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.

A fundamental accounting concept that mandates expenses to be matched with the revenues they help generate within the same accounting period, or over the periods that benefit from the expenditure. This principle ensures that each period's earnings are accurately reported by correlating costs with their related revenues.

In accounting, material refers to information or an amount that could influence the decision-making of users of financial statements. An item is considered material if its omission or misstatement could impact the economic decisions of users taken on the basis of the financial statements.

A significant deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected on a timely basis.

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.

An inventory account that records the value of raw materials, parts, and supplies held by a company at any given time, which are used in the production process or for maintenance and repairs.

The date on which the principal amount of a financial instrument, such as a bond or loan, is due to be paid in full, or the date an agreement such as an interest rate swap ceases to accrue interest.

The date on which the principal amount of a financial instrument, such as a note, draft, bond, or other debt instrument, becomes due and payable.

Items that can be bought or sold, including all movable goods such as cars, textiles, and appliances.

The goods that are currently on hand and available for sale to customers in the regular course of business operations.

A business combination in which one entity directly acquires the assets and liabilities of one or more entities, resulting in a unified company. This process may involve the absorption of all assets and liabilities by the buyer without the creation of a new entity.

An accounting model based on the principle that maximum profit is achieved when the difference between total revenue and total cost is maximized, aligning with basic microeconomic theories of profit maximization.

The branch of economics that studies the behavior and decision-making processes of individual economic units, including households, companies, and industries, focusing on the mechanisms of supply and demand and the allocation of resources.

Mixed costs are expenses that contain both variable and fixed cost elements, making them partially dependent on the level of activity and partially constant, regardless of activity levels.

The process of creating a mathematical representation of an economic or financial system to study and predict the effects of various changes.

A mandatory system of depreciation for income tax purposes in the United States, established by Congress in 1986, which allows for the accelerated depreciation of property under specific rules and schedules.

Assets and liabilities that have a fixed or determinable money value, typically stated in currency units such as dollars, which are not subject to inflation or deflation adjustments.

The process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to be earned legally. It typically involves three steps: placement, layering, and integration.

A financial market specifically for trading short-term debt instruments, typically with high liquidity and short maturities.

Control of the production and distribution of a product or service by a single firm or a group of firms acting in concert, often resulting in the exclusion of other competitors and potentially leading to higher prices and reduced innovation.

A legal agreement that conveys the conditional right of ownership on an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan with the condition that the conveyance of the title becomes void upon the payment of the debt.

A moving average is a statistical calculation used to analyze data points by creating a series of averages of different subsets of the full data set. It is commonly used in financial markets to smooth out short-term fluctuations and highlight longer-term trends in data.

A method used in accounting to calculate the average cost of inventory on a perpetual basis, which adjusts after each inventory purchase by averaging the costs of the current inventory and any new purchases.

A bond issued by a government or public body, where the interest income received by investors is generally exempt from federal taxes.

The principle whereby each partner in a partnership is empowered to act as an agent of the partnership, thereby binding all other partners and the partnership itself to the actions taken and agreements made in the course of business operations.

An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities, managed by a professional fund manager.

The National Association of State Boards of Accountancy (NASBA) serves as a platform for the 54 State Boards of Accountancy in the United States, which administer the Uniform CPA Examination, license Certified Public Accountants, and regulate the practice of public accountancy.

The National Association of Securities Dealers Automated Quotations system, a global electronic marketplace for buying and selling securities, primarily stocks. It is known for its high concentration of technology stocks and is operated by the National Association of Securities Dealers (NASD).

Net Asset Value (NAV) refers to the value per share of a mutual fund or an ETF, calculated by dividing the total value of all the assets in the portfolio, minus liabilities, by the number of shares outstanding.

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or project, calculated by summing the present values of all expected future cash inflows and outflows using a specific discount rate, typically the required rate of return.

A check that cannot be processed because the account on which it was drawn does not have sufficient funds.

The New York Stock Exchange (NYSE), also known as the Big Board, is the oldest and largest stock exchange in the United States, located at 11 Wall Street in New York City.

A computerized system owned and operated by the National Association of Securities Dealers that provides brokers and dealers with price quotations for securities traded over-the-counter, as well as for many securities listed on the New York Stock Exchange (NYSE).

