Accounting Terminology Guide - Over 1,000 Accounting and Finance Terms (2024)

Table of Contents

4 401(k) Plan A A Misstatement is Inconsequential Abatement Absorption Costing Accelerated Depreciation Account Account Payable Account Receivable Accountable Plan Accountant Accountants' Report Accounting Accounting Change Accounting Cycle Accounting Principles Board (APB) Accounts Payable Subsidiary Ledger Accounts Receivable Turnover Accrual Accrual Accounting Accrual Basis Accrued Expense Accrued Interest Accumulated Depreciation Accumulation Acid-Test Ratio Acquisition Actuary Additional Paid in Capital Adjusted Basis Adjusted Gross Income Adjusted Trial Balance Adjusting Journal Entry ADR Adverse Opinion Affiliated Company Agency Fund AICPA Allocate Allowance for Doubtful Accounts Alternative Dispute Resolution Alternative Minimum Tax (AMT) American Depository Receipt (ADR) American Institute of Certified Public Accountants (AICPA) Amortization AMT Analyst Analytical Procedures Annual Report Annuity Anti-Dilution APB Appreciation Assembly of Financial Statements Assertion Asset Asset Turnover At Par Audit Audit Documentation Audit Engagement Audit Risk Audit Sampling Auditing Standards Auditor Auditors' Report Authorized Shares Average Days’ Inventory On-Hand Average Days’ Sales Uncollected Average-Cost Method B Backup Withholding Bad Debt Balance Bank Reconciliation Bank Statement Bankruptcy Base Market Value Beginning Inventory Bequest Beta Coefficient Bid and Asked Blue Sky Laws Board of Directors Bond Bond Discount Bond Indenture Bondholder Book Value Bookkeeping Boot Bottom Line Break-Even Point Break-Even Units Budget Burden Rate Business Combinations Business Segment Buyout Bylaws C Cafeteria Plan Call Loan Call Price Callable Callable Instrument Capital Asset Pricing Model (CAPM) Capital Expenditure Capital Gain Capital Projects Funds Capital Stock Capitalize Capitalized Cost Capitalized Interest Capitalized Lease CAPM Carrying Value Carryovers Cash Cash Account Cash Basis Cash Dividend Cash Equivalents Cash Flow to Assets Cash Flow to Sales Cash Flows Cash Payments Journal Cash Ratio Cash Receipts Journal Casualty Loss CD CEO Certificate of Deposit (CD) Certified Financial Planner (CFP) Certified Internal Auditor (CIA) Certified Management Accountant (CMA) Certified Public Accountant (CPA) CFO CFP Chief Executive Officer (CEO) Chief Financial Officer (CFO) CIA Claim for Refund Clean Opinion Close Closed-End Mutual Fund Closing Entry CMA CMO Co-Mingling Collateral Collateralized Mortgage Obligation (CMO) Combined Financial Statement Comfort Letter Commercial Paper Commission Committee of Sponsoring Organizations of the Treadway Commission (COSO) Commodities Common Stock Company Company Level Controls Comparative Financial Statement Compensate Compensatory Balance Compilation Compilation Engagement Compilation Report Complex Trust Compliance Audit Compound Interest Principles Comprehensive Income Condensed Financial Statement Confirmation Conservatism Consistency Consolidated Financial Statements Consolidation Constructive Receipt Consumer Goods Contingency Contingent Liability Continuing Operations Continuing Professional Education (CPE) Contra Account Contra-Liability Account Contract Contributed Capital Contribution Margin Control Deficiency Control Risk Controls Tests Conversion Convertible Stock Copyright Corporate Bond Corporate Income Tax Corporation COSO Cost Accounting Cost Basis Cost of Capital Cost of Goods Sold Cost Recovery Method Coupon Coupon Bond Coverdell Education Savings Account (Education IRA) CPA CPE Credit Credit Agreement Credit Balance Creditor Current Asset Current Liability Current Ratio Current Value Current Yield D Date of Auditors'/Accountants' Report DDB Dealer Death Benefit Debenture Debenture Stock Debit Debit Balance Debt Debt Instrument Debt Retirement Debt Security Debt Service Fund Debt-to-Equity Ratio Debtor Decedent Declare Declining-Balance Method Defalcation Default Defeasance Deferral Deferred Charge Deferred Income Taxes Deferred Interest Bond Deferred Payment Annuity Deficiency in Design Deficiency in Operation Deficit Defined Benefit Plan Defined Contribution Plan Deflation Demand Loan Dependent Care Expenses Depletion Deposit Method Depreciation Derivatives Detailed Income Statement Detection Risk Detective Controls Direct Labor Costs Direct Material Direct Overhead Disbursem*nt Disclaimer of Opinion Disclosure Discontinued Operations Discount Discount Bond Discount Rate Discount Yield Discounted Cash Flow Discretionary Trust Disposable Income Dissolution Distribution Expense Distributions Dividend Payout Ratio Dividends Dividends in Arrears Dividends Payable Dividends Yield Documentation Completion Date Double Taxation Double-Declining-Balance Depreciation Method (DDB) Double-Entry Bookkeeping Draft Dual Dating Due Date Due Diligence Dutch Auction E Earned Income Earned Income Tax Credit (EITC) Earnings Per Share (EPS) Earnings Price Ratio Econometrics Economic Growth Rate Economics Effective Interest Method Effective Interest Rate Effective Tax Rate EITC EITF Emerging Issues Task Force (EITF) Employee Benefit Plan Employee Stock Ownership Plan (ESOP) Encumbrance Ending Inventory Endorsem*nt Engagement Completion Document Entrepreneur EPS Equilibrium Price Equity Equity Account Equity Financing Equity Method of Accounting Equity Securities Error Escrow ESOP Estate Tax Estimated Tax Estimation Transactions Evidential Matter Exchanges Excise Tax Excluded Income Exclusions Executor Exempt Organization Exemption Expatriation Tax Expectation Gap Expenditure Expense Expense Ratio Experienced Auditor Exploration Expenditures Exposure Draft Extension Extent of Tests of Control External Reporting Extinguishment of Debt Extraordinary Items F Face Value Factoring Factoring: Over-Advances Factory Overhead Costs Fair Credit Reporting Act Fair Market Value FASB Favorable Variance Federal Income Taxes Federal Reserve Bank Federal Reserve System Fiduciary FIFO Filing of Returns Finance Financial Accounting Standards Financial Accounting Standards Board (FASB) Financial Institution Financial Leverage Financial Statements Finished Goods Finished Goods Inventory Firm First In, First Out (FIFO) Fiscal Year Fixed Annuity Fixed Assets Fixed Costs Fixed Price Fixture Floor Flotation Cost FOB FOB Destination FOB Shipping Point Forecast Forecasted Balance Sheet Forecasted Income Statement Forecasting of Cash Flow Foreclosure Foreign Corporation Foreign Currency Translation Foreign Exchange Foreign Tax Credit Form 10-K Form 10-Q Form 8-K Form W-4 Franchise Franchise Tax Fraud Free Cash Flow Free On Board (FOB) Freight In Freight Out Full Disclosure Fund Accounting Fundamental Analysis Funding Future Contract Future Value G GAAP GAAS Gain GAO GASB General Journal General Ledger General Partnership Generally Accepted Accounting Principles (GAAP) Generally Accepted Auditing Standards (GAAS) Gift Going Concern Going Private Going Public Goods Available for Sale Goodwill Governing Documents Government Accountability Office (GAO) Governmental Accounting Standards Board (GASB) Grantee Grantor Greenmail Gross Income Gross Margin Gross Sales Guaranty H Half-Life Head of Household Hedge Held-to-Maturity Security High-Low Method High-Premium Convertible Debenture Historical Cost Holding Period Hope Scholarship Credit Horizontal Analysis I IASC IMA Improvement Imputed Interest In Arrears Income Income from Operation Income Statement Income Summary Income Tax Basis Incorporation Incremental Cash Flow Indenture Independence Standard Board (ISB) Independent Broker Index Indirect Cost Indirect Labor Costs Indirect Manufacturing Costs Indirect Materials Indirect Method Individual Retirement Account (IRA) Inflation Inflation Rate Inheritance Initial Public Offering (IPO) Inquiry Inside Information Insolvency Insolvent Installment Method Institute of Management Accounts (IMA) Instrument Insurance Insured Account Intangible Asset Interest Interest Coverage Ratio Interest Rate Interim Dividend Interim Financial Statements Internal Audit Internal Control Internal Control Over Financial Reporting Internal Rate of Return Internal Revenue Code Internal Revenue Service (IRS) International Accounting Standards Committee (IASC) International Mutual Fund Intrinsic Value Inventory Inventory Financing Inventory Turnover Invest Investing Investment Investment Banker Investment Income Investment Tax Credit Invoice Involuntary Conversions IPO IRA IRS ISB Issue Issued and Outstanding Issuer J Jeopardy Job Order Joint Return Joint Venture Journal Journal Entry Junk Bonds Just-In-Time K Keogh Plan Key Employee Key Industry Key Person Insurance Kiting L Labor Laissez-Faire Land Last In, First Out (LIFO) Lay Off Lease Lease Acquisition Cost Lease-Purchase Agreement Leasehold Ledger Ledger Account Lender Lending Securities Lessee Lessor Letter of Credit Letter of Intent Leverage Leveraged Buy Out Leveraged Lease Liability Lien Life Expectancy Lifetime Learning Credit LIFO LIFO Liquidation Limited Company Limited Liability Limited Liability Company (LLC) Limited Liability Partnership (LLP) Limited Partnership Liquid Assets Liquidation Liquidity Liquidity Ratio Listed Property Litigation Support/Dispute Resolution LLC LLP Loan Loan Value Long Bond Long Term Long-Term Asset Long-Term Debt Long-Term Gain Long-Term Investment Long-Term Liability Long-Term Loss Loss Loss on Disposal of Plant and Equipment Lower of Cost or Market Lump-Sum Distribution M Macroeconomics Management Management Accounting Management Discussion and Analysis (MD&A) Management's Report Managerial Accounting Manipulation Manufacture Manufacturing Overhead Margin Margin of Profit Marginal Cost Marginal Tax Rate Mark-to-Market Markdown Market Market Capitalization Market Index Market Interest Rate Market Price Market Share Market Value Marketable Securities Marketing Markup Married Taxpayers Matching Principle Material Material Weakness Materiality Materials Inventory Account Maturity Maturity Date MD&A Merchandise Merchandise Inventory Merger Microeconomic Pricing Model Microeconomics Mixed Costs Modeling Modified Accelerated Cost Recovery System Monetary Items Money Laundering Money Market Monopoly Mortgage Moving Average Moving Average Method Municipal Bond Mutual Agency Mutual Fund N NASBA NASDAQ National Association of Securities Dealers Automated Quotations (NASDAQ) National Association of State Boards of Accountancy (NASBA) Nationalization NAV Negative Assurance Negligence Negotiable Net Net Asset Value (NAV) Net Assets Net Current Assets Net Income Net Leas Net Loss Net Present Value (NPV) Net Present Value Method Net Proceeds Net Sales Net Worth New York Stock Exchange (NYSE) No-Par Stock No-Par Value Non Routine Transactions Non-Callable Non-for-Profit Organization/Tax-Exempt Organization Non-Sufficient Funds (NSF) Check Nonresident Alien Not-for-Profit Note Notes Payable Notes Receivable Notional NPV NSF Check NYSE O Objectivity Obligations Obsolescence OCBOA Offer Offering Price OPEB Open-End Mutual Fund Operating Agreement Operating Cycle Operating Expense Operating Lease Operating Profit (or Loss) Opportunity Cose Option Ordinary Annuity Ordinary Income Organization Organization Expenditures Original Cost Other Comprehensive Basis of Accounting (OCBOA) Other Post-Retirement Employee Benefit (OPEB) Output Outsourcing Outstanding Outstanding Check Over-the-Counter Overhead Overhead Application Rate Owner’s Equity P P/E Ratio Paid in Capital Par Par Value Parent Company Partnership Passive Activity Loss Passive Income Patronage Dividends Payback Period Payback Period Method Payout Ratio PCAOB Peer Review Penalty Pension Period Periodic Inventory System Periodicity Perpetual Inventory Personal Financial Planning Personal Financial Specialist (PFS) Personal Financial Statements Personal Property Petty Cash PFS Phantom Income Physical Inventory Plant Pledged POB Pooling of Interest Portfolio Post-Closing Trial Balance Post-Retirement Benefits Predetermined Overhead Rate Preemptive Right Preferred Stock Premium Premium Bond Prenuptial Contract Prepaid Expense Present Value Preventive Controls Price Range Price/Earnings (P/E) Ratio Primary Earnings Per Share Prime Rate Principal Private Placement Privilege Privity Pro Forma Pro Rata Product Line Production Profit Profit Margin Profit Margin Pricing Profit Sharing Plan Profitability Projection Promissory Note Property, Plant, and Equipment Proprietorship Prospective Financial Information (Forecast and Projection) Prospectus Proxy Public Company Accounting Oversight Board (PCAOB) Public Offering Public Oversight Board (POB) Purchase Method of Accounting Purchase Order Purchases Purchases Discounts Purchases Returns and Allowances Push-Down Accounting Puts Q Qualified Opinion Qualitative Qualitative Analysis Quality Quantitative Analysis Quantity Quarter Quarterly Reports Quasi-Reorganization Quick Assets Quick Ratio R R&D Rate of Return Ratio Analysis Raw Material Raw Materials Inventory Account Real Estate Real Estate Investment Trust (REIT) Real Estate Mortgage Investment Conduit (REMIC) Real Income Real Interest Rate Real Property Real Rate of Return Realization Realized Profit (or Loss) Reasonable Assurance Rebate Recapitalization Receivable Turnover Receivables Recession Reconcile Reconciliation Recovery Red Herring Redemption Value Refinancing Agreement Refunding Registrar Regression Analysis Regressive Rate Regulated Investment Company (RIC) Reinsurance Reinvestment Rate REIT Related Party Transaction Relevant Assertions REMIC Reorganization Repairs Replacements Report Report Release Date Repos Repurchase Agreement (Repos) Required Rate of Return Rescind Research and Development (R&D) Research and Development Costs Reserve Resident Alien Residual Value Restricted Assets Restricted Fund Restructuring Retail Method Retained Earnings Retained Earnings Account Retire Return Return on Assets Return on Equity Return on Investment (ROI) Return on Sales Revenue Recognition Revenues Review Review Engagement Review Report RIC Right of Rescission Right to Setoff Risk Risk Averse Risk Management Risk-Adjusted Discount Rate ROI Routine Transactions S S Corporation Safe Harbor Rule Sale Sale-Leaseback Transaction Sales Discount Sales Tax Salvage Value SAS Savings Bond Seasonality SEC SEC Filings SEC Registration Statement Secondary Market Secured Bond Secured Debt Securities and Commodities Exchanges Securities and Exchange Commission (SEC) Securities Industry Association (SIA) Securitization Security Security Interest Self Employment Tax Sell Out Selling, General, and Administrative (SG&A) Expenses Sensitivity Analysis SEP Plan Separate Entity Serial Bond Settlement Method SFAS Share Shareholder Shares Authorized Shares Outstanding Short Bond Short Coupon Short Interest Short Sale Short-Term Short-Term Debt Short-Term Gain or Loss Short-Term Investment SIA Significant Accounts Significant Deficiency Significant Findings or Issues Simple Interest Simple Plans Simple Trust Simplified Employee Pension (SEP) Plan Single Audit Act Single-Premium Deferred Annuity (SPDA) Sinking Fund Small Business Stock Sole Proprietorship Solvency Solvent SPDA Special Assessment Special Report Specialist Specialized Mutual Fund Specific Identification Method Speculation Spinoff Split Offering Spot Market Spread Spreadsheet SSARS Standard Standard Cost Standard Deduction Standard Deviation Start-Up Costs Stated Value Statement Statement of Cash Flows Statement of Cost of Goods Manufactured Statement of Financial Accounting Standards (SFAS) Statement of Financial Condition Statement of Owner’s Equity Statements on Auditing Standards (SAS) Statements on Standards for Accounting and Review Services (SSARS) Statute of Limitations Stepped Up Basis Stock Compensation Plan Stock Exchange Stock Market Stock Options Stock Rights Stock Split Stockholder Stockholders’ Equity Straight-Line Depreciation Straight-Line Percentage Strike Price Subsequent Event Subsidiary Sum-of-the-Years-Digits Method Surplus Surviving Spouse Swap T T Account Takeover Tangible Asset Target Costing Tax Tax Basis Tax Court Tax Credit for the Elderly and Disabled Tax Lien Tax Shelter Tax Year Taxable Earnings Taxable Income Taxable Municipal Bond Taxpayer Identification Number (TIN) Tenancy-in-Common Term Term Loan Test Time Value Time Value of Money Timing of Tests of Control TIN Tip Title Ton Total Capitalization Total Cost Total Direct Labor Cost Variance Total Direct Materials Cost Variance Total Gain Total Inventory Method Total Quality Management Trade Trade Date Trademark Trader Transaction Transfer Transfer Agent Transfer Price Transfer Tax Transferee Liability Transferred Basis Treasurer Treasury Treasury Bill Treasury Bond Treasury Instruments Treasury Note Treasury Stock Trend Trend Analysis Trial Balance Troubled Debt Restructuring Trust Trustee Turnover U UAA Unamortized Bond Discount Unamortized Premiums on Investments Unaudited Financial Statements Underlying Debt Underlying Security Undervalued Underwrite Unearned Discount Unearned Income Unearned Interest Unequal Cash Flows Uniform Accountancy Act (UAA) Uniform Capitalization Rules Unissued Stock Unit Unlimited Liability Unqualified Opinion Unrealized Loss or Gain on Long-Term Investments Unrealized Profit (or Loss) Unrestricted Funds Unsecured Bond Use of Professional Skepticism when Evaluating the Results of Testing V Valuation Valuation Allowance Value Value-Added Tax (VAT) Variable Annuity Variable Costs Variable Manufacturing Costs Variable Overhead Variable Rate Loan Variance VAT Velocity Vendor Venture Capital Vertical Analysis Vesting Voidable Volatile Volatility Volume W Wage Walkthroughs Warrant Wash Sale Weighted-Average-Cost Method Wholesale Wholesaler With Recourse Withholding Withholding Allowance Without Recourse Work in Progress Working Capital Working Interest Working Papers Worksheet Wrap-Around Mortgage Write Off Y Yellow Book Yield Yield Curve Yield to Call Yield to Maturity Z Zero-Coupon Bond Zero-Coupon Convertible Security

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4

401(k) Plan

Employee benefit plan authorized by Internal Revenue Code section 401(k), whereby an employer establishes an account for each participating employee and each participant elects to deposit a portion of his or her salary into the account. The amount deposited is not subject to income tax. This is the most common type of salary reduction plans.

