1,000+ Accounting Terms

Accounting

Terms and Definitions

Glossary of Accounting Terms

Popular Terms

Accelerated Depreciation

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.

Accumulated 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.

Alternative Minimum Tax (AMT)

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.

Appreciation

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

Bankruptcy

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.

Bond

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.

Book Value

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.

Boot

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.

Capital Expenditure

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.

Capital Gain

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.

Carrying Value

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.

Dealer

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.

Debt Instrument

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

Debt-to-Equity Ratio

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.

Delaware Statutory Trust

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.

Depreciation

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.

Exchanges

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

FIFO

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.

Face Value

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.

Fair 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.

Fiduciary

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.

Gain

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.

General Partnership

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

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.

Hedge

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

Held-to-Maturity 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.

Holding Period

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

Intangible Asset

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.

Interest

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.

Internal Rate of Return

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

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.

Joint Venture

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.

Junk Bonds

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.

Key Employee

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.

Labor

Physical or mental effort exerted during work or tasks.

Limited Partnership

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.

Loan

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.

Long-Term Gain

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.

Long-Term Liability

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.

Marginal Tax Rate

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

Market Value

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.

Materiality

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)

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

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.

Notional

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.

Operating Agreement

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)

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.

Option

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.

Paid in Capital

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.

Principal

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.

Qualified Intermediary

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.

Qualified Opinion

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.

Quick Ratio

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.

Retained Earnings

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

Return on Assets

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.

Return on Equity

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.

Safe Harbor Rule

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.

Sale-Leaseback Transaction

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.

Separate Entity

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.

Short Sale

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.

Tax Lien

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.

Tax Shelter

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

Transfer Tax

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

Unearned Interest

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.

Unlimited Liability

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.

Variable Costs

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

Variable Rate Loan

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

Warrant

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.

Weighted-Average-Cost Method

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.

Yield

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

Yield Curve

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.

Zero-Coupon Bond

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

All Accounting Terms (Alphabetical)

Reasonable Assurance

Reasonable assurance refers to a high level of confidence achieved through internal controls over financial reporting, suggesting a remote likelihood that material misstatements will not be prevented or detected on a timely basis.

Rebate

A rebate in financial contexts typically refers to a return of a portion of interest or charges to a party, which can occur in lending when unearned interest is refunded if a loan is paid off before its maturity, or in securities lending where a portion of the interest earned by the lender of the stock is returned to a short seller.

Recapitalization

Recapitalization is the process of restructuring a company's debt and equity mixture, often with the aim of making a company's capital structure more stable or efficient. This may involve the exchange of one form of financing for another, such as replacing bonds with stock, or altering the mix between equity and debt in the capital structure.

Receivable Turnover

A financial ratio that measures how efficiently a company uses its assets by comparing net credit sales with the average accounts receivable during an accounting period. This ratio indicates how well the company manages its credit and collects debts from customers.

Receivables

Amounts of money due from customers or other debtors, usually arising from sales or services provided on credit.

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months. It is typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins after the economy reaches a peak of activity and ends as it reaches its trough. Between these points, the economy is in an expansion. The National Bureau of Economic Research (NBER) uses monthly data to determine the start and end dates of recessions.

Reconcile

In accounting, to reconcile means to ensure that two sets of records (usually the balances of two accounts) are in agreement. Reconciliation is a process used to ensure that the money leaving an account matches the actual money spent.

Reconciliation

The process of comparing two sets of records to ensure they are in agreement and accurate, often used to verify the accuracy of financial records by matching transactions from different sources.

Recovery

In economics, recovery refers to a phase in the business cycle where economic activity increases, leading to growth in gross national product and often transitioning into an expansion phase. In finance, it can also refer to a period where securities prices rise following a decline.

Red Herring

A preliminary prospectus distributed to potential investors during the waiting period between the registration of a new securities issue with the Securities and Exchange Commission (SEC) and the effective date of the registration statement. A red herring contains details about the business and its upcoming offering but is not an offer to sell or a solicitation of an offer to buy.

Redemption Value

The price at which a company agrees to repurchase its bonds or preferred stock from holders, effectively retiring the securities.

Refinancing Agreement

An arrangement to replace existing financing with new funding, commonly used to refinance a home mortgage or other loans to obtain better interest rates or different terms.