Serves as a forum for the 54 State Boards of Accountancy, which administer the uniform CPA examination, license Certified Public Accountants, and regulate the practice of public accountancy in the United States.

The process by which a government takes control over a privately owned company, asset, or industry, often with compensation to the original owners.

A report issued by an accountant, based on limited review procedures, which indicates that nothing has come to the accountant's attention to suggest that the financial information is not fairly presented.

Negligence is the failure to exercise the care that a reasonably prudent person would exercise in like circumstances. It involves the doing of something that a person of ordinary prudence would not do, or failing to do something that a person of ordinary prudence would do under similar circumstances. This legal concept is based on the expectation of exercising reasonable care and attention to prevent harm or injury.

Refers to a security or instrument whose ownership can be transferred from one party to another, typically by endorsement or delivery, and can be used to settle financial obligations or exchanged for money.

The amount remaining after all deductions are made from the gross total, which can include the profit or loss from a sale after subtracting the costs associated with the transaction.

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.

Net assets represent the excess of total assets over total liabilities, reflecting the equity value held by the owners in the company.

Net Current Assets, also known as working capital, represent the difference between a company's current assets and its current liabilities. This figure indicates the short-term financial health of a company and its ability to cover its short-term obligations with its short-term assets.

Net income is the excess of total revenues and gains over total expenses and losses for an accounting period, indicating the profitability of a company.

A lease agreement where the lessee is responsible for both the rent and additional property expenses, which may include taxes, insurance, and maintenance costs associated with the property.

The amount by which total expenses exceed total revenues in a given period, indicating a financial loss in a company's operations.

Net Present Value (NPV) is a financial analysis method used to evaluate investments by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time, using a specified discount rate.

A capital investment evaluation method that discounts future cash flows to their present value, used to assess the profitability of a project or investment by determining the net value of all future cash flows.

The amount received from the sale or disposition of assets, issuance of securities, or from a loan, after deducting all related costs and expenses.

Net sales refer to the revenue generated from sales of goods or services after subtracting returns, allowances for damaged or missing goods, and any discounts offered.

Net worth is the total value of an individual's or entity's assets minus their liabilities, representing the owner's equity in the entity.

The New York Stock Exchange (NYSE), commonly known as the Big Board, is the oldest and largest stock exchange in the United States, located at 11 Wall Street in New York City. It is a platform where stocks of publicly held companies are bought and sold.

Stock authorized to be issued without a specified par value in the articles of incorporation. Instead, a stated value is assigned by the board of directors at the time of issue.

Stock or bond that does not have a specific face value indicated on the certificate.

Transactions that occur infrequently and involve data that are not part of the standard, daily flow of transactions within a business.

A type of preferred stock or bond that cannot be redeemed before its maturity date at the option of the issuer.

A check that cannot be processed because the account on which it is drawn does not have enough funds to cover the amount of the check.

An incorporated organization that operates for educational, charitable, social, cultural, or similar purposes, and does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. These organizations are typically exempt from paying income tax.

A nonresident alien is an individual who is not a U.S. citizen or a resident alien of the United States. The income of nonresident aliens is subject to U.S. taxation if it is effectively connected with a U.S. trade or business.

A type of organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help achieve its goals, which typically include various charitable, humanitarian, or educational purposes.

A written promise to pay a specified amount to a certain entity either on demand or on a specified date.

Notes payable are liabilities in the form of written promissory notes that a company is obligated to pay within a specified period, typically less than one year.

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 consistent accounting basis other than Generally Accepted Accounting Principles (GAAP) used for financial reporting, such as the income tax basis or a cash basis.

All post-retirement benefits other than pensions, such as health insurance, life insurance, and other non-pension benefits, provided by employers to their retired employees.

In accounting, objectivity refers to the unbiased and impartial presentation of financial data, ensuring that such data is free from personal feelings or influences and accurately represents the financial reality.

Any amount or duty which may require payment, action, or performance by an entity at a future time.

The process or condition of becoming outdated or no longer used, typically because something newer or more efficient has emerged.

In finance, an offer is the price at which a seller is willing to sell a security or other asset, indicating a willingness to transact at that price.