A

A Misstatement is Inconsequential

If a reasonable person would conclude after considering the possibility of further undetected misstatements that the misstatement either individually or when aggregated with other misstatements would clearly be immaterial to the

FINANCIAL STATEMENTS

. If a reasonable person could not reach such a conclusion regarding a particular misstatement, that misstatement is more than inconsequential.

Abatement

Complete removal of an amount due, (usually referring to ataxABATEMENTapenaltyabatement or anINTERESTabatement within a governing agency).

Absorption Costing

An approach to product costing that assigns a representative portion of all types of manufacturing costs--direct materials, directlabor, variable factoryoverhead, and fixed factory overhead--to individual products.

Accelerated Depreciation

Method that records greater DEPRECIATION than STRAIGHT-LINE DEPRECIATION in the early years and less depreciation than straight-line in the later years of an ASSET'S HOLDING PERIOD.

Account

Formal record that represents, in words, money or other unit of measurement, certain resources, claims to such resources, transactions or other events that result in changes to those resources and claims.

Account Payable

Amount owed to a CREDITOR for delivered goods or completed services.

Account Receivable

Claim against a DEBTOR for an uncollected amount, generally from a completed transaction of sales or services rendered.

Accountable Plan

Any reimbursem*nt or other expense allowance arrangement of an employer that meets all of the following requirements (therefore excluding it from gross w-2 EARNED INCOME and tax): (1) it provides reimbursem*nts advances or allowances including per diem and meals, to employees for any job related deductible business expense; (2) employees must be able to substantiate expenses covered in the plan; (3) employee must return any excess advances or payments.

Accountant

Person skilled in the recording and reporting of financial transactions.

Accountants' Report

Formal document that communicates an independent accountant's: (1) expression of limited assurance on FINANCIAL STATEMENTS as a result of performing inquiry and analytic procedures (REVIEW REPORT); (2) results of procedures performed (AGREED-UPON PROCEDURES REPORT); (3) non-expression of opinion or any form of assurance on a presentation in the form of financial statements information that is the representation of management (COMPILATION REPORT); or (4) an opinion on an assertion made by management in accordance with the Statements on Standards for Attestation Engagements (ATTESTATION REPORT). An accountants' report does not result from the performance of an AUDIT.

Accounting

Recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the FINANCIAL STATEMENTS.

Accounting Change

Change in (1) an accounting principle; (2) an accounting estimate; or (3) the reporting entity that necessitates DISCLOSURE and explanation in published financial reports.

Accounting Cycle

The sequence of steps followed in the accounting process to measure business transactions and transform the measurements into FINANCIAL STATEMENTS for a specific period.

Accounting Principles Board (APB)

Senior technical committee of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) which issued pronouncements on accounting principles from 1959-1973. The APB was replaced by the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB).

Accounts Payable Subsidiary Ledger

A financial record of an individual ACCOUNT PAYABLE in which entries can be made daily.

Accounts Receivable Turnover

Used to measure a company’s ability to collect cash from credit customers. Found by dividing net sales by average net ACCOUNT RECEIVABLE.

Accrual

The recognition of an expense or revenue that has occurred but has not yet been recorded.

Accrual Accounting

The attempt to record the financial effects of transactions and other events in the periods in which those transactions or events occur rather than only in the periods in which cash is received or paid by the business, using all the techniques developed by accountants to apply the MATCHING PRINCIPLE.

Accrual Basis

Method of ACCOUNTING that recognizes REVENUE when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.

Accrued Expense

An expense that has occurred but is not recognized in the accounts.

Accrued Interest

INTEREST that has accumulated between the most recent payment and the sale of a BOND or other fixed-income security.

Accumulated Depreciation

Total DEPRECIATION pertaining to an ASSET or group of assets from the time the assets were placed in services until the date of the FINANCIAL STATEMENT or tax return. This total is the CONTRA ACCOUNT to the related asset account.

Accumulation

Profits that are not paid out as DIVIDENDS but are instead added to the company’s capital base.

Acid-Test Ratio

The relationship of a company’s current assets that can be converted into cash to its current liabilities. It is determined by dividing QUICK ASSETS by current liabilities.

Acquisition

One company taking over controlling interest in another company.

Actuary

Mathematician employed by an insurance company to calculate PREMIUMS, RESERVES, DIVIDENDS, and insurance, PENSION, and ANNUITY rates, using risk factors obtained from experience tables.

Additional Paid in Capital

Amounts paid for stock in excess of its PAR VALUE or STATED VALUE. Also, other amounts paid by stockholders and charged to EQUITY ACCOUNTS other than CAPITAL STOCK.

Adjusted Basis

After a taxpayer's basis in property is determined, it must be adjusted upward to include any additions of capital to the property and reduced by any returns of capital to the taxpayer. Additions might include improvements to the property and subtractions may include depreciation or depletion. A taxpayer's adjusted basis in property is deducted from the amount realized to find the gain or loss on sale or disposition.

Adjusted Gross Income

Gross income reduced by business and other specified expenses of individual taxpayers. The amount of adjusted gross income affects the extent to which medical expenses, non business casualty and theft losses and charitable contributions may be deductible. It is also an important figure in the basis of many other individual planning issues as well as a key line item on the IRS form 1040 and required state forms.

Adjusted Trial Balance

A trial balance prepared after all adjusting entries have been recorded and posted to the accounts. Should have equal credit and debit totals.

Adjusting Journal Entry

An accounting entry made into a subsidiary ledger called the General journal to account for a periods changes, omissions or other financial data required to be reported "in the books" but not usually posted to the journals used for typical period transactions (the cash receipts journal, cash disbursem*nts journal, the payroll journal, sales journal and so on) the entry is posted to the general ledger accounts directly and usually will be numbered itself, dated and have an explanation. Example: AJE# 1 12-31-2003, debit Cash in bank $1,000. Credit interest income $1,000, to record interest income on business bank account at year end, not recorded in cash receipts journal but credited by the bank. (Cross-reference bank reconciliation and account where it was found)

ADR

Receipts for shares of foreign company stock maintained by an intermediary indicating ownership.

Adverse Opinion

Expression of an opinion in an AUDITORS' REPORT which states that FINANCIAL STATEMENTS do not fairly present the financial position, results of operations and cash flows in conformity with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).

Affiliated Company

Company, or other organization related through common ownership, common control of management or owners, or through some other control mechanism, such as a long-term LEASE.

Agency Fund

Fund consisting of ASSETS where the holder agrees to remit the assets, income from the assets, or both, to a specified beneficiary in due course or at a specified time.

AICPA

National professional membership organization that represents practicing CERTIFIED PUBLIC ACCOUNTANTS (CPAs). The AICPA establishes ethical and auditing standards as well as standards for other services performed by its members. Through committees, it develops guidance for specialized industries. It participates with the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and the GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB) in establishing accounting principles.

Allocate

To set aside for a specific reason.

Allowance for Doubtful Accounts

A contra-asset account used to reduce ACCOUNTS RECEIVABLE to the amount that is expected to be collected in cash.

Alternative Dispute Resolution

An alternative to formal litigation which includes techniques such as arbitration, mediation, and a non-binding summary jury trial.

Alternative Minimum Tax (AMT)

Tax imposed to back up the regular income tax imposed on CORPORATION and individuals to assure that taxpayers with economically measured income exceeding certain thresholds pay at least some income tax.

American Depository Receipt (ADR)

Receipts for shares of foreign company stock maintained by an intermediary indicating ownership.

American Institute of Certified Public Accountants (AICPA)

Amortization

Gradual and periodic reduction of any amount, such as the periodic writedown of a BOND premium, the cost of an intangible ASSET or periodic payment Of MORTGAGES or other DEBT.

AMT

Analyst

Person in a brokerage house, bank trust dept., or mutual fund group who studies a number of companies and makes buy or sell recommendations on the securities of particular companies and industry groups.

Analytical Procedures

Substantive tests of financial information which examine relationships among data as a means of obtaining evidence. Such procedures include: (1) comparison of financial information with information of comparable prior periods; (2) comparison of financial information with anticipated results (e.g., forecasts); (3) study of relationships between elements of financial information that should conform to predictable patterns based on the entity's experience; (4) comparison of financial information with industry norms.

Annual Report

Report to the stockholders of a company which includes the company's annual, audited BALANCE SHEET and related statements of earnings, stockholders' or owners' equity and cash flows, as well as other financial and business information.

Annuity

Series of payments, usually payable at specified time intervals.

Anti-Dilution

Condition that may increase the computation of EARNINGS PER SHARE (EPS) or decrease loss per share solely because of the inclusion of COMMON STOCK equivalents, such as STOCK OPTIONS, WARRANTS, convertible DEBT or convertible PREFERRED STOCK, nomination or selection of the independent AUDITORs.

APB

Appreciation

Increase in the value of an ASSET such as a stock, BOND, commodity, or real estate.

Assembly of Financial Statements

The providing of various accounting or data-processing services by an accountant, the output of which is in the form of financial statements ostensibly to be used solely for internal management purposes.

Assertion

Explicit or implicit representations by an entity's management that are embodied in financial statement components and for which the AUDITOR obtains and evaluates evidential matter when forming his or her opinion on the entity's financial statements.

Asset

An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events. Anything of value to which the firm has a legal claim. Any owned tangible or intangible object having economic value useful to the owner.

Asset Turnover

A way of measuring how profitably and efficiently assets are being used to produce sales. This is determined by dividing net sales by average total assets.

At Par

At a price equal to the face, or nominal, value of a security.

Audit

A professional examination of a company’s financial statement by a professional accountant or group to determine that the statement has been presented fairly and prepared using GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).

Audit Documentation

The written record of the basis for the AUDITOR's conclusions that provides the support for the auditor's representations, whether those representations are contained in the auditor's report or otherwise. (May be referred to as work papers or working papers).

Audit Engagement

Agreement between a CPA firm and its client to perform an AUDIT.

Audit Risk

The risk that the AUDITOR may unknowingly fail to modify appropriately his or her opinion on financial statements that are materially misstated.

Audit Sampling

Application of an AUDIT procedure to less than 100% of the items within an account BALANCE or class of transactions for the purpose of evaluating some characteristic of the balance or class.

Auditing Standards

Guidelines to which an AUDITOR adheres. Auditing standards encompass the auditor's professional qualities, as well as his or her judgment in performing an AUDIT and in preparing the AUDITORS' REPORT. Audits conducted by independent CERTIFIED PUBLIC ACCOUNTANT (CPA) usually in accordance with GENERALLY ACCEPTED AUDITING STANDARDS (GAAS), which consist of standards approved and adopted by the membership of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA).

Auditor

Person who AUDITS financial accounts and records kept by others. Includes both public accounting firms registered with the PCAOB and associated persons thereof.

Auditors' Report

Written communication issued by an independent CERTIFIED PUBLIC ACCOUNTANT (CPA) describing the character of his or her work and the degree of responsibility taken. An auditors' report includes a statement that the AUDIT was conducted in accordance with GENERALLY ACCEPTED AUDITING STANDARDS (GAAS), which require that the AUDITOR plan and perform the audit to obtain reasonable assurance about whether the FINANCIAL STATEMENTS are free of material misstatement, as well as a statement that the auditor believes the audit provides a reasonable basis for his or her opinion.

Authorized Shares

Maximum number of shares of any class a company may legally create under the terms of its articles of incorporation.

Average Days’ Inventory On-Hand

The average number of days required to sell the current inventory of products available for sale. It is found by dividing the number of days in a year by inventory turnover.

Average Days’ Sales Uncollected

A ratio that shows the average length of time it takes a company to receive payment for credit sales.

Average-Cost Method

A way of arriving at the cost of inventory that computes the average cost of all goods available for sale during a fixed period in order to determine the value of inventory.

B

Backup Withholding

Payors of interest, dividends and other reportable payments must withhold income tax equal at a rate equal to the fourth lowest rate applicable to single filers if they fail to supply a federal id # or if they fail to certify that they are not subject to it.

Bad Debt

All or portion of an ACCOUNT, loan, or note receivable considered to be uncollectible.

Balance

Basic FINANCIAL STATEMENT, usually accompanied by appropriate DISCLOSURES that describe the basis of ACCOUNTING used in its preparation and presentation of a specified date the entity's ASSETS, LIABILITIES and the EQUITY of its owners. Also known as a STATEMENT OF FINANCIAL CONDITION.

Bank Reconciliation

A process by which anaccountantdetermines whether and why there is a difference between thebalanceshown on thebank statementand the balance of thecash accountin the firm’sGENERAL LEDGER.

Bank Statement

A periodicstatement, usually monthly, that a bank sends to the holder of a checkingaccountshowing thebalance in the account at the beginning of the month, during, and at the end of the month.

Bankruptcy

Legal process, governed by federal statute, whereby the DEBTS of aninsolventperson are liquidated after being satisfied to the greatest extent possible by theDEBTOR'S ASSETS. Duringbankruptcy, the debtor's assets are held and managed by a court appointedTRUSTEE.

Base Market Value

Averagemarket priceof a group of securities at a given time.

Beginning Inventory

Thequantityofmerchandiseavailable forsaleat the beginning of anACCOUNTINGperiod.

Bequest

Beta Coefficient

Measure of a stock’s relativevolatility. The beta is the covariance of a stock in relation to the rest of thestock market.

Bid and Asked

Bid is the highest price a prospective buyer is prepared to pay at a particular time for a tradingunitof a given SECURITY; asked is the lowest price acceptable to a prospective seller of the same security. The difference between the prices is theSPREAD.

Blue Sky Laws

State laws that regulate the ISSUANCE of SECURITIES. These laws are coordinated with federal acts.

Board of Directors

Individuals responsible for overseeing the affairs of an entity, including the election of its officers. The board of a CORPORATIONthat issues stock is elected by stockholders.

Bond

One type of long-termPROMISSORY NOTE, frequently issued to the public as aSECURITYregulated under federal securities laws or state BLUE SKY LAWS. Bonds can either be registered in the owner's name or are issued as bearer instruments.

Bond Discount

The amount belowPAR VALUEthat aBONDsells for.

Bond Indenture

An additional agreement to aBONDissuethat defines the rights, privileges, and limitations of BONDHOLDERS.