Refunding

The process of replacing an existing debt with a new one, typically with lower interest costs, by redeeming the old debt with proceeds from issuing new debt obligations that have equal or superior ranking.

Registrar

A financial institution or agency responsible for recording the issuance and ownership of company securities, such as stocks and bonds.

Regression Analysis

A statistical technique that identifies the relationship between a dependent variable and one or more independent variables. This method is used to predict the value of the dependent variable based on the values of the independent variables, often for purposes of forecasting or decision making in various fields, including economics and finance.

Regressive Rate

A rate that decreases as the calculation base increases, commonly applied to taxation systems where the tax rate diminishes as the taxable income of an individual or entity increases.

Regulated Investment Company (RIC)

A domestic corporation that operates as an investment agent for its shareholders, typically investing in government and corporate securities and distributing the dividends and interest income earned from such investments. To qualify as a RIC, a corporation must make an irrevocable tax election to be treated as such under specific regulatory conditions.

Reinsurance

The process by which an insurance company transfers portions of its risk to other insurers to reduce the likelihood of paying a large amount on a single claim. This practice allows the sharing of risk and division of client premiums among insurers.

Reinvestment Rate

The rate of return obtained from reinvesting the earnings, such as interest or dividends, from an investment like a bond or other fixed-income security.

Related Party Transaction

A transaction between entities or individuals that share a pre-existing, non-arm's-length relationship, such as family members or companies under common control. These transactions often face increased scrutiny for tax and financial reporting purposes due to potential conflicts of interest and the possibility of non-market terms.

Relevant Assertions

Assertions that have a meaningful bearing on whether the account is fairly stated, impacting the accuracy and validity of financial statements.

Reorganization

Reorganization refers to the process of restructuring a corporation's capital arrangements or creating a plan to restore a debtor's business to financial health. This process often involves changes that allow the corporation and its shareholders to not recognize any gain or loss on the exchange of stock.

Repairs

Expenditures made to maintain property in good working condition without significantly prolonging its life or increasing its value.

Replacements

Expenditures incurred to restore or replace parts of property that have deteriorated through use or have been damaged or destroyed through accident.

Report

A written or oral account that describes and confirms details of an event, situation, or activity, often including specific data or outcomes related to financial transactions or business operations.

Report Release Date

The date on which a company's financial statements are officially issued and made available to the public.

Repos

An agreement in which an institution sells securities with a commitment to repurchase the same securities at a specified price on a future date, typically used for short-term borrowing.

Repurchase Agreement (Repos)

A repurchase agreement, or repo, is a short-term agreement in which one party sells securities to another party with a promise to repurchase the securities at a later date at an agreed-upon price.

Required Rate of Return

The minimum return that investors expect to receive for investing in a particular asset, given its risk level.

Rescind

To cancel, revoke, or repeal a contract, often due to misrepresentation, fraud, or illegal procedures.

Research and Development (R&D)

Research and Development (R&D) refers to a series of investigative activities to improve existing products and procedures or to lead to the development of new products and procedures.

Research and Development Costs

Expenses incurred in the process of discovering, developing, and enhancing a company's products, services, or processes. These costs can include salaries, materials, and overhead expenses directly related to the R&D activities.

Reserve

An account used to earmark a portion of equity or fund balance to indicate that it is not available for expenditure, often reflecting contingent liabilities or other financial commitments.

Resident Alien

An individual who is not a citizen of the United States but has established residence in the country. Resident aliens are subject to the same tax obligations on their worldwide income as U.S. citizens.

Residual Value

The estimated net scrap, salvage, or trade-in value of a tangible asset at the estimated date of disposal.

Restricted Assets

Assets, including cash, whose utilization is limited or restricted for specific purposes as stipulated by contractual agreements or regulatory requirements.

Restricted Fund

A fund established to account for assets whose income must be used for specific purposes as stipulated by donors or grantors.

Restructuring

The process of reorganizing a company's structure or operations to increase efficiency, adapt to new markets, or improve financial stability. This may involve changes in capital structure, debt renegotiation, mergers, acquisitions, divestitures, spin-offs, or other major corporate transactions.

Retail Method

A method used in retail businesses to estimate inventory cost by comparing the cost of goods available for sale with the retail price of the goods available for sale.

