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.

Income derived from various non-business investments, including dividends, interest, and other earnings from securities.

A credit that reduces a company's tax liability, associated with specific investments such as the energy credit, rehabilitation credit, and reforestation credit, as part of the general business credit.

A document prepared by a seller of goods or services and issued to the purchaser, detailing the items sold or services provided, their prices, and the total amount due for payment.

Involuntary conversions occur when property is destroyed, stolen, seized, requisitioned, condemned, or threatened with such actions, leading to a forced change in the property's status or ownership.

A financial asset such as stocks or bonds that is sold by a corporation or government entity at a particular time.

Shares of a corporation that have been officially issued to shareholders and are currently held by them, not repurchased by the corporation or otherwise retired.

An entity that releases financial instruments into the marketplace, which can include securities registered under relevant financial regulatory laws, or has filed registration statements for its securities with the Securities and Exchange Commission (SEC).

In the context of tax collection, jeopardy refers to a situation where the IRS believes that the collection of tax is at risk of being uncollected, prompting immediate assessment and collection of such tax without the intermediate procedural steps.

A customer request for a specific quantity of products that are designed and manufactured to unique specifications.

A tax return filed by married taxpayers or surviving spouses, combining their incomes, exemptions, deductions, and credits on a single form.

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.

A book or digital record in which all daily financial transactions are initially recorded in chronological order.

A record in the general journal that documents a single financial transaction, detailing the accounts affected and the amounts involved.

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.

An inventory management philosophy in which resources, including materials, personnel, and facilities, are utilized only as needed, with the goal of minimizing waste and increasing efficiency.

A qualified retirement plan for self-employed individuals or unincorporated businesses, also known as an HR 10 plan, which allows for tax-deferred contributions and potential tax deductions.

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.

An industry of primary importance to a nation's economy, often critical for its infrastructure, economic stability, and growth.

A type of business-owned life insurance contract that is taken out on the lives of principal officers or essential employees of a company, providing guaranteed death benefits to the company and potentially accumulating a cash surrender value.

Kiting is a fraudulent banking practice involving the issuance of checks from an account without sufficient funds, with the expectation that deposits will clear before the checks are processed. This practice exploits the float time between the check being written and its clearance. Kiting can also refer to manipulating the face value of a check or inflating stock prices through deceptive trading strategies.

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

The process of reducing inventory levels at the end of the year to below the levels at the beginning of the year, specifically for businesses using the Last In, First Out (LIFO) inventory method. This often results in older, lower-cost inventory being sold, which can impact the cost of goods sold and subsequently, the company's profitability.

A Limited Liability Company (LLC) is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is formed by filing articles of organization with the appropriate state authority, and its regulations can vary by state.

A Limited Liability Partnership (LLP) is a form of partnership where all partners have limited liability, protecting each partner's personal assets from the debts and liabilities of the partnership. Rules and regulations for LLPs can vary by state.

Physical or mental effort exerted during work or tasks.

A doctrine advocating minimal governmental interference in the economic and business affairs of society.

A type of real estate that refers to the earth's surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects.

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

In financial terms, to lay off is to reduce the risk in a standby commitment, where bankers agree to purchase and resell to the public any portion of a stock issue not subscribed to by shareholders who hold rights.

A contractual agreement in which a lessor (the owner) grants a lessee (the user) the right to use an asset such as land, buildings, or equipment for a specified period of time in exchange for monetary or other consideration, typically in the form of rent.

The total expenses incurred by a real estate limited partnership or similar entity when acquiring a lease, which includes the price paid for the lease, legal fees, and other related expenses.

An agreement that allows a portion of lease payments to be applied toward the purchase of the property being leased, potentially leading to ownership at the end of the lease term.

A leasehold is an asset that provides the right to use and occupy property under the terms of a lease agreement.

A ledger is a book or collection of accounts in which account transactions are recorded, consisting of debit and credit entries.

A ledger account is a complete record of all the transactions pertaining to a specific account, providing a detailed history of financial activities over a period.