Bondholder

A person who owns aBONDcertificate issued by a government orCORPORATION.

Book Value

Amount,netorCONTRA ACCOUNTbalances, that anASSETorLIABILITYshows on the BALANCE SHEET of acompany. Also known asCARRYING VALUE.

Bookkeeping

The process of recording financial transactions and keeping financial records.

Boot

The non technicaltermused by some to describe anycashor other property that is received in exchange of property that would be otherwise nontaxable.

Bottom Line

The line in a FINANCIALSTATEMENTthat showsNET INCOMEorLOSS.

Break-Even Point

The point at which TOTALREVENUESequals TOTAL COSTS.

Break-Even Units

The number of units of a product that must be sold before acompanymakes enough money to pay for direct and indirect costs of making the product.

Budget

Financial plan that serves as an estimate of future cost,REVENUESor both.

Burden Rate

Standardrate multiplied by a level of activity to determine theOVERHEADcost of that activity. Activity measures includeLABORor machine hours.

Business Combinations

Combining of two entities. Under thePURCHASE METHOD OF ACCOUNTING, one entity is deemed to acquire another and there is a new basis of accounting for the ASSETS and LIABILITIES of the acquiredcompany. In a POOLING OF INTERESTS, two entities merge through an exchange ofCOMMON STOCKand there is no change in theCARRYING VALUEof the assets or liabilities.

Business Segment

Any division of anorganizationauthorized to operate, within prescribed or otherwise established limitations, under substantial control by its ownmanagement.

Buyout

Purchase of at least a controlling percentage of a company’s stock to take over its ASSETS and operations.

Bylaws

Collection of formal, written rules governing the conduct of aCORPORATION'S affairs (such as what officers it will have, what their responsibilities are, and how they are to be chosen).Bylawsare approved by a corporation's stockholders, if a stock corporation, or other owners, if a non-stock corporation.

C

Cafeteria Plan

A benefit plan maintained by an employer for the benefit of the employees under which each participant has the opportunity to select the benefits they desire. Certain minimum choices and nondiscriminatory rules apply.

Call Loan

Loan repayable on demand. Also known as DEMAND LOAN.

Call Price

A specified price, usually above face value, at which a CORPORATION may, at its option, buy back and retire BONDS before maturity.

Callable

Redeemable by the issuer before the scheduled maturity.

Callable Instrument

BOND which accords an issuer the right to redemption before it is due.

Capital Asset Pricing Model (CAPM)

Sophisticated model of the relationship between expected risk and expected return.

Capital Expenditure

Outlay of money to acquire or improve capital assets such as buildings and machinery.

Capital Gain

Portion of the total GAIN recognized on the sale or exchange of a noninventory asset which is not taxed as ORDINARY INCOME. Capital gains have historically been taxed at a lower rate than ordinary income.

Capital Projects Funds

Funds used by anot-for-profitorganizationtoaccountfor all resources used for the development of aland improvementor building addition or renovation.

Capital Stock

Ownership shares of aCORPORATIONauthorized by its ARTICLES OFINCORPORATION. The moneyvalueassigned to a corporation's issued shares. TheBALANCESHEETaccountwith the aggregate amount of thePAR VALUEorSTATED VALUEof all stock issued by a corporation.

Capitalize

Convert a schedule ofINCOMEinto aprincipalamount, called capitalizedvalue, by dividing by a rate of INTEREST.

Capitalized Cost

Expenditureidentified with goods or services acquired and measured by the amount ofcashpaid or themarket valueof other property,CAPITAL STOCK, or services surrendered. Expenditures that are written off during two or moreaccountingperiods.

Capitalized Interest

INTERESTcost incurred during the time necessary to bring anASSETto the condition and location for its intended use and included as part of theHISTORICAL COSTof acquiring the asset.

Capitalized Lease

LEASErecorded as anASSETacquisitionaccompanied by a correspondingLIABILITYby theLESSEE.

CAPM

Sophisticated model of the relationship between expectedriskand expectedreturn.

Carrying Value

Amount,netorCONTRA ACCOUNTbalances, that anASSETorLIABILITYshows on the BALANCE SHEET of a company. Also known asBOOK VALUE.

Carryovers

Provision oftaxlaw that allows current losses or certain tax credits to be utilized in the tax returns of future periods..

Cash

ASSETaccounton abalancesheet representing paper currency and coins,negotiablemoney orders and checks, bank balances, and certainshort-termgovernment securities.

Cash Account

Brokeragefirmaccountwhose transactions are settled on acash basis.

Cash Basis

Method ofbookkeepingby whichREVENUESand EXPENDITURES are recorded when they are received and paid.

Cash Dividend

Distribution of a CORPORATION’s earnings to stockholders in the form ofCASH.

Cash Equivalents

Short-term(generally less than three months), highly liquid INVESTMENTS that are convertible to known amounts ofcash.

Cash Flow to Assets

Used to measure the ability of ASSETS to generate operatingCASH FLOWS.

Cash Flow to Sales

A way of measuring the ability of sales to generate operatingCASH FLOWS.

Cash Flows

Netofcashreceipts and cash disbursem*nts relating to a particular activity during a specifiedaccountingperiod.

Cash Payments Journal

A multicolumnjournalused to record sums ofcashpaid out for expenses.

Cash Ratio

Ratio ofCASHandMARKETABLE SECURITIESto CURRENT LIABILITIES.

Cash Receipts Journal

A multicolumnjournalused to record business transactions involving the receipt ofCASHfrom other individuals or businesses.

Casualty Loss

Anylossof anassetdue to fire storm act of nature causing asset damage from unexpected or accidental force. Generally it is deductible regardless of whether it is business or personal.

CD

Formalinstrumentissued by a bank upon the deposit of funds which may not be withdrawn for a specified time period. Typically, an early withdrawal will incur apenalty.

CEO

Officer of afirmprincipally responsible for the activities of aCOMPANY.

Certificate of Deposit (CD)

Formalinstrumentissued by a bank upon the deposit of funds which may not be withdrawn for a specified time period. Typically, an early withdrawal will incur apenalty.

Certified Financial Planner (CFP)

Individual who is trained to develop and implement financial plans for individuals, businesses, and organizations, utilizing knowledge ofincomeandestate tax, investments,risk managementanalysis and retirement planning. CFPs are certified after completing a series of requirements that include education, experience, ethics and an exam. CFPs are not regulated by a governmental authority.

Certified Internal Auditor (CIA)

InternalAUDITORwho has satisfied the examination requirements of the Institute of Internal Auditors.

Certified Management Accountant (CMA)

An accreditation conferred by the Institute ofManagementAccountants that indicates the designee has passed an examination and attained certain levels of education and experience in the practice ofaccountingin the private sector.

Certified Public Accountant (CPA)

ACCOUNTANTwho has satisfied the education, experience, and examination requirements of his or her jurisdiction necessary to be certified as a public accountant.

CFO

Executive officer who is responsible for handling funds, signing CHECKS, keeping financial records, and financial planning for aCORPORATION.

CFP

Chief Executive Officer (CEO)

Officer of afirmprincipally responsible for the activities of aCOMPANY.

Chief Financial Officer (CFO)

Executive officer who is responsible for handling funds, signing CHECKS, keeping financial records, and financial planning for aCORPORATION.

CIA

InternalAUDITORwho has satisfied the examination requirements of the Institute of Internal Auditors.

Claim for Refund

A refund is not automatically mailed if one is due. A taxpayer, whether business or individual, must file a request on a form. It must also be filed within the timeframe allotted or the refund may be lost. An individual can claim a refund back to whatever year it was due but it will only be paid three years back or less.

Clean Opinion

AUDITopinion not qualified for anymaterialscope restrictions nor departures fromGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). Also known asUNQUALIFIED OPINION.

Close

To clear the BALANCES of temporary accounts in order to be ready for the nextaccountingperiod.

Closed-End Mutual Fund

MUTUAL FUNDwith a fixed number ofshares outstandingthat may be bought or sold.CMO- See COLLATERALIZEDMORTGAGEOBLIGATION.

Closing Entry

Ajournal entrymade at the end of anaccountingperiodin order to prepare for the next accounting period by clearing the BALANCES of temporary accounts and summarizing the period’sREVENUESand expenses.

CMA

CMO

SECURITYwhosecash flowsequal the difference between thecashflows of the collateralizing ASSETS and the collateralizedobligationsof a securitizedTRUST. Characteristics ofCMOresiduals vary greatly and can be extremely complex in nature.

Co-Mingling

Mixing ASSETS, e.g. customer-owned SECURITIES, with those owned by afirmin its proprietary accounts.

Collateral

ASSETprovided to aCREDITORassecurityfor aloan.

Collateralized Mortgage Obligation (CMO)

Combined Financial Statement

FINANCIALSTATEMENTcomprising the accounts of two or more entities.

Comfort Letter

Letter provided by acompany's independent publicaccountantto an underwriter when the underwriter has aDUE DILIGENCEresponsibility under Section 11 of the Securities Act of 1933 regarding financial information included in an offeringstatement.

Commercial Paper

A way of borrowing money by using unsecuredshort-termloans sold directly to the public, usually through professionally managed investments firms.

Commission

Percentage of the selling price of the property, paid by the seller.

Committee of Sponsoring Organizations of the Treadway Commission (COSO)

An alliance of five professional organizations dedicated to disseminating appropriateinternal controlstandards.

Commodities

Bulk goods such as grains, metals, and foods traded on acommoditiesexchange or on theSPOT MARKET.

Common Stock

CAPITAL STOCKhaving no preferences generally in terms ofdividends, voting rights ordistributions.

Company

Organizationengaged in business as aPROPRIETORSHIP,PARTNERSHIP,CORPORATION, or other form of enterprise.

Company Level Controls

Controls that exist at thecompanylevel that have an impact on controls at the process,transaction, or application level.

Comparative Financial Statement

FINANCIALSTATEMENTpresentation in which the current amounts and the corresponding amounts for previous periods or dates also are shown.

Compensate

To pay or make payment for something.

Compensatory Balance

Funds that a borrower must keep on deposit as required by a bank.

Compilation

Presentation of financialstatementdata without theACCOUNTANT'S assurance as to conformity with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).

Compilation Engagement

Agreement between aCPAfirmand its client toissuea COMPILATIONREPORT.

Compilation Report

SeeACCOUNTANTS' REPORT.

Complex Trust

Atrustthat is to be distinguished from asimple trustin the fact that it permitsaccumulationor distribution of current incomeduring thetax yearand provides for charitable contributions.

Compliance Audit

Reviewof financial records to determine whether the entity is complying with specific procedures or rules.

Compound Interest Principles

Interestcomputed onprincipalplus interest earned in previous periods.

Comprehensive Income

Change inEQUITYof a business enterprise during aperiodfrom transactions and other events and circ*mstances from sources not shown in theincome statement. The period includes all changes in equity except those resulting from INVESTMENTS by owners anddistributionsto owners.

Condensed Financial Statement

A FINANCIALSTATEMENTforexternal reportingthat presents only the major categories of information.

Confirmation

AUDITOR'S receipt of a written or oral response from an independent third party verifying the accuracy of information requested.

Conservatism

Aninvestmentstrategy aimed at long-termcapitalappreciationwith lowrisk; moderate; cautious; opposite of aggressive behavior; show possible losses but wait for actual profits. Concept which directs the least favorable effect onnet income.

Consistency

ACCOUNTINGpostulate which stipulates that, except as otherwise noted in the FINANCIALSTATEMENT, the same accounting policies and procedures have been followed fromperiodto period by anorganizationin the preparation and presentation of itsfinancial statements.

Consolidated Financial Statements

CombinedFINANCIAL STATEMENTSof aparent companyand one or more of its subsidiaries as one economic unit

Consolidation

BUSINESS COMBINATION of two or more entities that occurs when the entitiestransferall of theirNET ASSETS to a new entity created for that purpose.

Constructive Receipt

A taxpayer is considered to have received theincomeeven though the monies are not in hand, it may have been set aside or otherwise made available. An example isintereston a bankaccount.

Consumer Goods

Goods bought for personal or household use, as distinguished from capital goods or producer’s goods, which are used to produce other goods.

Contingency

An event that might happen but that is not likely or planned.

Contingent Liability

PotentialLIABILITYarising from a pasttransactionor asubsequent event.

Continuing Operations

Portion of a business entity expected to remain active.

Continuing Professional Education (CPE)

Educational programs for CERTIFIED PUBLIC ACCOUNTANTS (CPAs) to keep informed on changes that occur within the profession. State Boards for Public Accountancy and theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)each have separateCPErequirements.

Contra Account

ACCOUNTconsidered to be an offset to another account. Generally established to reduce the other account to amounts that can be realized or collected.

Contra-Liability Account

A deduction from aLIABILITY, such as discounts onnotes payable, which is a deduction from thebalanceof notes payable.

Contract

In general, agreement by which rights or acts are exchanged for lawful consideration.

Contributed Capital

The stockholders’investmentin aCORPORATION.

Contribution Margin

The excess ofREVENUESover allvariable costsrelated to a particular salesvolume.

Control Deficiency

This exists when the design or operation of a control does not allowmanagementor employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

Control Risk

Measure ofriskthat errors exceeding a tolerable amount will not be prevented or detected by an entity's internal controls.

Controls Tests

Tests directed toward the design or operation of aninternal controlstructure policy or procedure to assess its effectiveness in preventing or detectingmaterialmisstatements in a financialreport.

Conversion

Exchange of a convertiblesecuritysuch as aBONDinto another security such as a fixed number of shares of the issuing CORPORATION’sCOMMON STOCK.

Convertible Stock

Stock that may be exchanged for other SECURITIES of theissuer.

Copyright

An exclusive right granted by the federal government to the possessor to publish and sell literary, musical, or other artistic materials for aperiodof the author’s life plus 50 years, including computer programs.

Corporate Bond

DEBT instrumentissued by a privateCORPORATION, as distinct from one issued by a government agency or a municipality.

Corporate Income Tax

TheTAXthat an incorporated business must pay to the federal government and, often, to state and city governments as well.

Corporation

Form of doing business pursuant to a charter granted by a state or federal government. Corporations typically are characterized by the issuance of freely transferableCAPITAL STOCK, perpetual life, centralizedMANAGEMENT, and limitation of owners'LIABILITYto the amount theyINVESTin the business.

COSO

An alliance of five professional organizations dedicated to disseminating appropriateinternal controlstandards.

Cost Accounting

Procedures used for rationally classifying, recording, and allocating current or predicted costs that relate to a certain product orproductionprocess.

Cost Basis

Original price of anASSET, used in determiningCAPITAL GAIN.

Cost of Capital

Rate of returnthat a business could earn if it chose anotherinvestmentwith equivalentrisk.

Cost of Goods Sold

Figure representing the cost of buying raw materials and producingfinished goods.

Cost Recovery Method

METHOD OFREVENUE RECOGNITIONwhich recognizes profits after costs are completely recovered. Generally used only when the total amount of collections is highly uncertain. Intax, theACCOUNTINGMETHOD used to depreciate ASSETS.

Coupon

INTEREST rateon aDEBT SECURITYtheISSUERpromises to pay to the holder untilmaturity, expressed as an annual percentage ofFACE VALUE.

Coupon Bond

ABONDthat is usually not registered with the issuingCORPORATIONbut instead bearsinterestcoupons stating the amount of INTEREST due and the payment date.

Coverdell Education Savings Account (Education IRA)

Ataxexempttrustexclusively for the purpose of paying qualified higher education costs of the trusts designated beneficiary.

CPA

ACCOUNTANTwho has satisfied the education, experience, and examination requirements of his or her jurisdiction necessary to be certified as a public accountant.

CPE

Credit

Entry on the right side of aDOUBLE-ENTRY BOOKKEEPINGsystem that represents the reduction of anASSETorexpenseor the addition to aLIABILITYor RVENUE.

Credit Agreement

Arrangement in which one party borrows or takes possession in the present by promising to pay in the future.

Credit Balance

BALANCEremaining after one of a series ofbookkeepingentries. This amount represents aLIABILITYorincometo the entity.

Creditor

Party that loans money or other ASSETS to another party.

Current Asset

ASSETthat one can reasonably expect to convert intocash, sell, or consume in operations within a single operating cycle, or within a year if more than one cycle is completed each year.

Current Liability

Obligation whoseLIQUIDATIONis expected to require the use of existing resources classified as CURRENT ASSETS, or the creation of other current liabilities.