Retained Earnings

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

Retained Earnings Account

The account that reflects the cumulative amount of net income earned by a company that has been reinvested in its operations and not distributed to its shareholders as dividends.

Retire

In finance, to retire a security means to remove it from circulation, typically by paying off a debt or extinguishing the security.

Return

The change in the value of an investment over a period, including any profits and distributions, usually expressed as an annual percentage rate.

Return on Assets

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.

Return on Equity

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.

Return on Investment (ROI)

Return on Investment (ROI) is a financial ratio that calculates the percentage return on the money invested in relation to the profit gained from that investment. It is commonly used to evaluate the efficiency of an investment or compare the efficiency of several different investments.

Return on Sales

Return on Sales (ROS) is a financial ratio that measures the efficiency of a company in generating profits from its sales. It is calculated as net pretax profits divided by net sales, expressed as a percentage. This ratio is useful for assessing operational efficiency and comparing performance over different periods or against other companies in the same industry.

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes realized as revenue. Generally, revenue is recognized when a critical event has occurred and the dollar amount is easily measurable.

Revenues

Revenues are the total income generated from the sale of goods, provision of services, or other key business activities, including earnings from interest, dividends, and rents.

Review

An accounting service where a Certified Public Accountant (CPA) provides limited assurance on the reliability of financial information without conducting a full audit under Generally Accepted Auditing Standards (GAAS).

Review Engagement

An agreement between a Certified Public Accountant (CPA) and a client to perform a review of the client's financial statements to ensure accuracy and compliance with accounting standards, without the extensive checks involved in an audit.

Review Report

A Review Report is a formal document issued by an accountant or accounting firm that presents the findings of a review engagement. The report provides limited assurance that no material modifications need to be made to the financial statements for them to be in conformity with the applicable financial reporting framework.

Right of Rescission

The legal right granted under the Federal Consumer Credit Protection Act of 1968, allowing a consumer to void a contract within three business days, ensuring a full refund of any down payment without any penalties.

Right to Setoff

A debtor's legal right to discharge all or a portion of the debt owed to another party by applying against the debt an amount that the other party owes to the debtor.

Risk

The measurable possibility of losing or not gaining value.

Risk Management

The process of identifying, analyzing, and responding to business risks in a way that aligns with the entity's risk tolerance and ensures an acceptable risk-return relationship.

Risk-Adjusted Discount Rate

In finance, the risk-adjusted discount rate is the rate used to calculate the present value of uncertain or risky future cash flows. It consists of the risk-free rate plus a risk premium that compensates for the risk associated with the specific investment or project.

Routine Transactions

Recurring financial activities that are regularly reflected in the accounting records during the normal course of business.

S Corporation

A type of corporation that elects to pass corporate income, losses, deductions, and credits through to its shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates, allowing S corporations to avoid double taxation on the corporate income.

SAS

Statements issued by the Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA), which provide guidelines and rules for conducting audits and other financial reporting activities.

SEC

The Securities and Exchange Commission (SEC) is an agency authorized by the United States Congress to regulate the securities markets and protect investors by enforcing financial reporting practices among public corporations.

SEC Filings

Financial and informational disclosures required by the U.S. Securities and Exchange Commission (SEC) under the Securities Act of 1933 and the Securities Exchange Act of 1934. These filings, which include forms such as 10-K, 10-Q, and 8-K, are mandatory for publicly traded companies to ensure transparency and compliance with federal securities laws.

SEC Registration Statement

A disclosure document that must be filed with the Securities and Exchange Commission (SEC) in connection with a public offering of securities, unless the offering qualifies for an exemption.

SEP Plan

A Simplified Employee Pension (SEP) plan is a type of retirement plan that allows employers to contribute to traditional Individual Retirement Accounts (IRAs) set up for employees, including themselves if self-employed. Contributions are made directly to the IRA of each participating employee.

SFAS

Statements issued by the Financial Accounting Standards Board (FASD), intended to provide guidelines and standards for financial accounting and reporting.

SIA

A trade group that represents broker-dealers, advocating on their behalf and providing industry standards and support.

SPDA

A tax-deferred investment vehicle similar to an Individual Retirement Account (IRA), but without many of the restrictions typically associated with IRAs.