Price per share at which a new or secondary distribution of securities is offered for sale to the public.

A mutual fund that does not have a fixed number of shares outstanding, continuously offers new shares to investors, and buys back shares at their current net asset value.

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.

The period of time between the acquisition of goods and services involved in the manufacturing process and the final cash realization resulting from sales and subsequent collections.

An expense other than cost of goods sold that is incurred in running a business, including costs related to administration, sales, and other operational activities.

An operating lease is a type of lease agreement for equipment or property, typically structured with a term shorter than the asset's useful life. The lessor remains responsible for maintenance and servicing. This lease does not result in asset ownership transfer to the lessee.

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.

The highest value or rate of return that could have been earned by an alternative course of action when a particular choice is made.

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.

An ordinary annuity is a financial product consisting of a series of equal payments made at regular intervals at the end of each period, with interest compounding on these payments.

Income that is earned through standard operations, such as wages, salaries, bonuses, and interest. It is categorized separately from capital gains and is typically taxed at a higher rate under the Internal Revenue Code.

The act of arranging elements or details in a systematic, structured, or coherent manner, often to achieve specific goals or functions.

The costs incurred during the formation of a trade or business or for-profit activity before it begins active operations. These expenses may include legal fees, state fees, and other costs associated with establishing the entity. Taxpayers may elect to amortize these expenses over a period of no less than 60 months. If not amortized, these costs are not deductible until the business is sold or ceases operations.

In accounting, the original cost refers to all costs associated with the acquisition of an asset, including the purchase price and any other expenses necessary to bring the asset into usable condition.

A consistent accounting framework other than Generally Accepted Accounting Principles (GAAP) used for financial reporting. Examples include cash basis and income tax basis of accounting.

Benefits, other than pensions, provided by employers to their retired employees. These benefits can include health insurance, life insurance, and other forms of non-pension benefits.

An amount of something produced, especially during a given period of time.

The practice of contracting out certain business functions or processes to external entities or suppliers, typically to reduce costs, access specialized expertise, or improve efficiency.

In accounting and finance, outstanding refers to the total amount of stock currently held by all shareholders, excluding shares held by the company as treasury stock, or to amounts that have not yet been settled or paid.

A check that has been written and recorded in the issuer's financial records but has not yet been processed or cleared by the bank, and therefore has not been deducted from the bank balance.

Refers to the trading of securities, such as stocks and bonds, directly between two parties without the oversight of an exchange. Over-the-counter trading is typically done for securities not listed on a formal exchange, allowing for less regulated and more flexible transactions.

Costs of a business that are not directly associated with the production or sale of goods or services, including expenses such as rent, utilities, and administrative salaries.

A standard rate used to allocate overhead costs to specific activities, typically measured in labor or machine hours.

The residual interest in the assets of a business entity that remains after deducting the entity’s liabilities; it represents the owner's claim on the assets of the business.

The P/E Ratio, or Price-to-Earnings Ratio, is a financial metric used to evaluate the relative value of a company's shares. It is calculated by dividing the market price per share by the earnings per share (EPS). This ratio indicates how much investors are willing to pay per dollar of earnings, providing insight into investor confidence and stock valuation.

The Public Company Accounting Oversight Board (PCAOB) is a private-sector, nonprofit corporation established by the Sarbanes-Oxley Act of 2002. It oversees the auditors of public companies to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

A certification for Certified Public Accountants who specialize in personal financial planning, which includes fulfilling requirements in education, experience, ethics, and an examination.

The POB, or Public Oversight Board, is an independent oversight entity composed of public members that monitors and evaluates peer reviews and other activities conducted by the SEC Practice Section (SECPS) of the AICPA's Division for CPA Firms.

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.

Equal to the nominal or face value of a security, such as a bond or stock. A security selling at par is traded at an amount equivalent to its original issue value or its redemption value at maturity, typically represented as $1000 per bond.

The nominal or face value assigned to a share of stock as specified in the articles of incorporation of a corporation. This value is used for legal purposes and represents the minimum price at which shares can be issued, serving as a cushion of equity capital for the protection of creditors.

A company that has a controlling interest in one or more other companies, usually by owning a majority of their common stock, thereby exerting control over their operations and decisions.