Current Ratio

Used as an indicator of a COMPANY’sliquidityand ability to pay short-termdebts. This is found by dividing CURRENT ASSETS by CURRENT LIABILITIES.

Current Value

1)Valueof anASSETat the present time as compared with the asset'sHISTORICAL COST. (2) Infinance, the amount determined by discounting the future revenue stream of an asset usingCOMPOUND INTEREST PRINCIPLES.

Current Yield

AnnualINTERESTon aBONDdivided by themarket price.

D

Date of Auditors'/Accountants' Report

Last day the AUDITORS perform fieldwork and the last day of responsibility relating to significant events subsequent to the financialstatementdate.

DDB

Method ofACCELERATED DEPRECIATION, approved by theINTERNAL REVENUE SERVICE (IRS), permitting twice the rate of annual DEPRECIATION as theSTRAIGHT-LINE DEPRECIATIONmethod.

Dealer

Individual orfirmacting as a principal in a securitiestransaction.

Death Benefit

Amounts received under a lifeinsurancecontractand paid by reason of the death of the insured. (Although most death benefits are paid at termination of life, certain plans now pay accelerated death benefits while the insured is still alive, i.e.: an AIDS patient might possibly receive accelerated death benefit)

Debenture

GeneralDEBTobligation backed only by the integrity of the borrower and documented by an agreement called and INDENTURE.

Debenture Stock

Stock issued under acontractproviding for fixed payments at scheduled intervals and more likepreferred stock than aDEBENTURE, since their status inliquidationisEQUITYand notDEBT.

Debit

Entry on the left side of aDOUBLE-ENTRY BOOKKEEPINGsystem that represents the addition of anASSETor expenseor the reduction to aLIABILITYor REVENUE.

Debit Balance

BALANCEremaining after one or a series ofbookkeepingentries. This amount represents anASSETor an expenseof the entity.

Debt

General name for money, notes, BONDS, goods or services which represent amounts owed.

Debt Instrument

Written promise to repay aDEBT.

Debt Retirement

Repayment ofDEBT.

Debt Security

Document which is evidence of an obligation orLIABILITY.

Debt Service Fund

Fund whosePRINCIPALorINTERESTis set aside and accumulated toretireDEBT.

Debt-to-Equity Ratio

A way of measuring the relationship ofDEBTfinancing toEQUITY FINANCING, or the extent to which acompanyis leveraged.

Debtor

Party owing money or other ASSETS to aCREDITOR.

Decedent

Individual who has died.

Declare

Authorize the payment of DIVIDEND on a specified date, an act of theBOARD OF DIRECTORSof a CORPORATION.

Declining-Balance Method

An accelerated method of depreciating a tangible long-livedASSETby applying a fixed-rate based on some multiple of theSTRAIGHT-LINE DEPRECIATIONrate to itsCARRYING VALUE.

Defalcation

To misuse or embezzle funds.

Default

Failure to meet any financial obligation.Defaulttriggers aCREDITOR'S rights and remedies identified in the agreement and under the law.

Defeasance

Annulment of acontractor deed; a clause within a contract or deed that provides for annulment.

Deferral

The postponement of the date that anexpensealready paid or incurred, or of a REVENUE already received, is entered in theLEDGER.

Deferred Charge

Incomereceived but not earned until all events have occurred. Deferred income is reflected as aLIABILITY.

Deferred Income Taxes

ASSETS or LIABILITIES that arise from timing or measurement differences betweentaxandaccountingprinciples.

Deferred Interest Bond

BONDthat paysINTERESTat a later date.

Deferred Payment Annuity

ANNUITYwhosecontractprovides that payments to the annuitant be postponed until a number of periods have elapsed.

Deficiency in Design

This exists when a control necessary to meet the control objective is missing or an existing control is not properly designed so that even if the control operates as designed, the control objective is not always met.

Deficiency in Operation

This exists when a properly designed control does not operate as designed, or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.

Deficit

Financial shortage that occurs when LIABILITIES exceed ASSETS.

Defined Benefit Plan

SeeEMPLOYEE BENEFIT PLAN.

Defined Contribution Plan

SeeEMPLOYEE BENEFIT PLAN.

Deflation

Decline in the prices of goods and services.

Demand Loan

Loanrepayable on demand. Also known as aCALL LOAN.

Dependent Care Expenses

Qualified child care expenses will allow a taxpayer this computedcreditagainst tax. The amounts can be found on the individual forms as the limitations and computation may change eachtax year.

Depletion

Method of computing a deduction toACCOUNTfor a reduction invalueof extractable natural resources.

Deposit Method

Expenseallowance made for wear and tear on anASSETover its estimated useful life.

Depreciation

Expenseallowance made for wear and tear on anASSETover its estimated useful life.

Derivatives

Financial instruments whosevaluevaries with the value of an underlyingasset(such as a stock,BOND, commodity or currency) orindexsuch as interest rates. Financial instruments whose characteristics and value depend on the characterization of an underlying instrument or asset.

Detailed Income Statement

A complete and explicitstatementof an economic entity’s financial activities and holdings.

Detection Risk

Riskthat theAUDITORwill not detect amaterialmisstatement.

Detective Controls

These have the objective of detecting errors orfraudthat have already occurred that could result in a misstatement of thefinancial statements.

Direct Labor Costs

Thelaborcost is for specific work that can be easily and economically traced to an end product.

Direct Material

Amaterialthat will become part of a finished product and can be easily and economically traced to specific product units.

Direct Overhead

Portion ofOVERHEADcosts allocated to manufacturing, by the application of astandardfactor termed aBURDEN RATEorOVERHEAD APPLICATION RATE.

Disbursem*nt

Payment bycashor check.

Disclaimer of Opinion

Statementby anAUDITORindicating inability to express an opinion on the fairness of theFINANCIAL STATEMENTSprovided and the reason for the inability. The auditor is required to disclaim depending on the limitation in scope.

Disclosure

Process of divulgingaccountinginformation so that the content ofFINANCIAL STATEMENTSis understood.

Discontinued Operations

Portion of a business that is planned to be or is discontinued.

Discount

Reduction from the full amount of a price orDEBT.

Discount Bond

BONDselling below itsREDEMPTION VALUE.

Discount Rate

Rate at whichINTERESTis deducted in advance of the issuance, purchasing, selling, or lending of a financial instrument. Also, the rate used to determine theCURRENT VALUE, orpresent value, of anASSETorincomestream.

Discount Yield

Yieldon aSECURITYsold at aDISCOUNT.

Discounted Cash Flow

Present valueof futurecashestimated to be generated.

Discretionary Trust

Arrangement in which theTRUSTEEhas the authority to makeINVESTMENTdecisions and has control over investments within the framework of theTRUSTinstrument.

Disposable Income

PersonalINCOMEremaining after personal taxes and noncommercial government fees have been paid.

Dissolution

Termination of aCORPORATION.

Distribution Expense

Expenseof selling, advertising, and delivery of goods and services.

Distributions

Payment by a business entity to its owners of items such ascashASSETS, stocks, or earnings.

Dividend Payout Ratio

Percentage of earnings paid to shareholders inCASH.

Dividends

Distribution of earnings to owners of aCORPORATIONinCASH, other ASSETS of the corporation, or the corporation'sCAPITAL STOCK.

Dividends in Arrears

DIVIDENDSon cumulativePREFERRED STOCKthat remain unpaid in the year they are due.

Dividends Payable

ALIABILITYfor payment of a COMPANY’s earnings to its shareholders.

Dividends Yield

Used to measure the currentreturnto an investor in a stock.

Documentation Completion Date

A complete and final set ofaudit documentationshould be assembled for retention as of a date not more than 45 days after thereport release date.

Double Taxation

The act of taxing corporate earnings twice, once as theNET INCOMEof theCORPORATIONand once as the DIVIDENDSdistributed to stockholders.

Double-Declining-Balance Depreciation Method (DDB)

Method ofACCELERATED DEPRECIATION, approved by theINTERNAL REVENUE SERVICE (IRS), permitting twice the rate of annual DEPRECIATION as theSTRAIGHT-LINE DEPRECIATIONmethod.

Double-Entry Bookkeeping

Method of recording financial transactions in which each transaction is entered in two or more accounts and involves two-way, self-balancing posting. Total DEBITS must equal total CREDITS.

Draft

Signed, written order by which one party (drawer) instructs another party (drawee) to pay a specified sum to a third party (payee).

Dual Dating

Dating of the ACCCOUNTANTS' orAUDITORS' REPORTwhen asubsequent eventdisclosed in theFINANCIAL STATEMENTSoccurs after completion of the field work but before issuance of the report. For example, "January 3, 19xx, except forNotex, as to which the date is March 10, 19xx."

Due Date

Each governing agency and its forms scheduled reporting and most importantly payments have a requireddue date. It is this date that if most files timely may result in apenalty, fine, and commenceinterestcharges.

Due Diligence

(1) Procedures performed by underwriters in connection with the issuance of a SECURITIES EXCHANGE COMMISSION(SEC) registrationstatement. These procedures involve questions concerning thecompanyand its business, products, competitive position, recent financial and other developments and prospects. Also performed by others in connection with acquisitions and other transactions. (2) Requirement found in ethical codes that the person governed by the ethical rules exercise professional care in conducting his or her activities.

Dutch Auction

Auction system in which the price of an item is gradually lowered until it meets a responsive bid and is sold.

E

Earned Income

Wages, salaries, professional fees, and other amounts received as compensation for services rendered.

Earned Income Tax Credit (EITC)

A refundabletaxcreditfor eligible lowincomeworkers, subject to computations based on qualifying children and phase in and phase out income levels.

Earnings Per Share (EPS)

Measure of performance calculated by dividing thenetearnings of acompanyby the average number ofshares outstandingduring aperiod.

Earnings Price Ratio

Relationship ofEARNINGS PER SHARE (EPS)to current stock price.

Econometrics

Use of computer analysis andmodelingtechniques to describe in mathematical terms the relationship between key economic forces such aslabor, capital, interest rates, and government policies, the test the effects of changes in economic scenarios.

Economic Growth Rate

Rate of change in the gross national product, as expressed in an annual percentage.

Economics

The study of the ways goods and services are produced, transported, sold, and used.

Effective Interest Method

A way of AMORTIZING BOND DISCOUNTS or PREMIUMS by applying a constantinterest rateto theCARRYING VALUEof the BONDS at the beginning of eachinterestperiod.

Effective Interest Rate

The rate ofINTERESTactually paid or earned.

Effective Tax Rate

Totalincometaxes expressed as a percentage ofNET INCOMEbefore taxes.

EITC

A refundabletaxcreditfor eligible lowincomeworkers, subject to computations based on qualifying children and phase in and phase out income levels.

EITF

Assists theFINANCIAL ACCOUNTING STANDARDS BOARD (FASB)and provides guidance on early identification of emerging issues affecting financial reporting and problems in implementing authoritative pronouncements.

Emerging Issues Task Force (EITF)

Employee Benefit Plan

Compensation arrangement, generally in writing, used by employers in addition to salary or wages. Some plans such as grouptermlifeinsurance, medical insurance and qualified retirement plans are treated favorably under the taxlaw. Most common qualified retirement plans are: (1) defined benefit plans - a promise to pay participants specified benefits that are determinable and based on such factors as age, years of service, and compensation; or (2) defined contribution plans - provide an individualaccountfor each participant and benefits based on items such as amounts contributed to the account by the employer and employee andinvestmentexperience. This type includesPROFIT-SHARING PLANS, EMPLOYEE STOCK OWNERSHIP PLANS and 401(k) PLANS.

Employee Stock Ownership Plan (ESOP)

Stock bonus plan of an employer that acquires SECURITIES issued by the plan sponsor.

Encumbrance

(1)MORTGAGEor otherlienon the entity's ASSETS; (2) AnticipatedEXPENDITURE; (3) Uncompleted or undelivered portion of a purchase commitment.

Ending Inventory

Merchandiseon hand at the end of anaccountingperiod

Endorsem*nt

The process by which the payee transfers ownership of a CHECK to a bank or another party by writing his or her name on the back of it.

Engagement Completion Document

A document whereby theAUDITORidentifies allsignificant findings or issues. The document should be as specific as necessary in the circ*mstances for a reviewer togaina thorough understanding of the significant findings or issues.

Entrepreneur

Person who takes on the risks of starting a new business.

EPS

Measure of performance calculated by dividing thenetearnings of acompanyby the average number ofshares outstandingduring aperiod.

Equilibrium Price

Price when the supply of goods in a particularmarketmatches demand.

Equity

ResidualINTERESTin the ASSETS of an entity that remains after deducting its LIABILITIES. Also, the amount of a business' total assets less total liabilities. Also, the third section of aBALANCESHEET, the other two being assets and liabilities.

Equity Account

ACCOUNTin theEQUITYsection of theBALANCESHEET. IncludesCAPITAL STOCK, ADDITIONALPAID IN CAPITALandRETAINED EARNINGS.

Equity Financing

Raising the money by issuing shares ofCOMMON STOCKorPREFERRED STOCK.

Equity Method of Accounting

Investorscost basisis adjusted up or down (in proportion to the % of stock ownership) as the investee'sretained earningsfluctuation; used for long-terminvestments inequity securitiesof affiliate where holder can exert significant influence; 20% ownership or greater is arbitrarily presumed to have significant influence over the investee.

Equity Securities

CAPITAL STOCKand other SECURITIES that represent ownership shares, or the legal rights to purchase or acquire CAPITAL STOCK.

Error

Act that departs from what should be done; imprudent deviation, unintentional mistake or omission.

Escrow

Money or property put into the custody of a third party for delivery to aGRANTEE, only after fulfillment of specified conditions.

ESOP

Stock bonus plan of an employer that acquires SECURITIES issued by the plan sponsor.

Estate Tax

Taxon thevalueof a DECENDENT'S taxable estate, typically defined as thedecedent's ASSETS less LIABILITIES and certain expenses which may include funeral and administrative expenses.

Estimated Tax

Amount oftaxLIABILITYa taxpayer may expect to pay for the current taxperiod. Usually paid through quarterly installments.

Estimation Transactions

Activities that involvemanagementjudgments or assumptions in formulatingaccountbalances in the absence of a precise means of measurement.

Evidential Matter

UnderlyingACCOUNTINGdata and other corroborating information that support theFINANCIAL STATEMENTS.

Exchanges

Transferof money, property or services in exchange for any combination of these items.

Excise Tax

Taxor duty on themanufacture,sale, or consumption ofcommodities.

Excluded Income

SeeEXCLUSIONS.

Exclusions

Incomeitem which is excluded from a taxpayer'sgross incomeby theINTERNAL REVENUE CODEor an administrative action. Commonexclusionsinclude gifts, inheritances, and death proceeds paid under a life insurancecontract. Also known asexcluded income.

Executor

Person appointed by a will to manage a DECENDENT'S estate.

Exempt Organization

Organizationwhich is generally exempt from paying federalincometax. Exempt organizations include religious organizations, charitable organizations, social clubs, and others.

Exemption

Amount of a taxpayer'sincomethat is not subject to tax. All individuals, TRUSTS, and estates qualify for an exemptionunless they are claimed as a dependent on another individual's taxreturn. Exemptions also are granted to taxpayers for their dependents.

Expatriation Tax

Individuals that loose or terminate their residency within the 10 yearperiodimmediately preceding thecloseof a tax year, if the termination orlossis for the sole purpose of avoidingtax.

Expectation Gap

The difference in perception between the public and theCPAas a result ofaccountingandauditservice.

Expenditure

Payment, either inCASH, by assuming aLIABILITY, or by surrenderingASSET.

Expense

Something spent on a specific item or for a particular purpose.

Expense Ratio

Amount, expressed as a percentage of totalinvestment, that shareholders pay forMUTUAL FUNDoperating expenses andmanagementfees.

Experienced Auditor

AnAUDITORthat has a reasonable understanding ofauditactivities and has studied thecompany's industry as well as theaccountingand auditing issues relevant to the industry.

Exploration Expenditures

AnAUDITORthat has a reasonable understanding ofauditactivities and has studied thecompany's industry as well as theaccountingand auditing issues relevant to the industry.

Exposure Draft

Document issued by theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA),FINANCIAL ACCOUNTING STANDARDS BOARD (FASB),GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB)or other standards setting authorities to invite public comment before a final pronouncement is issued.

Extension

Time granted by a taxing authority, such as theINTERNAL REVENUE SERVICE (IRS), a state or city, which allows the taxpayer to file tax returns later than the originaldue date.

