October 1, 2018

Glossary

Glossary

All | # A B C D E F G H I J K L M N O P Q R S T U V W Y Z
There are 45 names in this directory beginning with the letter A.
Account Balance
The net of credits and debits for an account at the end of a reporting period.

Account Reconciliation
The process of ensuring that the beginning balance plus the sum of all entries on an account statement equals the ending balance. After deposits, interest received, and credits are added and automatic withdrawals, outstanding checks, negotiated checks, and account charges are subtracted, if the resulting balance equals the ending balance on the statement, the account is reconciled.

Accountant
An individual trained and knowledgeable in the profession of accountancy.

Accounting (Accountancy)
The function of compiling and providing financial information primarily by reports referred to as financial statements. Accounting includes bookkeeping, systems design, analysis and interpretation of accounting information.

Accounts Payable
Obligations to pay for goods or services that have been acquired on open accounts from suppliers. Accounts Payable is a current liability in the Balance Sheet.

Accounts Receivable
Amounts due the company on account from customers who have bought merchandise or received services. Accounts Receivable is a current asset in the Balance Sheet.

Accrual Basis
The method of keeping accounts which shows all expenses incurred and income earned for a given period of time, even though such expenses and income may not actually have been paid or received in cash during the same period of time.

Accrued Expense
An expense incurred, but not yet paid.

Accrued Revenue
Revenue earned, but not yet collected.

Accumulated Depreciation
An account to which estimated depreciation is added.

Active-Participant Status
A person who participates in a qualified pension, stock bonus, or profit-sharing plan, a qualified annuity plan, a tax-sheltered annuity (TSA) plan, a simplified employee pension plan, or a local, state, county, or federal retirement plan has active-participant status, as does his or her spouse.

Actuary
A person who analyzes probability and risk estimates for insurance contracts and retirement plans.

Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that changes periodically based on a measure or an index, such as the rate on US Treasury bills or the average national mortgage rate. Borrowers assume a degree of risk in order to receive a lower rate at the beginning of an ARM.

Adjusted Entry
An entry made in the general journal at the end of an accounting period to bring certain accounts up to date.

Adjusted Gross Income (AGI)
The amount of income subject to federal income taxes. To determine AGI, subtract deductions (e.g., business expenses or IRA contributions) from gross income (employment income, interest income, dividends, and capital gains).

Advance
Money received from an employer before it is actually earned.

Agent
A person authorized by another to act on their behalf. Thus, an agent can enter into contracts and other such legal binding functions on behalf of another. Usually, the corporation's officers act as corporate agents.

Aggressive Growth Fund
A mutual fund designed to maximize long-term capital growth, rather than dividend income, by investing in narrow market segments, small company stocks, and companies with high growth rates.

Allocation Formula
Formula The formula that governs employer contributions to employee profit-sharing plans and redistributes funds forfeited by employees who leave these plans.

Alternative Minimum Tax (AMT)
A tax calculation designed to prevent taxpayers from escaping their fair share of tax liability by taking numerous tax breaks; it adds certain tax preference items back into adjusted gross income. If AMT liability is greater than regular tax liability, the taxpayer must pay the AMT amount.

American Opportunity Tax Credit (Hope Credit)
A federal tax credit that compensates families for a certain amount of tuition per student per year for the first four years of post-secondary education.

Amortization
A way of measuring the consumption of the value of long-term assets like equipment or buildings. This process gradually eliminates a debt, loan, or mortgage over a period of time. It can also be used to deduct capital expenses over a period of time.

Annual Meeting of Shareholders
Nearly all states require a corporation to hold an annual meeting of shareholders at which time directors are elected and other corporate issues are voted on.

Annual Percentage Rate (APR)
The yearly cost of credit or a loan, expressed as a simple percentage. All consumer credit agreements and loans are legally required to disclose the APR.

Annual Report
A yearly statement that describes company management, operations, and financial information. The Securities and Exchange Commission (SEC) requires all corporations issuing registered stock to publish annual reports, which are sent to shareholders and also made available for public review.

Annuitant
The person to whom an annuity is payable.

Annuity
A long-term contract sold by life insurance companies that guarantees fixed or variable payments to the purchaser at regular intervals. Payments are usually scheduled to begin at a future time, such as retirement. Some annuities provide tax-deferred earnings, often as part of retirement plans.

Annuity Cash Refund
The contract for an annuity offering income for life may include a death benefit for the total premiums paid. When the annuitant dies, the annuity cash refund will be the net sum of premiums paid minus the amount received in annuity payments.

Annuity Certain
An option in an annuity contract that allows the annuity owner to select a future level of income covering a specified number of years, generally 10 years. If the annuitant dies before the end of this period, the remaining obligation is transferred to a designated beneficiary.

Annuity Joint and Survivor
An annuity option that provides payments for two designated annuitants. Upon the death of the first annuitant, the surviving annuitant receives prearranged, continued payments for life, based on a percentage received by the first annuitant.

Annuity Joint Life
An annuity option for two or more individuals where payments cease at the death of the first annuitant.

Annuity Modified Refund
In a contributory retirement plan, the annuity beneficiary of a deceased retiree receives the accumulated balance of the pension fund, which is referred to as the annuity modified refund.

Annuity Payout Option
The choice of how payments from an annuity will be received: as a fixed dollar amount, for a fixed period, or over the lifetime(s) of one or two annuitants.

Application Fee
A fee to process a loan application.

Appraisal
An assessment of a property's value by a qualified appraiser, based on information from recent sales of similar properties.

Appreciation
Increase in value. Often used with reference to an asset, such as land, building, stocks or bonds.

Articles of Incorporation (Certificate of Incorporation or Charter)
The articles are the primary legal document of a corporation; they serve as a corporation's constitution. The articles are filed with the state government to begin corporate existence. The articles contain basic information on the corporation as required by state law.

Articles of Organization
LLCs must file the articles with the proper state authorities to begin existence. The articles of organization are very similar to a corporation's articles of incorporation.

Asset
Anything of value owned or controlled by a corporation or individual. An asset may be tangible or intangible.

Asset Allocation
A process that divides investments among different asset classes, such as stocks, bonds, and cash, in order to reduce portfolio risk.

Asset Class
A specific category of assets or investments, such as cash, bonds, stocks, or real estate. Assets in the same class have similar characteristics and behave similarly in the marketplace.

Assignment
The legal transfer of ownership of an asset to another person or entity.

Assumed Name
A name under which a corporation conducts business that is not the legal name of the corporation as shown in its articles of incorporation. If a corporation does business under an assumed name, it may be required to file registration of the assumed name with the state. Also known as a Fictitious Business Name.

Authorized Shares or Stock
The total number of shares a corporation is authorized to sell. This number is specified in the articles of incorporation. All of the shares authorized need not be issued.

Automatic Reinvestment
Automatically depositing mutual fund dividends or capital gains back into an account to buy additional shares.