods, services, or securities are sold, not subject to change under normal circumstances.

An attachment to real property that is intended to be permanent and would likely cause damage to the property if removed.

In finance and accounting, 'floor' can refer to the minimum value, rate, or price set for assets, stocks, or interest rates. Specifically, it denotes the lowest price limit at which inventory can be valued, accounting for net realizable value minus a normal profit margin. It can also indicate the minimum level that interest rates or currency values are structured not to fall below, or in trading, the area of a stock exchange where active trading occurs.

The expenses incurred by a company in issuing new stocks or bonds, including underwriting fees, legal fees, and registration fees.

Prospective financial statements that predict an entity's expected financial position, results of operations, and cash flows based on current and historical data.

A financial statement that projects the assets, liabilities, and equity of a business at a future date, based on current data, trends, and projections.

A financial statement that estimates the expected revenue, expenses, and net income of a business for a future period.

The process of estimating the future financial transactions of a business, specifically focusing on the cash receipts and cash payments expected in a future period.

The legal process by which a lender or creditor seizes property when the borrower fails to make required payments on a mortgage or loan, as stipulated in the contract.

A corporation that is incorporated under the laws of a country or state other than the one in which it primarily operates. The tax obligations of a foreign corporation in a host country depend on its level of economic engagement, such as having a Nexus or effectively connected income within that country.

The process of converting the financial statements of a company's foreign operations from the local currency into the functional currency of the parent company. Unrealized gains or losses due to exchange rate fluctuations are included in stockholders' equity until the foreign operation is substantially liquidated.

Foreign exchange involves the trading of currencies from different countries against each other and the instruments employed in making payments between countries.

A nonrefundable tax credit that U.S. taxpayers can claim on their federal income tax return for income taxes paid or accrued to a foreign government, which helps to mitigate the issue of double taxation on the same income.

An annual report required by the SEC from exchange-listed companies, which provides a comprehensive overview of the company's financial performance and includes the balance sheet, income statement, and cash flow statement. It is due within 90 days after the end of the company's fiscal year.

An SEC filing that serves as a quarterly report, required to be filed 45 days after the end of each of the first three quarters of a company's fiscal year, detailing its financial performance.

An SEC filing required when a publicly held company experiences a significant event that could affect its financial condition or the value of its stock, necessitating prompt disclosure to shareholders and the Securities and Exchange Commission.

A form used by employees to indicate their tax situation to employers, specifying exemptions and the amount to withhold for federal income taxes and Federal Insurance Contributions Act (FICA) taxes.

A legal arrangement where the owner of a trade name, known as the franchisor, allows another party, known as the franchisee, to use the name on a non-exclusive basis to sell goods or services. This agreement often includes strict supervisory powers for the franchisor over the franchisee, who operates as an independent business.

A state tax levied on corporations for the privilege of doing business under a corporate charter in that state.

Willful misrepresentation by one person of a fact with the intent to deceive another person, leading to damage or harm.

The amount of cash that a company has available after accounting for the capital expenditures necessary to maintain or expand its asset base. It is a useful measure for investors to assess the financial health and profitability of a company.

A shipping term used to indicate the point at which the ownership and responsibility of goods pass from the seller to the buyer. 'FOB destination' means the seller retains risk of loss until the goods reach the buyer's location, whereas 'FOB shipping point' means the buyer assumes responsibility once the goods leave the seller's premises.

Transportation charges on merchandise purchased for resale, typically recorded as part of the inventory cost on the balance sheet.

Transportation charges on merchandise sold, categorized as an operating expense in accounting.

The requirement in financial reporting to provide all material facts relevant to a transaction or financial statement to ensure transparency and fairness.

A method of accounting and presentation where assets and liabilities are grouped according to their specific purpose, primarily used by non-profit organizations and government entities to ensure and demonstrate compliance with funding and operational objectives.

A method of evaluating a security that involves examining economic, financial, and other qualitative and quantitative factors. Fundamental analysts study anything that can affect the security's value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company's management.