Extent of Tests of Control

Each year theAUDITORmust obtain sufficient evidence about whether thecompany'sinternal control over financial reporting, including the controls for allinternal controlcomponents, is operating effectively.

External Reporting

Reporting to stockholders and the public, as opposed to internal reporting formanagement's benefit.

Extinguishment of Debt

To get rid of theliabilityby payment; to bring to an end.

Extraordinary Items

Events and transactions distinguished by their unusual nature and by the infrequency of their occurrence.Extraordinary itemsare reported separately, less applicableincometaxes, in the entity'sstatementof income or operations.

F

Face Value

Amount due atmaturityfrom aBONDornote.

Factoring

Selling a RECEIVABLE at a discountedvalueto a third party forcash.

Factoring: Over-Advances

Circ*mstance where a business receives more money from a factor than thevalueof the RECEIVABLES, which is aloanagainstinventoryin anticipation of future sales.

Factory Overhead Costs

Variousproduction-related costs that cannot be practically or conveniently traced to an end product.

Fair Credit Reporting Act

Federal law enacted in 1971 giving persons the right to see theircreditrecords at credit reporting bureaus.

Fair Market Value

Price at which property would change hands between a buyer and a seller without any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts.

FASB

Independent, private, non-governmental authority for the establishment ofACCOUNTINGprinciples in the United States.

Favorable Variance

Excess of actual REVENUE over projected revenue, or actual costs over projected costs.

Federal Income Taxes

Taxes onNET INCOMEthat must be paid to the federal government by individuals and businesses.

Federal Reserve Bank

One of the 12 banks that, with their branches, make up theFEDERAL RESERVE SYSTEM.

Federal Reserve System

System established by the FederalReserveAct of 1913 to regulate the U.S. monetary and banking system.

Fiduciary

Person who is responsible for the administration of property owned by others. Corporatemanagementis a FIDUCIARYwith respect to corporate ASSETS which are beneficially owned by the stockholders and CREDITORS. Similarly, aTRUSTEEis the fiduciary of aTRUSTand partners owe fiduciary responsibility to each other and to their creditors.

FIFO

ACCOUNTINGmethod of valuingINVENTORYunder which the costs of the first goods acquired are the first costs charged toexpense. Commonly known asFIFO.

Filing of Returns

Taxpayers meeting statutory requirements MUST file various returns on the prescribed forms. And they must be filed timely or the y may not be considered as filed.

Finance

The science of themanagementof money and other financial ASSETS.

Financial Accounting Standards

Official promulgations, known as STATEMENTS OFFINANCIAL ACCOUNTING STANDARDS, by theFINANCIAL ACCOUNTING STANDARDS BOARD (FASB)which are part ofGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)in the United States.

Financial Accounting Standards Board (FASB)

Independent, private, non-governmental authority for the establishment ofACCOUNTINGprinciples in the United States.

Financial Institution

Organizationengaged in any of the many aspects offinanceincluding commercial banks, thrift institutions, investmentbanks, securities brokers and dealers,creditunions, investment companies,insurancecompanies, and REAL ESTATEINVESTMENT TRUSTS.

Financial Leverage

The ability to increase earnings for stockholders by earning more on ASSETS than is paid inINTERESTonDEBTincurred tofinancethe assets.

Financial Statements

Presentation of financial data includingBALANCESHEETS, INCOME STATEMENTS and STATEMENTS OFCASHFLOW, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for aperiodthen ended.

Finished Goods

The products that have been made and are ready forsale.

Finished Goods Inventory

Aninventoryaccountunique to manufacturing operations.

Firm

A businesspartnership, especially when it is unincorporated.

First In, First Out (FIFO)

ACCOUNTINGmethod of valuingINVENTORYunder which the costs of the first goods acquired are the first costs charged toexpense. Commonly known asFIFO.

Fiscal Year

Periodof 12 consecutive months chosen by an entity as itsACCOUNTINGperiod which may or may not be a calendar year. FixedAsset- Any tangible ASSET with a life of more than one year used in an entity's operations.

Fixed Annuity

Investmentcontractsold by aninsurancecompanythat guarantees fixed payments, either for life or for a specified period, to an annuitant.

Fixed Assets

TangibleLONG TERMASSETS used in the continuing operation of a business that are unlikely to change for a long time.

Fixed Costs

Costs that remain constant within a defined range of activity,volume, or timeperiod.

Fixed Price

In apublic offeringof new SECURITIES, price at which investment bankers in the underwriting syndicate agree to sell theissueto the public.

Fixture

Attachment toreal propertythat is not intended to be moved and would create damage to the property if it were moved.

Floor

Termused when discussing INVENTORIES.Inventorycannot be valued lower than the "floor" which is thenetrealizable value of the inventory less an allowance for a normalprofit margin.

Flotation Cost

Cost of issuing new stocks or BONDS.

FOB

Indicates the point at whichtitleto goods passes.

FOB Destination

A shippingtermthat means that the seller bears transportation costs to the place of delivery.

FOB Shipping Point

A shippingtermthat means that the buyer bears transportation costs from the point of origin.

Forecast

ProspectiveFINANCIAL STATEMENTSthat are an entity's expected financial position, results of operations, and cash flows.

Forecasted Balance Sheet

Abalancesheet that projects the financial position of a business for a futureperiod.

Forecasted Income Statement

AnINCOME STATEMENTthat projects theNET INCOMEof a business for a futureperiod.

Forecasting of Cash Flow

Projecting the cashreceipts and the cash payments for a futureperiod.

Foreclosure

Seizure ofCOLLATERALby aCREDITORwhenDEFAULTunder aloanagreement occurs.

Foreign Corporation

Acorporationwhich is not organized under the laws of ones territories or states. Taxing of foreign corporations depends on whether the corporation has Nexus or effectively connectedincomein that state.

Foreign Currency Translation

Restating foreign currency in equivalent dollars; unrealized gains or losses are postponed and carried in Stockholder'sEquityuntil the foreign operation is substantially liquidated.

Foreign Exchange

Instruments employed in making payments between countries.

Foreign Tax Credit

A U.S. taxpayer that pays or accruesincometax to a foreign country may elect tocreditor deduct these taxes in a determinable us dollar amount. This is usually done on the annual individual taxreturnand there is s specific form provided for this.

Form 10-K

SECfiling which is theANNUAL REPORTdue 90 days after the registrant'sBALANCESHEET date.

Form 10-Q

SECfiling which is the quarterlyreportdue 45 days after each of the first three quarter.ends of eachfiscal year.

Form 8-K

SECfiling which is a filing that must be made on the occurrence of an event that is deemed to be of significant importance toSECURITYholders.

Form W-4

A form that specifies the number of EXEMPTIONS claimed by each employee and that gives the employer the authority to withhold money for an employee’sFEDERAL INCOME TAXESand FederalInsuranceContributions Act (FICA) taxes.

Franchise

Legal arrangement whereby the owner of atradename, franchisor, contracts with a party that wants to use the name on a non-exclusive basis to sell goods or services, franchisee. Frequently, the franchise agreement grants strict supervisory powers to the franchisor over the franchisee which, nevertheless, is an independent business.

Franchise Tax

Statetaxwhich is imposed on a state-charteredCORPORATIONfor the right to do business under its corporate name.

Fraud

Willful misrepresentation by one person of a fact inflicting damage on another person.

Free Cash Flow

The amount ofcashthat remains after deducting the funds aCOMPANYmust commit to continue operating at its planned level.

Free On Board (FOB)

Indicates the point at whichtitleto goods passes.

Freight In

Transportation charges onmerchandisepurchased for resale.

Freight Out

Transportation charges onmerchandisesold; anoperating expense.

Full Disclosure

Requirement to disclose allmaterialfacts relevant to atransaction.

Fund Accounting

Method of ACCOUNTING and presentation whereby ASSETS and LIABILITIES are grouped according to the purpose for which they are to be used. Generally used by government entities and not-for-profits.

Fundamental Analysis

Research of such factors as interest rates, gross national product,inflation, unemployment, and inventories as tools to predict the direction of the economy.

Funding

Refinancing aDEBTon or before itsMATURITY; also calledREFUNDINGand, in certain instances, pre-refunding.

Future Contract

Transferable agreement to deliver or receive during a specific future month a standardized amount of a commodity.

Future Value

The amount that aninvestmentwill be worth at a future date if it is invested at compoundinterest.

G

GAAP

Conventions, rules, and procedures necessary to define acceptedaccountingpractice at a particular time. The highest level of such principles are set by theFINANCIAL ACCOUNTING STANDARDS BOARD (FASB).

GAAS

See GENERALLY ACCEPTEDAUDITING STANDARDS.

Gain

Excess ofREVENUESreceived over costs relating to a specifictransaction.

GAO

Accountingand auditing office of the United States government. An independent agency that reviews federal financial transactions and reports directly to Congress.

GASB

Group that has authority to establish standards of financial reporting for all units of state and local government.

General Journal

The simple and most flexible type ofjournal.

General Ledger

Collection of allASSET,LIABILITY, ownersEQUITY, REVENUE, andexpenseaccounts.

General Partnership

PARTNERSHIPwith no limited partners.

Generally Accepted Accounting Principles (GAAP)

Conventions, rules, and procedures necessary to define acceptedaccountingpractice at a particular time. The highest level of such principles are set by theFINANCIAL ACCOUNTING STANDARDS BOARD (FASB).

Generally Accepted Auditing Standards (GAAS)

Standards set by theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)which concern theAUDITOR'S professional qualities and judgment in the performance of his or herAUDITand in the actual report.

Gift

A validtransferof property from one taxpayer to another without consideration or compensation. Agiftmay be subject to the unified estate and gifttransfer tax.

Going Concern

Assumption that a business can remain in operation long enough for all of its current plans to be carried out.

Going Private

Movement from public ownership to private ownership of a COMPANY’s shares either by the company’s repurchase of shares or throughpurchasesby an outside private investor.

Going Public

Activities that relate to offering a privatecompany's shares to the generalinvestingpublic including registering with theSEC.

Goods Available for Sale

The sum ofbeginning inventoryand thenetcost ofpurchasesduring aperiod; the totalgoods available for saleto customers during anaccountingperiod.

Goodwill

Premiumpaid in theacquisitionof an entity over the fairvalueof its identifiable tangible and intangible ASSETS less LIABILITIES assumed.

Governing Documents

Official legal documents that dictate how an entity is operated. Thegoverning documentsof aCORPORATIONinclude ARTICLES OFINCORPORATIONandBYLAWS; aPARTNERSHIPincludes the partnership agreement; a TRUSTincludes the trust agreement or trustindenture; and anLLCincludes the ARTICLES OFORGANIZATIONandOPERATING AGREEMENT.

Government Accountability Office (GAO)

Accountingand auditing office of the United States government. An independent agency that reviews federal financial transactions and reports directly to Congress.

Governmental Accounting Standards Board (GASB)

Group that has authority to establish standards of financial reporting for all units of state and local government.

Grantee

Person to whom property is transferred.

Grantor

(1) Person who transfers property. (2) Person who creates atrust.

Greenmail

Any amount acorporationpays to ashareholderto directly or indirectly buy back its stock.

Gross Income

The beginning point for the determination ofincome, including income from whatever sources derived.

Gross Margin

The difference betweenNET SALESandCOST OF GOODS SOLD.

Gross Sales

The total amount of sales forcashand oncreditaccumulated during a specificaccountingperiod.

Guaranty

Legal arrangement involving a promise by one person to perform theobligationsof a second person to a third person, in the event the second person fails to perform.

H

Half-Life

Point in time at which half thePRINCIPALhas been repaid in amortgage-backedsecurityguaranteed or issued by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home LoanMortgageCorporation.

Head of Household

An individual entitled to specialtaxrates that fall midway between single rates and married filing joint rates, if they fit the qualifying profile.

Hedge

A financialtermfor a specific type ofcommoditiesplanning and trading.

Held-to-Maturity Security

ADEBT SECURITYthatmanagementintends to hold to itsMATURITYor payment date and whosecashvalueis not needed until that date.

High-Low Method

A common, simple way of separatingVARIABLE COSTSfromFIXED COSTS.

High-Premium Convertible Debenture

BONDwith a long-term, high-premium,COMMON STOCKconversionfeature and also offering a fairly competitive interest rate.

Historical Cost

Original costof anassetto an entity.

Holding Period

The time in which a taxpayer acquires property and the date on which it is sold.

Hope Scholarship Credit

A maximum allowablecreditof $1,500 per student for each of the first 2 years of post-secondary education. It is allowable after all additional requirements are met.

Horizontal Analysis

A technique for analyzingFINANCIAL STATEMENTSthat involves the computation of changes in both dollar amounts and percentages from the previous year to the current year.

I

IASC

An independent private sector body, formed in 1973, with the objective of harmonizing theaccountingprinciples which are used in businesses and other organizations for financial reporting around the world. Its members are 143 professional accounting bodies in 104 countries.

IMA

A professionalorganizationmade up primarily ofmanagementaccountants.

Improvement

EXPENDITUREdirected to a particularASSETto improve its performance or useful life.

Imputed Interest

If nointerestor an unrealistic amount of interest is charged in a salve involving certain kinds of deferred payments, then thetransactionwill be treated as if the realistic rate of interest had been used. The difference between the realistic interest and the interest actually used is referred to asimputed interest.

In Arrears

Not paid at the time originally agreed to and overdue.

Income

Inflow of REVENUE during aperiodof time.

Income from Operation

Gross marginwith operating expenses subtracted.

Income Statement

Summary of the effect ofREVENUESand expenses over aperiodof time.

Income Summary

A temporaryaccountused during the closing process that holds a summary of allREVENUESand EXPENSES before theNET INCOMEorlossis transferred to the capital account.

Income Tax Basis

(1) Fortaxpurposes, the concept of basis determines the proper amount ofgaintoreportwhen anASSETis sold. Basis is generally the cost paid for an asset plus the amounts paid to improve the asset less deductions taken against the asset, such asDEPRECIATIONandAMORTIZATION. (2) Foraccountingpurposes, a consistent basis of accounting that usesincometax accounting rules whileGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)does not.

Incorporation

Process by which aCOMPANYreceives a state charter allowing it to operate as aCORPORATION.

Incremental Cash Flow

Netofcashoutflows and inflows attributable to a corporateinvestmentproject.

Indenture

Formal agreement, also called a deed oftrust, between anissuerof bonds and theBONDHOLDERcovering certain considerations such as form of the BOND for example.

Independence Standard Board (ISB)

This is the private sectorstandard-setting body governing the independence of AUDITORs from their public companyclients. It came about from discussions between theAICPA, otheraccountingrepresentatives and the SEC.

Independent Broker

New YorkStock Exchangemember who executes orders for otherfloorbrokers who have morevolumethan they can handle, or for firms whose exchange members are not on the floor.

Index

Statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month.

Indirect Cost

Any cost that cannot be conveniently and economically traced to a specific department; a manufacturing cost that is not easily traced to a specific product and must be assigned using an allocation method.

Indirect Labor Costs

Laborcosts forproduction-related activities that cannot be connected with or conveniently and economically traced to a specific end product.

Indirect Manufacturing Costs

Variousproduction-related costs that cannot be practically or conveniently traced to an end product.

Indirect Materials

Minor materials and otherproductionsupplies that cannot be conveniently and economically traced to specific products.

Indirect Method

The procedure for converting theINCOME STATEMENTfrom anACCRUALto aCASH BASIS.

Individual Retirement Account (IRA)

A personal savings plan that allows an individual to makecashcontributions per year dependent on the individual'sadjusted gross incomeand participation in an employer's retirement plan. Under a traditionalIRAthese earnings are not taxable until the time of withdrawal from the plan.

Inflation

Rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on themarket.

Inflation Rate

Rate of change in prices.

Inheritance

As distinguished from aBEQUESTor devise, aninheritanceis property acquired through laws of descent and distribution from a person who dies without leaving a will. Thevalueof property inherited id excluded from a taxpayersgross income, but if the property inherited produces income it is included in gross income. A taxpayer's basis in inherited property is thefair market valueat the time of death.

Initial Public Offering (IPO)

When a privatecompanygoes public for the first time.

Inquiry

A procedure that consists of seeking information, both financial and non financial, of knowledgeable persons throughout thecompany. It is used extensively throughout theauditand often is complementary to performing other procedures. Inquiries may range from formal written inquiries to informal oral inquiries.

Inside Information

Corporate affairs that have not yet been made public.

Insolvency

Inability to pay DEBTS when due.