SSARS

Statements on Standards for Accounting and Review Services (SSARS) are standards issued by the American Institute of Certified Public Accountants (AICPA) pertaining to the performance of review and compilation engagements for non-public entities.

Safe Harbor Rule

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.

Sale

A transaction between a buyer and a seller in which the buyer receives goods, services, or securities in exchange for money or other consideration.

Sale-Leaseback Transaction

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.

Sales Discount

A reduction in the price of goods or services provided to a buyer, typically granted for early payment on sales made on credit.

Sales Tax

A tax imposed by state or local governments on the sale of goods and services, collected by the retailer at the point of sale and remitted to the government.

Salvage Value

The estimated resale value assigned to an asset at the end of its useful life, often used in calculating depreciation of fixed assets.

Savings Bond

A savings bond is a debt security issued by the U.S. government, available in denominations ranging from $50 to $10,000, designed to provide a safe investment option where interest accrues and the bond is redeemable for its face value at maturity.

Seasonality

Variations in business or economic activity that recur with regularity due to factors such as changes in climate, holidays, and vacations.

Secondary Market

A market where securities are traded among investors subsequent to their original issuance in the primary market. This includes exchanges and over-the-counter markets where investors buy and sell securities such as stocks and bonds.

Secured Bond

A bond that provides bondholders with a pledge of specific company assets as collateral to guarantee the repayment of the principal and interest.

Secured Debt

Debt that is backed by the pledge of collateral or other assets, providing the lender with a claim to specific property if the borrower defaults.

Securities Industry Association (SIA)

A trade association representing broker-dealers, which lobbies the government, monitors industry trends, and maintains records of broker profits, primarily focusing on the sale of taxable securities.

Securities and Commodities Exchanges

Organized, national exchanges where securities, options, and futures contracts are traded by members for their own accounts and for the accounts of customers.

Securities and Exchange Commission (SEC)

A U.S. federal agency responsible for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, including the nation's stock and options exchanges.

Securitization

The process of pooling various types of contractual debt such as residential mortgages, commercial loans, or other receivables, and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations.

Security

A security is a transferable certificate of ownership that represents an investment in equity (such as stocks) or debt (such as bonds) and serves as evidence of an interest in or a claim on the assets and earnings of the issuer.

Security Interest

A legal interest granted in an asset to secure the performance or payment of an obligation by a debtor to a creditor.

Self Employment Tax

A tax primarily for individuals who work for themselves, such as sole proprietors, partners, and independent contractors. It covers contributions for Social Security (OASDI) and Medicare (HI), similar to taxes withheld by employers from employee wages.

Sell Out

The liquidation of a margin account by a broker after a margin call has failed to produce additional equity to bring the margin to the required level.

Selling, General, and Administrative (SG&A) Expenses

Selling, General, and Administrative (SG&A) Expenses are the cumulative costs associated with selling products, managing the company, and general overhead. These expenses appear on a company's income statement and include sales commissions, advertising, promotional materials, salaries of non-production employees, and office supplies among other costs.

Sensitivity Analysis

A study that measures the impact of changes in one or more variables on the risk or profitability of an investment or project.

Separate Entity

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.

Serial Bond

A type of bond issue, often utilized by municipalities, that is structured with various maturity dates scheduled at regular intervals until the entire issue is retired.

Share

A unit of equity representing ownership in a corporation, which entitles the holder to a proportion of the corporation's assets and profits.

Shareholder

A person or entity that owns shares or equity in a corporation, thereby holding a portion of the corporation's capital stock.

Shares Authorized

The maximum number of shares of stock that a company is legally permitted to issue as specified in its articles of incorporation.

Shares Outstanding

The total number of shares of a company that have been issued and are currently held by investors, including shares held by institutional investors and restricted shares held by company insiders and officers.

Short Bond

A bond with a short maturity period, typically defined as two years or less.

Short Coupon

A bond interest payment that covers a period less than the conventional six-month period.

Short Interest

The total number of shares of a stock that have been sold short by investors and have not yet been covered or closed out.

Short Sale

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.

Short Term Gain or Loss

This gain is subject to tax at the investor's ordinary income tax rate, rather than the lower long-term capital gains rate, which applies to investments held for more than a year. For tax purposes, the profit or loss realized from the sale of securities or other capital assets that were held for six months or less.