An individual, firm, or financial institution that extends money to borrowers with the expectation that it will be repaid, typically with interest.

The process of borrowing securities from a broker's inventory, other margin accounts, or other brokers, typically to facilitate a short sale where the borrowed securities are delivered to the buying customer's broker.

A person or entity that has the contractual right to use an asset leased from another entity, known as the lessor, under the terms of a lease agreement.

An entity or individual that owns an asset and transfers the right to use this asset to another party (lessee) under the terms of a lease agreement.

A conditional bank commitment issued on behalf of a customer to pay a third party in accordance with certain terms and conditions. Common types include commercial letters of credit, which facilitate international trade, and standby letters of credit, which guarantee payment in case of a default.

A written document outlining the preliminary agreements or intentions of parties prior to a formal contract, often specifying actions contingent upon further negotiation and due diligence.

The use of borrowed funds or debt financing to increase the potential return of an investment. Leverage can amplify both gains and losses, making investments more sensitive to changes in the market.

A leveraged buyout (LBO) is a financial transaction in which a company is acquired using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired and those of the acquiring company are often used as collateral for the loans.

A financing arrangement in which a lessor uses borrowed funds to acquire an asset that is then leased to a third party, with the leased asset and lease payments serving as collateral for the borrowed funds.

A liability is a financial obligation or debt owed by one entity (debtor) to another (creditor), which requires settlement through the transfer of money, goods, or services.

A legal claim or security interest in one or more assets, held by a creditor to secure debt financing or ensure repayment of a debt.

The age to which an average person is statistically expected to live, as calculated by an actuary, based on various demographic factors.

A tax credit that allows taxpayers to claim 20 percent of qualified tuition and related expenses for higher education for themselves, their spouse, or dependents. This credit can be used for undergraduate, graduate, and professional degree courses, including courses to acquire or improve job skills, available for an unlimited number of years.

A business entity registered in jurisdictions such as the United Kingdom, where the company's owners are protected from full financial liability. The owners' liability is limited to the capital they have invested in the company.

A legal structure where the owners of a corporation are only financially responsible up to the amount of their investment in the company and are not personally liable for the corporation's debts and liabilities.

A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. An LLC is established by filing Articles of Organization with the relevant state authority, and its regulations can differ significantly across different states.

A Limited Liability Partnership (LLP) is a form of partnership where all partners have limited liabilities, protecting each partner from debts against the partnership arising from professional malpractice of the other partners. Rules and regulations for LLPs can vary by state, requiring registration with a state authority.

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.

Assets that can be quickly and easily converted into cash without significant loss in value. These typically include cash, cash equivalents, and marketable securities.

The process of winding up a company's financial affairs by selling its assets, settling debts, and distributing any remaining assets to shareholders. Liquidation occurs when a business ceases operations permanently.

Liquidity refers to the ease with which assets can be converted into cash without significant loss of value. In the context of a corporation, it indicates the ability of the company to meet its short-term obligations using assets that can be quickly converted to cash, as measured by ratios like the current ratio, quick ratio, and cash ratio. In the context of securities, liquidity describes a high level of trading activity that allows for buying and selling with minimal price disturbance.

A measure of a firm's ability to meet its short-term obligations using its most liquid assets.

Listed property refers to specific categories of assets for which tax deductions on depreciation are limited. These categories typically include passenger cars, property used for transportation, entertainment, recreation, amusement, computers and peripheral equipment, and cellular telephones.

A specialized service provided by CPAs to assist attorneys in legal cases involving financial issues. This service includes expert testimony, forensic accounting, and the evaluation of financial documents to support legal arguments or resolve disputes.

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.

The maximum amount a lender is willing to loan, which is determined based on the assessed value of the collateral provided by the borrower.

A bond that matures in more than 10 years, typically offering a higher yield to compensate for the longer investment period and associated risks.

In finance and accounting, 'long term' generally refers to a holding period or investment horizon that is one year or longer. It is often used in the context of capital gains taxation, where assets held for more than one year may qualify for lower tax rates.