Insolvent

When an entity's LIABILITIES exceed its ASSETS.

Installment Method

TaxACCOUNTINGmethod of reportingGAINon thesaleof anASSETexchanged for a RECEIVABLE. In general, the gain is reported as thenoteis paid off.

Institute of Management Accounts (IMA)

A professionalorganizationmade up primarily ofmanagementaccountants.

Instrument

A legal document used for a specific purpose, such as paying for goods received.

Insurance

System whereby individuals and companies that are concerned about potential hazards pay premiums to an insurancecompany, which reimburses them in the event ofloss.

Insured Account

Accountat a bank, savings andloanassociation,creditunion, or brokeragefirmthat belongs to a federal or private insuranceorganization.

Intangible Asset

Assethaving no physical existence such as trademarks and patents.

Interest

Payment for the use or forbearance of money.

Interest Coverage Ratio

A way of measuring the degree of protection that aCREDITORhas from a DEBTOR’sDEFAULToninterestpayments.

Interest Rate

An amount of money charged for borrowing money or paid for the use of somebody else’s money.

Interim Dividend

DIVIDEND declared and paid before annual earnings have been determined, generally quarterly.

Interim Financial Statements

FINANCIAL STATEMENTSthatreportthe operations of an entity for less than one year.

Internal Audit

AUDITperformed within an entity by its staff rather than an independent certified publicaccountant.

Internal Control

Process designed to providereasonable assuranceregarding achievement of variousmanagementobjectives such as the reliability of financial reports.

Internal Control Over Financial Reporting

A process designed by, or under the supervision of the company's principal executive and principal financial officers or persons performing similar functions and effected by the company's board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES and includes those policies and procedures that:
1. Pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the assets of the company.
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company.
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Internal Rate of Return

Method that determines thediscount rateat which thepresent valueof the futureCASH FLOWSwill exactly equal investmentoutlay.

Internal Revenue Code

Collection oftaxrules of the federal government. Also referred to asTitle26 of the United States Code.

Internal Revenue Service (IRS)

Federal agency that administers theINTERNAL REVENUE CODE. TheIRSis part of the United StatesTreasuryDepartment.

International Accounting Standards Committee (IASC)

International Mutual Fund

MUTUAL FUNDthat invests in SECURITIES markets throughout the world so that if one market is in a slump, money can still be made in others.

Intrinsic Value

Valuationdetermined by applying data inputs to a valuation theory or model.

Inventory

Tangible property held forsale, or materials used in aproductionprocess to make a product.

Inventory Financing

Circ*mstance where loans in excess of ACCOUNTS RECEIVABLE are made againstinventoryin anticipation of future sales. Sometimes used as a synonym for OVER-ADVANCES INFACTORING.

Inventory Turnover

A ratio used to indicate the number of times a COMPANY’s averageinventoryis sold during anaccountingperiod.

Invest

To put money into something such as property, stocks, or a business, in order to earnINTERESTor make aprofit.

Investing

The practice of putting money into something, such as property, in order to earnINTERESTor make aprofit.

Investment

EXPENDITUREused to purchase goods or services that could produce areturnto the investor.

Investment Banker

Firm, acting as underwriter or agent, that serves as intermediary between anissuerof SECURITIES and the investingpublic.

Investment Income

Incomefrom SECURITIES and other non-business investments; such asDIVIDENDS,INTEREST, etc.

Investment Tax Credit

This is a component of the general business credit and consists of the following:
1. The energy credit;
2. The rehabilitation credit; and
3. The reforestation credit.

Invoice

Bill prepared by a seller of goods or services and submitted to the purchaser.

Involuntary Conversions

This is aconversionof property where it is in whole or part destroyed, stolen, seized, requisitioned or condemned (or where there is a threat or imminence of requisition or condemnation).

IPO

When a privatecompanygoes public for the first time.

IRA

A personal savings plan that allows an individual to makecashcontributions per year dependent on the individual's adjusted gross incomeand participation in an employer's retirement plan. Under a traditionalIRAthese earnings are not taxable until the time of withdrawal from the plan.

IRS

Federal agency that administers theINTERNAL REVENUE CODE. TheIRSis part of the United StatesTreasuryDepartment.

ISB

Issue

Stock or BONDS sold by aCORPORATIONor a government entity at a particular time.

Issued and Outstanding

Shares of aCORPORATION, authorized in the corporate charter, which have been issued and areoutstanding.

Issuer

Thistermmeans anissuer, the securities of which are registered under Section 12 of the Securities Exchange Act of 1934, or that is required to file reports under Section 15(d) of that Act, or that files or has filed a registration statementwith the SEC that has not yet become effective under the Securities Act of 1933 and that it has not withdrawn.

J

Jeopardy

If theIRSbelieves that collection oftaxappears to be injeopardy(danger of being uncollected), it may immediately assess and collect such tax. The intermediate steps are bypassed.

Job Order

A customer order for a specific number of specially designed, made-to-order products.

Joint Return

Areturnfiled bymarried taxpayersor surviving spouses.

Joint Venture

When two or more persons or organizations gather CAPITAL to provide a product or service. Often carried out as a PARTNERSHIP.

Journal

Any book containing original entries of daily financial transactions.

Journal Entry

A notation in theGENERAL JOURNAL. It records a singletransaction.

Junk Bonds

DEBTSECURITIES issued by companies with higher than normalcreditrisk. Considered "non-investmentgrade" bonds, these SECURITIES ordinarilyyielda higher rate ofinteresttocompensatefor the additional risk.

Just-In-Time

An overall operating philosophy ofINVENTORYmanagementin which all resources, including materials, personnel, and facilities, are used only as needed.

K

Keogh Plan

Also known as an HR 10, this is a qualified retirement plan for self employed who do not incorporate their business. If qualifications are met the taxpayer may receive a deduction for contributions made.

Key Employee

For purposes of rules that apply to top heavy plans, a key employee:
1. An officer of the employer earning more than $130,000;
2. An individual who owns more than 5 percent of the employer;
3. An individual who owns more than 1 percent of the employer and compensation greater than $150,000.

Key Industry

Industry of primary importance to a nation’s economy.

Key Person Insurance

Business-owned lifeinsurancecontracttypically on the lives ofprincipalofficers that normally provides for guaranteed death benefits to thecompanyand theaccumulationof acashsurrendervalue.

Kiting

Writing checks against a bankaccountwith insufficient funds to cover them, hoping that the bank will receive deposits before the checks arrive for clearance.

L

Labor

Physical or mental effort; work.

Laissez-Faire

Doctrine that interference of government in business and economic affairs should be minimal.

Land

Property;real estate.

Last In, First Out (LIFO)

ACCOUNTINGmethod of valuinginventoryunder which the costs of the last goods acquired are the first costs charged toexpense. Commonly known asLIFO.

Lay Off

Reduce theriskin standby commitment, under which the bankers agree to purchase and resell to the public any portion of a stockissuenot subscribed to by shareowners who hold rights.

Lease

Conveyance ofland, buildings, equipment or other ASSETS from one person (LESSOR) to another (LESSEE) for a specificperiodof time for monetary or other consideration, usually in the form of rent.

Lease Acquisition Cost

Price paid by areal estatelimited partnership, when acquiring alease, including legal fees and related expenses.

Lease-Purchase Agreement

Agreement providing that portions ofleasepayments may be applied toward the purchase of the property under lease.

Leasehold

PropertyINTERESTaLESSEEowns in the leased property.

Ledger

Any book of accounts containing the summaries ofdebitandcreditentries.

Ledger Account

A complete record of the transactions recorded in each individualaccount.

Lender

Individual orfirmthat extends money to a borrower with the expectation of being repaid, usually withINTEREST.

Lending Securities

SECURITIES borrowed from a broker’sINVENTORY, otherMARGINaccounts, or from other brokers, when a customer makes ashort saleand the securities must be delivered to the buying customer’s broker.

Lessee

Person or entity that has the right to use property under the terms of aLEASE.

Lessor

Owner of property, the temporary use of which is transferred to another (LESSEE) under the terms of aLEASE.

Letter of Credit

Conditional bank commitment issued on behalf of a customer to pay a third party in accordance with certain terms and conditions. The two primary types are commercial letters ofcreditand standby letters of credit.

Letter of Intent

Any letter expressing an intention to take an action, sometimes subject to other action being taken.

Leverage

The use of borrowed funds to increase theprofitfrom aninvestment.

Leveraged Buy Out

Acquisitionof a controllingINTERESTin acompanyin atransactionfinanced by the issuance of DEBT instruments by the acquired entity.

Leveraged Lease

Transactionunder which theLESSORborrows funds to acquire property which is leased to a third party. The property and lease rentals aresecurityfor the LESSOR'S indebtedness.

Liability

DEBTS orOBLIGATIONSowed by one entity (DEBTOR) to another entity (CREDITOR) payable in money, goods, or services.

Lien

CREDITOR’s claim against property. For example aMORTGAGEis alienagainst a house.

Life Expectancy

Age to which an average person can be expected to live, as calculated by anACTUARY.

Lifetime Learning Credit

This allows acreditfor 20 percent of qualified tuition and fees paid by the taxpayer with respect to one or more students for any year that the HOPE SHCOLARSHIP CREDIT is not claimed.

LIFO

ACCOUNTINGmethod of valuinginventoryunder which the costs of the last goods acquired are the first costs charged toexpense.

LIFO Liquidation

The reduction ofINVENTORYlevels at year’s end below beginning-of-the-year levels for businesses using the LAST IN, FIRST OUT (LIFO) inventory method.

Limited Company

ACOMPANY, usually registered in the United Kingdom, that is organized to protect its owners from financial responsibility.

Limited Liability

The obligation of owners of aCORPORATION, who are liable only for the amount of theirINVESTMENTand are not liable for the corporation’s DEBTS.

Limited Liability Company (LLC)

Form of doing business combiningLIMITED LIABILITYfor all owners (called members) with taxation as a PARTNERSHIP. AnLLCis formed by filing ARTICLES OFORGANIZATIONwith an appropriate state official. Rules governing LLCs vary significantly from state to state.

Limited Liability Partnership (LLP)

GENERAL PARTNERSHIPwhich, via registration with an appropriate state authority, is able to enshroud all its partners inLIMITED LIABILITY. Rules governing LLPs vary significantly from state to state.

Limited Partnership

PARTNERSHIPin which one or more partners, but not all, haveLIMITED LIABILITYto CREDITORS of the partnership.

Liquid Assets

Cash, cash equivalents, andmarketable SECURITIES.

Liquidation

Winding up an activity by distributing its ASSETS to the appropriate parties and settling its DEBTS.

Liquidity

Available money on hand to pay bills when they are due and to take care of unexpected needs forCASH.

Liquidity Ratio

Measure of a firm’s ability to meet maturingSHORT-TERMOBLIGATIONS.

Listed Property

Limits are imposed on the DEPRECIATION deduction a taxpayer may claim on certain listed property as follows:
1. A passenger car;
2. Other property used as transportation;
3. Property used for purposes of entertainment, recreation, or amusem*nt;
4. A computer and peripheral equipment; and
5. Cellular telephone.

Litigation Support/Dispute Resolution

A service that CPAs often provide to attorneys - e.g., expert testimony about thevalueof a business or otherasset, forensicaccounting(a partner stealing from his other partners, or a spouse understating hisincomein a matrimonial action). The lawyer hires the CPA to do the investigation and determine the amount of money stolen or understated.

LLC

LLP

GENERAL PARTNERSHIPwhich, via registration with an appropriate state authority, is able to enshroud all its partners inLIMITED LIABILITY. Rules governing LLPs vary significantly from state to state.

Loan

Transactionwherein an owner of property, called theLENDERallows another party, the borrower, to use the property.

Loan Value

Amount aLENDERis willing toLOANagainstCOLLATERAL.

Long Bond

BONDthat matures in more than 10 years.

Long Term

HOLDING PERIODof six months or longer, according to theTaxReform Act of 1984 and applicable in calculating the CAPITAL GAINS tax until 1988.

Long-Term Asset

AnASSETthat has the following characteristics: (1) it has a useful life of more than one year; (2) it is acquired for use in the operation of a business; and (3) it is not intended for resale to customers.

Long-Term Debt

DEBTwith amaturityof more than one year from the current date.

Long-Term Gain

Subsequent to theTaxReform Act of 1984 and prior to provisions of the Tax Reform Act of 1986 effective in 1988, againon thesaleof a capitalassetwhere the HOLIDNGPERIODwas six months or more and theprofitwas subject to the LONG-TERMCAPITAL GAINS tax.

Long-Term Investment

AnINVESTMENTthatmanagementplans to hold for more than one year.

Long-Term Liability

ADEBTthat falls due more than one year in the future or beyond the normalOPERATING CYCLE, or that is to be paid out of noncurrent assets.

Long-Term Loss

Negative counterpart toLONG-TERM GAINas defined by the same legislation.

Loss

Excess of EXPENDITURES over REVENUE for aperiodor activity. Also, fortaxpurposes, an excess of basis over the amount realized in atransaction.

Loss on Disposal of Plant and Equipment

Theaccountin which aLOSSis recorded when afirmsells or trades in anASSETand receives an amount less than theBOOK VALUEfor that asset.

Lower of Cost or Market

Valuing ASSETS for financial reporting purposes. Ordinarily, "cost" is the purchase price of the asset and "market" refers to its current replacement cost.GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)requires that certain assets (e.g., INVENTORIES) be carried at thelower of cost or market.

Lump-Sum Distribution

Single payment to a beneficiary covering the entire amount of an agreement.

M

Macroeconomics

Analysis of a nation’s economy as a whole, using such aggregate data as price levels, unemployment,INFLATION, and industrialproduction.

Management

Combined fields of policy and administration and the people who provide the decisions and supervision necessary to implement the owner’s business objectives and achieve stability and growth.

Management Accounting

Reporting designed to assistmanagementin decision-making, planning, and control. Also known as MANAGERIAL ACCOUNTING.

Management Discussion and Analysis (MD&A)

SECrequirement in financial reporting for an explanation bymanagementof significant changes in operations, ASSETS, andLIQUIDITY.

Management's Report

Managementis required to include in itsannual reportits assessment of the effectiveness of thecompany's internal control over financial reportingin addition to its auditedfinancial statementsas of the end of the most recentfiscal year.

Managerial Accounting

Reporting designed to assistmanagementin decision-making, planning, and control.

Manipulation

Buying or selling aSECURITYto create a false appearance of active trading and thus influence other investors to buy or sell shares.

Manufacture

To make or process (a product), especially by using machines.

Manufacturing Overhead

Anothertermfor FACTORYOVERHEADCOSTS.

Margin

Excess of selling price over theunitcost.

Margin of Profit

Relationship of gross profits tonet sales.

Marginal Cost

Increase or decrease in the TOTAL COSTS of a businessfirmas the result of one more or one lessunitofoutput.

Marginal Tax Rate

Amount oftaximposed on an additional dollar ofincome.

Mark-to-Market

Method of valuing ASSETS that results in adjustment of an asset's carrying amount to itsmarket value.

Markdown

Amount subtracted from the selling price, when a customer sells SECURITIES to aDEALERin theOVER-THE-COUNTERmarket.

Market

Public place where products or services are bought and sold, directly or through intermediaries.

Market Capitalization

Valueof aCORPORATIONas determined by theMARKET PRICEof itsISSUED AND OUTSTANDING COMMON STOCK.

Market Index

Numbers representing weighted values of the components that make up theINDEX.

Market Interest Rate

The rate ofinterestpaid in theMARKETon BONDS of similarrisk.

Market Price

Last reported price at which aSECURITYwas sold on an exchange.

Market Share

Percentage of industry sales of a particularCOMPANYor product.

Market Value

The price investors are willing to pay for ashareof stock on the openmarket.

Marketable Securities

Stocks and othernegotiableinstruments which can be easily bought and sold on either listedexchangesorover-the-countermarkets.

Marketing

Moving goods and services from the provider to consumer.

Markup

The amount added to the price of a product by a retailer to arrive at a selling price.

Married Taxpayers

Taxpayers that are married may file a JOINT RETURN, therefore combining their INCOME and expenses. Individuals will be considered married if:
1. They are living as husband and wife;
2. They are recognized living as common law marriage; or
3. Legally married but separated and living apart but not legally divorced.
Marriage is determined as of the last day of the tax year.

Matching Principle

A fundamental concept of basicaccounting. In any one given accountingperiod, you should try to match the revenue you are reporting with the expenses it took to generate that revenue in the same time period, or over the periods in which you will be receiving benefits from thatexpenditure. A simple example isdepreciationexpense. If you buy a building that will last for many years, you don'twrite offthe cost of that building all at once. Instead, you take depreciation deductions over the building's estimated useful life. Thus, you've "matched" the expense, or cost, of the building with the benefits it produces, over the course of the years it will be in service.

Material

The substance or substances from which something is made.

Material Weakness

Asignificant deficiencyor combination of significant deficiencies that results in more than a remote likelihood that a materialmisstatement of the annual orinterim financial statementswill not be prevented or detected.

Materiality

Magnitude of an omission or misstatements ofACCOUNTINGinformation that, in the light of surrounding circ*mstances, makes it probable that the judgment of a reasonable person relying on the information would change or be influenced.

Materials Inventory Account

AnINVENTORYaccountmade up of the balances of materials, parts, and supplies on hand at a given time.

Maturity

The time at which payment of aloanorBONDbecomes due.

Maturity Date

Date on which theprincipalamount of aNOTE,DRAFT, acceptance,BOND, or otherDEBT INSTRUMENTbecomes due and payable.

MD&A

SECrequirement in financial reporting for an explanation bymanagementof significant changes in operations, ASSETS, andLIQUIDITY.

Merchandise

Items that can be bought or sold; commercial goods.

Merchandise Inventory

The goods on hand at any one time that are available forsaleto customers in the regular course of business.

Merger

BUSINESS COMBINATION that occurs when one entity directly acquires the ASSETS and LIABILITIES of one or more entities and no newcorporationor entity is created.

Microeconomic Pricing Model

Anaccountingmodel that is based on the economic theory thatprofitwill be greater when the difference between total revenue andTOTAL COSTis the greatest.

Microeconomics

Study of the behavior of basic economic units such as companies, industries, or households.

Mixed Costs

Costs that result when bothVARIABLE COSTSandFIXED COSTSare charged to the sameGENERAL LEDGER account.

Modeling

Designing and manipulating a mathematical representation of an economic system or corporate financial application so that the effect of changes can be studied andforecast.

Modified Accelerated Cost Recovery System

A mandatory system ofDEPRECIATIONforincometaxpurposes, enacted by Congress in 1986.

Monetary Items

Definite fixed amounts stated in terms of dollars, either by law or bycontractagreement.

Money Laundering

The use of an intermediate agent, such as a bank, to disguise the source of money received from illegal activities.

Money Market

MARKETforSHORT-TERM DEBTinstruments.

Monopoly

Control of theproductionand distribution of a product or service by onefirmor a group of firms acting in concert.

Mortgage

Legalinstrumentevidencing asecurity interestin ASSETS, usuallyreal estate. Mortgages serve asCOLLATERAL for PROMISSORY NOTES.

Moving Average

Average ofSECURITYor COMMODITY prices constructed on aperiodas short as a few days or as long as several years and showing trends for the latest interval.

Moving Average Method

A modified version of theWEIGHTED-AVERAGE-COST METHOD. It is used to compute the average cost of a PERPETUAL INVENTORY.

Municipal Bond

BONDissued by a government or public body, theINTERESTon which is typically exempt from federal taxation.

Mutual Agency

The ability of each partner in aCOMPANYto act as an agent of the company.

Mutual Fund

Investmentcompanywhich generally offers its shares to the general public and invests the proceeds in a diversifiedportfolioof SECURITIES.

N

NASBA

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.

NASDAQ

National Association of Securities Dealers Automated Quotations system, which is owned and operated by the National Association of Securities Dealers; a computerized system that provides brokers and dealers with price quotations for securities traded

OVER-THE-COUNTER

as well as for many

NEW YORK STOCK EXCHANGE (NYSE)

listed securities.

National Association of Securities Dealers Automated Quotations (NASDAQ)

National Association of State Boards of Accountancy (NASBA)

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

Nationalization

Takeoverof a private company’s assets or operations by a government.

NAV

In mutual funds, theMARKET VALUEof a fundshare, synonymous with bid price;BOOK VALUEof a company’s different classes of securities, usually stated asNETASSETvalue perBOND, net asset value per share of PREFERRED STOCK, and net book value per common share ofCOMMON STOCK.

Negative Assurance

Reportissued by anACCOUNTANTbased on limited procedures that states that nothing has come to the accountant's attention to indicate that the financial information is not fairly presented.

Negligence

The omission to do something which a reasonable man, guided by those ordinary considerations which ordinarily regulate human affairs, would do, or the doing of something which a reasonable and prudent man would not do. Negligenceis the failure to use such care as a reasonably prudent and careful person would use under similar circ*mstances; it is the doing of some act which a person of ordinary prudence would not have done under similar circ*mstances or failure to do what a person of ordinary prudence would have done under similar circ*mstances. Thetermrefers only to that legal delinquency which results whenever a man fails to exhibit the care which he ought to exhibit, whether it be slight, ordinary, or great. It is characterized chiefly by inadvertence, thoughtlessness, inattention, and the like, while "wantonness" or "recklessness" is characterized by willfulness. The law of negligence is founded on reasonable conduct or reasonable care under all circ*mstances of particular care. Doctrine of negligence rests on duty of every person to exercise due care in his conduct toward others from which injury may result.

Negotiable

Something that can be sold or transferred to another party in exchange for money or as settlement of an obligation.

Net

Figure remaining after all relevant deductions have been made from the gross amount.

Net Asset Value (NAV)

Net Assets

Excess of thevalueof SECURITIES owned,cash, receivables, and other ASSETS over the LIABILITIES of the company.

Net Current Assets

Difference between current assets and current liabilities; another name forWORKING CAPITAL.

Net Income

Excess orDEFICITof totalREVENUESand GAINS compared with total expenses and losses for an ACCOUNTINGperiod.

Net Leas

In addition to the rental payment, theLESSEEassumes all property charges such as taxes,insurance, and maintenance.

Net Loss

The difference between expenses andREVENUESwhen expenses exceed revenues over aperiodof time.

Net Present Value (NPV)

Method used in evaluating investments whereby thenetpresent valueof allCASHoutflows and cash inflows is calculated using a givenDISCOUNT RATE, usuallyrequired rate of return.

Net Present Value Method

A capitalINVESTMENTevaluation method that discounts futureCASH FLOWSto theirPRESENT VALUE.

Net Proceeds

Amount received from thesaleor disposition of property, from aLOAN, or from the sale or issuance of securities after deduction of all costs incurred in thetransaction.

Net Sales

Sales at grossinvoiceamounts less any adjustments for returns, allowances, or discounts taken.

Net Worth

Similar toEQUITY, the excess of ASSETS over LIABILITIES.

New York Stock Exchange (NYSE)

Oldest and largeststock exchangein the United States, located at 11 Wall Street in New York City; also known as the Big Board and The Exchange.

No-Par Stock

Stock authorized to be issued but for which noPAR VALUEis set in the ARTICLES OFINCORORATION. A STATED VALUEis set by theBOARD OF DIRECTORSon the issuance of this type of stock.

No-Par Value

Stock orbondthat does not have a specificvalueindicated.

Non Routine Transactions

Activities that occur only periodically, the data involved are generally not part of the routine flow of transactions.

Non-Callable

PREFERRED STOCKorBONDthat cannot be redeemed at theOPTIONof theISSUER.

Non-for-Profit Organization/Tax-Exempt Organization

An incorporatedorganizationwhich exists for educational or charitable purposes, and from which its shareholders or trustees do not benefit financially. Also calledNOT-FOR-PROFITorganization.

Non-Sufficient Funds (NSF) Check

A CHECK drawn against anACCOUNTin which there is not enough money to honor it.

Nonresident Alien

Any citizen that is not a resident or citizen of the United States.Incomeof such individuals is subject to taxation if it is effectively connected with a United Statestradeor business.

Not-for-Profit

Type of incorporatedorganizationin which nostockholderorTRUSTEEshares in profits or losses and which usually exists to accomplish some charitable, humanitarian, or educational purpose.

Note

Written promise to pay a specified amount to a certain entity on demand or on a specified date.

Notes Payable

Collectivetermfor written promissory notes that are due in less than one year.

Notes Receivable

Collectivetermfor written promissory notes that are due in less than one year and are held by the entity to whom payment is promised.

Notional

Valueassigned to ASSETS or LIABILITIES that is not based on cost ormarket(e.g., the value of a service not yet rendered).

NPV

Method used in evaluating investments whereby thenetpresent valueof allCASHoutflows and cash inflows is calculated using a givenDISCOUNT RATE, usuallyrequired rate of return.

NSF Check

A CHECK drawn against anACCOUNTin which there is not enough money to honor it.

NYSE

Oldest and largeststock exchangein the United States, located at 11 Wall Street in New York City; also known as the Big Board and The Exchange.

O

Objectivity

Emphasizing or expressing the nature of reality as it is apart from personal reflection or feelings; independence of mind.

Obligations

Any amount which may require payment by an entity at a future time.

Obsolescence

The process of becoming out-of-date.

OCBOA

Consistentaccountingbasis other thanGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)used for financial reporting. Examples include anINCOME TAX BASISor aCASH BASIS.

Offer

Price at which someone who owns aSECURITYoffers to sell it.

Offering Price

Price pershareat which a new or secondary distribution of securities is offered forsaleto the public.

OPEB

Allpost-retirement benefitsother than pensions, provided by employers to employees.

Open-End Mutual Fund

MUTUAL FUNDthat does not have a fixed number ofshares outstanding, offers new shares to the public, and buys back outstanding shares atmarket value.

Operating Agreement

Agreement, usually a written document, that sets out the rules by which aLIMITED LIABILITY COMPANY (LLC)is to be operated. It is the LLC equivalent of corporateBYLAWSor aPARTNERSHIPagreement.

Operating Cycle

Periodof time between theacquisitionof goods and services involved in the manufacturing process and the final cashrealizationresulting from sales and subsequent collections.

Operating Expense

AnEXPENSEother thanCOST OF GOODS SOLDthat is incurred in running a business.

Operating Lease

Type ofLEASE, normally involving equipment, whereby theCONTRACTis written for considerably less than the life of the equipment and the lesser handles all maintenance and servicing.

Operating Profit (or Loss)

The difference between theREVENUESof a business and the related costs and expenses, excludingINCOME derived from a sources other than its regular activities and before income deductions.

Opportunity Cose

Highest price orrate of returnan alternative course of action would provide.

Option

Right to buy or sell something at a specified price during a specified timeperiod.

Ordinary Annuity

A series of equal payments made at the end of equal intervals of time, with compoundintereston these payments.

Ordinary Income

One of two classes ofincome(the other being CAPITAL GAINS) taxed under theINTERNAL REVENUE CODE. Historically,ordinary incomeis taxed at a higher rate than capital gains.

Organization

The act of arranging something in an orderly way.

Organization Expenditures

The costs of organizing atradeor business or forprofitactivity before it begins active business. A taxpayer may elect to amortize such expenses for a tern no less than 60 months. If the election is not made then the expenses are not deductible and may only be recovered when the business ceases operation or is sold.

Original Cost

InACCOUNTING, all costs associated with theacquisitionof anASSET.

Other Comprehensive Basis of Accounting (OCBOA)

Consistentaccountingbasis other thanGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)used for financial reporting. Examples include anINCOME TAX BASISor aCASH BASIS.

Output

An amount of something produced, especially during a givenperiodof time.

Outsourcing

The act or an instance of purchasing essential products or services from anotherCOMPANY.

Outstanding

Not settled or paid.

Outstanding Check

A CHECK that has been written by the drawer and deducted on his or her records but has not reached the bank for payment and is not deducted from the bankBALANCEby the time the bank issues itsstatement.

Over-the-Counter

Sold to customers at retail and without any special restrictions.

Overhead

Costs of a business that are not directly associated with theproductionorsaleof goods or services.

Overhead Application Rate

Standardrate used to calculate theOVERHEADcost of a given activity. Activity often measured inLABORor machine hours.

Owner’s Equity

The residualINTERESTin the assets of a business entity that remains after deducting the entity’s liabilities.

P

P/E Ratio

A ratio that is used as a way of measuring investor confidence in aCOMPANYand comparing stocks for profitability. It is found by dividingMARKET PRICEpersharebyEARNINGS PER SHARE (EPS).

Paid in Capital

Portion of the stockholders'EQUITYwhich was paid in by the stockholders, as opposed to CAPITAL arising from profitable operations.

Par

Equal to the nominal orface valueof aSECURITY.

Par Value

Amount pershareset in the ARTICLES OFINCORPORATIONof a CORPORATION to be entered in the CAPITAL STOCKSaccountwhere it is left permanently and signifies a cushion ofEQUITYcapital for the protection of CREDITORS.

Parent Company

Companythat has a controllinginterestin theCOMMON STOCKof another.

Partnership

Relationship between two or more persons based on a written, oral, or implied agreement whereby they agree to carry on atradeor business forprofitandsharethe resulting profits. Unlike aCORPORATION'S shareholders, the partnership's general partners are liable for the DEBTS of the partnership.

Passive Activity Loss

LOSSgenerated from activities involved in the conduct of atradeor business in which the taxpayer does not materially participate.

Passive Income

Includesincomederived from such sources asdividends,interest, royalties, rents, amounts received from personal service contracts, and income received as a beneficiary of an estate ortrust.

Patronage Dividends

Thesedividendsare amounts paid by a cooperative to its members and customers based on thequantityorvalue of business conducted with or for the members during thetax year.

Payback Period

In capital budgeting; the length of time needed to recoup thecost of capitalinvestment.

Payback Period Method

A way of judging capital investments that bases the decision toinvestin capital equipment on the minimum length of time it will take to earn back inCASHthe amount of the initial INVESTMENT.

Payout Ratio

Percentage of a firm’s profits that is paid out to shareholders in the form ofDIVIDENDS.

PCAOB

A private-sector, non-profitcorporation, created by the Sarbanes-Oxley Act of 2002, to oversee the AUDITORs of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independentauditreports.

Peer Review

Process by which anaccountingfirm's practice is evaluated for compliance with professional standards. The objective is achieved through the performance of an independentreviewby one's peers.

Penalty

The various government codes contain numerous provisions which impose penalties on a taxpayer (any type of taxpayer) for failure to perform a specific act or omitting vital information on areturn.

Pension

Retirement plan offered by an employer for the benefit of an employee, usually at retirement, through aTRUSTEEwho controls the plan ASSETS.

Period

An interval of time with a specified length or characterized by certain conditions.

Periodic Inventory System

A system for determiningINVENTORYon hand by a physical count that is taken at the end of anaccounting period.

Periodicity

The recognition thatNET INCOMEfor anyPERIODless than the life of the business, although tentative, is still a useful estimate ofnetincome for that period.

Perpetual Inventory

System that requires a continuous record of all receipts and withdrawals of each item ofINVENTORY.

Personal Financial Planning

Process for arriving at a comprehensive plan to solve an individual's personal, business, and financial problems and concerns.

Personal Financial Specialist (PFS)

CERTIFIED PUBLICACCOUNTANTwho specializes inPERSONAL FINANCIAL PLANNINGand completes a series of requirements that include education, experience, ethics and an exam.

Personal Financial Statements

FINANCIAL STATEMENTSprepared for an individual or family to show financial status.

Personal Property

Movable property that is not affixed to theland(REAL PROPERTY).Personal propertyincludes tangible items such ascash, cars and computers, as well as intangible items, such as royalties, patents and copyrights.

Petty Cash

A small amount ofCASHthat acompanykeeps on hand to pay for minor expenses in an office.

PFS

CERTIFIED PUBLICACCOUNTANTwho specializes inPERSONAL FINANCIAL PLANNINGand completes a series of requirements that include education, experience, ethics and an exam.

Phantom Income

Incomereported on aTAX BASISfor which nocashor financial benefit is realized.

Physical Inventory

An actual count of allMERCHANDISEon hand at the end of anaccountingperiod.

Plant

A building or group of buildings where something is made or processed; factory.

Pledged

ASSETplaced in aTRUSTand used asCOLLATERALfor aDEBT.

POB

ThePOBis an independent oversight board, composed of public members, which monitors and evaluates peer reviews conducted by theSECPractice Section (SECPS) of theAICPA's Division for CPA Firms as well as other activities of the SECPS.

Pooling of Interest

Used toaccountfor theacquisitionof anothercompanywhen the acquiring companyexchangesits voting COMMON STOCKfor the voting common stock of the acquired company when certain criteria are met.