An asset that is acquired for use in the operations of a business, has a useful life of more than one year, and is not intended for resale to customers.

Debt with a maturity of more than one year from the current date, typically used to finance long-term investments or projects.

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.

An investment that management intends to hold for a period exceeding one year, typically aimed at achieving long-term financial goals.

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.

A financial loss realized on the sale or exchange of an asset held for more than a year, which is the negative counterpart to a long-term gain.

In accounting, a loss is the excess of expenditures over revenue for a period or activity, or in a transaction, it is the excess of the asset's basis over the amount realized.

The financial loss recorded when a company disposes of plant and equipment assets for an amount less than their recorded book value.

An accounting principle that mandates certain assets be recorded at the lesser of either their historical cost or their current market value. This principle is applied primarily to inventory and other assets in situations where the market value has decreased below the cost at which the assets were originally purchased.

A single payment to a beneficiary that covers the entire amount due under an agreement or settlement.

Management Discussion and Analysis (MD&A) is a section required by the Securities and Exchange Commission (SEC) in financial reporting that provides an explanation by management of significant changes in operations, assets, and liquidity.

The branch of economics that studies the behavior and performance of an economy as a whole. It focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product, and inflation.

Management refers to the group of individuals who make decisions, create policies, and provide the supervision necessary to implement the owner's business objectives and ensure the organization's stability and growth.

A branch of accounting designed to provide financial and non-financial information to help management in making decisions, planning, and controlling organizational activities. Also known as managerial accounting.

A section required by the SEC in financial reporting where management provides an explanation of significant changes in operations, assets, and liquidity, highlighting the company's performance and future outlook.

A report included in a company's annual report, where management provides its assessment of the effectiveness of the company's internal control over financial reporting, alongside the audited financial statements for the most recent fiscal year.

A branch of accounting focused on providing financial information and analyses to managers within organizations to assist in decision-making, planning, and control.

The act of buying or selling securities to create a false appearance of active trading, with the intent to influence other investors to buy or sell shares, which is considered illegal.

To make or process a product, typically on a large scale using machinery.

Manufacturing overhead, also known as factory overhead costs, includes all indirect costs associated with the production process of a company. This includes costs related to the operation and maintenance of the production facilities, excluding direct materials and direct labor.

In finance, margin refers to the difference between the market value of securities and the loan amount provided by the broker to purchase these securities. It also represents the excess of selling price over the unit cost in trading contexts, and in derivatives trading, it is the cash collateral deposited to cover potential losses.

The ratio or percentage that represents the relationship of gross profits to net sales, indicating the profitability of a company's sales.

The increase or decrease in the total costs of a business as a result of producing one additional or one fewer unit of output.

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

A method of valuing assets that involves adjusting the carrying amount of an asset to reflect its current market value.

The amount subtracted from the selling price of securities when they are sold to a dealer in the over-the-counter (OTC) market, often reflecting a reduced price necessary to facilitate the sale.

A venue, physical or virtual, where goods, services, or financial instruments are exchanged between buyers and sellers. In finance, it often specifically refers to the equity market, where stocks are traded.

The total value of a corporation as determined by the market price of its issued and outstanding common stock.

A market index is a statistical measure that represents the value of a section of the stock market through the weighted average of the prices of selected stocks.

The prevailing rate of interest available in the market for securities of similar risk and maturity.

The last reported price at which a security was sold on an exchange.

The percentage of total sales or revenue generated by a company or product within a specific industry or market, compared to the total sales or revenue of that industry or market.

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.

Financial instruments, such as stocks or bonds, that can be easily bought or sold on public exchanges or over-the-counter markets due to their high liquidity and active trading.

The process of promoting, selling, and distributing a product or service, which includes market research and advertising to move goods and services from the provider to the consumer.

The amount added to the cost price of goods to cover overhead and profit, resulting in the final selling price.

Taxpayers who are married and may choose to file a joint tax return, combining their income and expenses. A married status applies if individuals are living as husband and wife, recognized in a common law marriage, or are legally married but separated (not legally divorced), as determined on the last day of the tax year.