Portfolio

Combined holding of more than one stock,BOND, commodity,real estateinvestment,cashequivalent, or other ASSETby an individual or institutional investor

Post-Closing Trial Balance

Atrial BALANCEprepared at the end of anaccountingperiodafter all adjusting and closing entries have been posted; a final check on the balance of theLEDGER.

Post-Retirement Benefits

PENSIONS, health care, lifeinsuranceand other benefits that are provided by an employer to retirees, their dependents, or survivors.

Predetermined Overhead Rate

A rate that is used as a way of estimating and assigningOVERHEADcosts to products or jobs for each department or operatingunitbefore the end of anaccountingperiod.

Preemptive Right

Right giving existing stockholders the opportunity to purchase shares of a newISSUEbefore it is offered to others.

Preferred Stock

Type ofCAPITAL STOCKthat carries certain preferences overCOMMON STOCK, such as a prior claim on DIVIDENDSand ASSETS.

Premium

(1) Excess amount paid for aBONDover its face amount. (2) Ininsurance, the cost of specified coverage for a designatedperiodof time.

Premium Bond

BONDwith a selling price above face orREDEMPTION VALUE.

Prenuptial Contract

Agreement between a future husband and wife that details how the couple’s financial affairs are to be handled both during the marriage and in the event of divorce.

Prepaid Expense

Cost incurred to acquire economically useful goods or services that are expected to be consumed in the revenue-earning process within theoperating cycle.

Present Value

CURRENT VALUEof a given futureCASHflow stream, discounted at a given rate.

Preventive Controls

These have the objective of preventing errors orfraudfrom occurring in the first place that could result in a misstatement of thefinancial statements.

Price Range

High/low range in which a stock has traded over a particularperiodof time.

Price/Earnings (P/E) Ratio

A ratio that is used as a way of measuring investor confidence in aCOMPANYand comparing stocks for profitability. It is found by dividingMARKET PRICEpersharebyEARNINGS PER SHARE (EPS).

Primary Earnings Per Share

Earnings available toCOMMON STOCKdivided by the number of commonshares OUTSTANDING.

Prime Rate

Rate ofINTERESTcharged by major U.S. banks on loans made to their preferred customers.

Principal

Face amount of aSECURITY, exclusive of anyPREMIUMorINTEREST. The basis for INTEREST computations.

Private Placement

Sales of SECURITIES not involving aPUBLIC OFFERINGand exempt from registration pursuant to certain EXEMPTIONS.

Privilege

A right or immunity granted as a peculiar benefit advantage.

Privity

Aninterestin atransaction,contractor legal action to which one is not a party, arising out of a relationship to one of the parties.

Pro Forma

Presentation of financial information that gives effect to an assumed event (e.g.,MERGER).

Pro Rata

Distribution of anexpense, fund, or DIVIDEND proportionate with ownership.

Product Line

The place in a factory where products are made.

Production

The act or process of creating something.

Profit

Positive difference that results from selling products and services for more than the cost of producing these goods.

Profit Margin

Used to measure the percentage of each sales dollar that results inNET INCOME.

Profit Margin Pricing

An approach to cost-based pricing in which price is computed using a percentage of a product’s total costs and expenses.

Profit Sharing Plan

DEFINED CONTRIBUTION PLANcharacterized by the setting aside of a portion of an entity's profits in participant's accounts.

Profitability

The ability to earn enoughINCOMEto attract and holdINVESTMENTcapital.

Projection

ProspectiveFINANCIAL STATEMENTSthat include one or more hypothetical assumptions.

Promissory Note

Evidence of aDEBTwith specific amount due andinterest rate. Thenotemay specify amaturity dateor it may be payable on demand. Thepromissory notemay or may not accompany other instruments such as aMORTGAGEprovidingsecurityfor the payment thereof.

Property, Plant, and Equipment

Long-termtangible assets used in the continuing operation of a business for a long time.

Proprietorship

Business owned by an individual without thelimited liabilityprotection of aCORPORATIONor aLIMITED LIABILITY COMPANY (LLC). Also known as SOLEPROPRIETORSHIP.

Prospective Financial Information (Forecast and Projection)

Forecast: Prospectivefinancial statementsthat present, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and changes in financial position. A financial forecast is based on the responsible party's assumptions reflecting conditions it expects to exist and the course of action it expects to take.Projection: Prospective financial statements that present, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions, an entity's expected financial position, results of operations, and changes in financial position.

Prospectus

Major part of the registrationstatementfiled with theSECURITIES AND EXCHANGE COMMISSION (SEC)for PUBLIC OFFERINGS. Aprospectusgenerally describes SECURITIES orpartnershipinterests to be issued and sold.

Proxy

Document authorizing someone other than theshareholderto exercise the right to vote the stock owned by the shareholder.

Public Company Accounting Oversight Board (PCAOB)

Public Offering

Offering shares to the public. Generally done throughSEC filings.

Public Oversight Board (POB)

Purchase Method of Accounting

ACCOUNTINGfor aMERGERby adding the acquiredcompany's ASSETS at the price paid for them to the acquiring company's assets.

Purchase Order

Written authorization to avendorto deliver specified goods or services at a stipulated price.

Purchases

A temporaryACCOUNTused under thePERIODIC INVENTORY SYSTEMto record theTOTAL COSTof all MERCHANDISEpurchased for resale during anaccountingperiod.

Purchases Discounts

Discounts taken by merchants inreturnfor prompt payment forMERCHANDISEpurchased for resale.

Purchases Returns and Allowances

ACONTRA ACCOUNTused under thePERIODIC INVENTORY SYSTEMto accumulateCASHrefunds, credits on ACCOUNT, and other allowances made by suppliers for unsatisfactory or incorrectMERCHANDISEthat was originally purchased for resale.

Push-Down Accounting

Method ofACCOUNTINGin which the values that arise from anacquisitionare transferred or "pushed down" to the accounts of an acquiredcompany.

Puts

A put is anoptionto sell a certain number of shares of stock at a stated price within a certainperiod. Thegainor losson a put is short orlong termdepending on theholding periodof the stock involved.

Q

Qualified Opinion

AUDITopinion that states, except for the effect of a matter to which a qualification relates, theFINANCIAL STATEMENTSare fairly presented in accordance withGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). TheAUDITORis required to qualify when there is a scope limitation.

Qualitative

Relating toquality, especially as distinguished fromquantityor amount.

Qualitative Analysis

Analysis that evaluates important factors that cannot be precisely measured.

Quality

An operating environment in which a company’s product or service meets a customer’s specifications the first time it is produced or delivered.

Quantitative Analysis

Analysis dealing with measurable factors as distinguished from suchQUALITATIVEconsiderations as the character ofmanagementor the state of employee morale.

Quantity

An amount or number.

Quarter

Three-month intervals of the year.

Quarterly Reports

AnothertermforINTERIM FINANCIAL STATEMENTS.

Quasi-Reorganization

Type ofreorganizationin which, withshareholderapproval, themanagementrevalues ASSETS and eliminates the DEFICIT(increased by asset devaluations if any) by charging it to other EQUITY accounts without the creation of a new corporate entity or without court intervention.

Quick Assets

Assets that are or are expected to be converted intoCASHin the nearterm: cash, accounts receivable, SHORT-TERM INVESTMENTS.

Quick Ratio

The relationship of a company’sQUICK ASSETSto its current liabilities.

R

R&D

Research is a planned activity aimed at discovery of new knowledge with the hope of developing new or improved products and services. Development is the translation of research findings into a plan or design of new or improved products and services.

Rate of Return

The amount ofPROFITorINTERESTearned on anINVESTMENT, usually expressed as a percentage, such as an interest; theCOST OF CAPITAL; the cost of money.

Ratio Analysis

Comparison of actual or projected data for a particularcompanyto other data for that company or industry in order to analyze trends or relationships.

Raw Material

Something in its natural state that will be used in a manufacturing process.

Raw Materials Inventory Account

AnothertermforMATERIALS INVENTORY ACCOUNT.

Real Estate

Piece oflandand all physical property related to it, including houses, fences, landscaping, and all rights to the air above and earth below the property.

Real Estate Investment Trust (REIT)

Investor-ownedTRUSTwhich invests inreal estateand, instead of payingincometaxon its income, reports to each of its owners his or herpro ratashareof its income for inclusion on their income tax returns. This unique trust arrangement is specifically provided for in theINTERNAL REVENUE CODE.

Real Estate Mortgage Investment Conduit (REMIC)

An entity that holds a fixed pool of mortgages and issues multiple classes ofinterests in itself to investors. A qualifiedREMICis generally taxed like apartnership, unless it takes contributions after its start up day or engages in a prohibitedtransaction.

Real Income

Incomeof an individual, group, or country adjusted for changes in purchasing power caused byINFLATION.

Real Interest Rate

CurrentINTEREST RATEminusINFLATION RATE.

Real Property

LANDand improvements, including buildings andPERSONAL PROPERTY, that is permanently attached to the land or customarily transferred with the land.

Real Rate of Return

RETURNon anINVESTMENTadjusted forINFLATION.

Realization

ConversionintoCASH, as happens in thesaleofasset.

Realized Profit (or Loss)

PROFITorLOSSresulting from thesaleor other disposal of aSECURITY.

Reasonable Assurance

Management's assessment of the effectiveness ofinternal control over financial reportingis expressed at the level ofreasonable assurance. It includes the understanding that there is a remote likelihood thatmaterial misstatements will not be prevented or detected on a timely basis. It is a high level of assurance.

Rebate

In lending,UNEARNED INTERESTrefunded to a borrower if theLOANis paid off beforeMATURITY.

Recapitalization

An internalreorganizationof acorporationincluding a rearrangement of the capital structure by changing the kind of stock or the number ofshares outstandingor issuing stock instead of bonds. It is distinguished from most other types of reorganization because it involves only one corporation and is usually accomplished by the surrender by shareholders of their securities for other stock or securities of a different type.

Receivable Turnover

A ratio for measuring the relative size of a company’s accounts receivable and the success of itsCREDITand collection policies during anaccountingperiod.

Receivables

Amounts of money due from customers or other DEBTORS.

Recession

Downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country’s gross national product.

Reconcile

To resolve.

Reconciliation

Comparison of two numbers to demonstrate the basis for the difference between them.

Recovery

Periodin a business cycle when economic activity picks up and the gross national product grows, leading into the expansion phase of the cycle.

Red Herring

"Pre-release"PROSPECTUSoffering. An announcement of a future issuance of SECURITIES, given restricted circulation during the waitingperiodof 20 days or other specified period between the filing of a registration statementwith the SEC and the effective date of the statement. Ared herringis not an offer to sell or the solicitation of an offer to buy.

Redemption Value

Price to be paid by an ENTITY toretireits BONDS orPREFERRED STOCK.

Refinancing Agreement

Arrangement to providefundingto replace existing financing, the most common being a refinance of a home MORTGAGE.

Refunding

Replacing an oldDEBTwith a new one, often in order to lower theINTERESTcosts of theissuer.

Registrar

Agency responsible for keeping track of the owners of bonds and the issuance of stock.

Regression Analysis

Statistical technique used to establish the relationship of a dependent variable, such as the sales of aCOMPANY, and one or more independent variables, such as family formations, gross national product, per capitaincome, and other economic indicators.

Regressive Rate

Rate that decreases as the calculation base increases. Often used to describe taxes where the TAX rate paid decreases as theTAXABLE INCOMEincreases.

Regulated Investment Company (RIC)

Commonly called aMUTUAL FUND, this is a domesticcorporationthat acts as aninvestmentagent for its shareholders by typicallyinvestingin government and corporate securities and distributing theDIVIDENDSandINTERESTincomeearned from such investments. In order to be considered aRICa CORPORATION must make an irrevocable electiontaxelection in order to be treated as one.

Reinsurance

Process by which aninsurancecompanyobtains insurance on its insurance claims with other insurers in order to spreadtherisk.

Reinvestment Rate

RATE OF RETURNresulting from the reinvestment of theINTERESTfrom aBONDor other fixed-income SECURITY.

REIT

Related Party Transaction

Business or othertransactionbetween persons who do not have an arm's-length relationship (e.g., a relationship with independent, competing interests). The most common is between family members or controlled entities. For taxpurposes, these types of transactions are generally subject to a greater level of scrutiny.

Relevant Assertions

Assertions that have a meaningful bearing on whether theaccountis fairly stated.

REMIC

Reorganization

This is a change in the businesses capital arrangements. If for aCORPORATIONthere are seven statutory options forreorganizationthat would cause the corporation and shareholders to not recognize anyGAINorLOSSon the exchange of stock.

Repairs

EXPENDITURES made in order to keep property in good condition but that do not appreciably prolong the life or increase thevalueof the property.

Replacements

EXPENDITURES for making good or whole the portions of property that have deteriorated through use or have been destroyed through accident.

Report

An oral or written description of something, such as a book, event, or situation.

Report Release Date

The date thecompany'sfinancial statementsare issued.

Repos

Agreement whereby an institutionpurchasesSECURITIES under a stipulation that the seller will repurchase the securities within a certain timeperiodat a certain price.

Repurchase Agreement (Repos)

Agreement whereby an institutionpurchasesSECURITIES under a stipulation that the seller will repurchase the securities within a certain timeperiodat a certain price.

Required Rate of Return

RETURNrequired by investors before they will commit money to anINVESTMENTat a given level ofrisk.

Rescind

Cancel aCONTRACTagreement.

Research and Development (R&D)

Research and Development Costs

TheEXPENSEofFUNDINGRESEARCH AND DEVELOPMENT (R&D).

Reserve

ACCOUNTused to earmark a portion ofEQUITYor fundbalanceto indicate that it is not available forexpenditure. An obsoletetermin the United States. More commonly used in Europe.

Resident Alien

This is an individual that is not a citizen, but who has a residence in the United States. They are taxed on all of their INCOMEworldwide in the same manner a citizen of the United States is.

Residual Value

The estimatedNETscrap, salvage, ortrade-invalueof a TANGIBLEASSETat the estimated date of disposal.

Restricted Assets

Cashor other ASSETS whose use in whole or in part is restricted for specific purposes bound by virtue of contracted agreements.

Restricted Fund

Fund established toaccountfor assets whoseincomemust be used for purposes established by donors or grantors of such ASSETS.

Restructuring

Reorganizationwithin an entity.Restructuringmay occur in the form of changing the components of CAPITAL, renegotiating the terms ofDEBTagreements, etc.

Retail Method

A way of estimatingINVENTORY, used in retail business.

Retained Earnings

Accumulated undistributed earnings of acompanyretained for future needs or for future distribution to its owners.

Retained Earnings Account

TheACCOUNTthat reflects the stockholders’ claim to the assets earned from operations and reinvested in corporate operations.

Retire

To take something, such as aBOND, out of circulation.

Return

PROFITon a securities or capitalINVESTMENT, usually expressed as an annual percentage rate.

Return on Assets

A measurement of a company’sPROFITABILITYor overall earning power, that is, how efficiently a company uses its assets to produceINCOME. It is found by dividing INCOME by average total assets.

Return on Equity

A measurement ofPROFITABILITYthat relates the amount earned by a business to the stockholders’ investments in the business. It is found by dividingNET INCOMEby average OWNER'SEQUITY.

Return on Investment (ROI)

Ratio measure of the profits achieved by afirmthrough its basic operations. An indicator ofmanagement's general effectiveness and efficiency. The simplest version is the ratio ofNET INCOMEto total ASSETS.

Return on Sales

NETpretax profits as a percentage ofNET SALES. A useful measure of overall operational efficiency when compared with the prior periods or with other companies in the same line of business.

Revenue Recognition

Method of determining whether or notincomehas met the conditions of being earned and realized or is realizable.

Revenues

Sales of products,merchandise, and services; and earnings fromINTEREST, DIVIDEND, rents.

Review

Accountingservice that provides some assurance as to the reliability of financial information. In areview, a CERTIFIED PUBLIC ACCOUNTANT (CPA)does not conduct an examination underGENERALLY ACCEPTED AUDITING STANDARDS (GAAS).

Review Engagement

Agreement between aCERTIFIED PUBLIC ACCOUNTANT (CPA)and his or her client to perform areview.

Review Report

See Accountants' Report

RIC

Commonly called aMUTUAL FUND, this is a domesticcorporationthat acts as aninvestmentagent for its shareholders by typicallyinvestingin government and corporate securities and distributing theDIVIDENDSand INTERESTincomeearned from such investments. In order to be considered aRICa CORPORATION must make an irrevocable electiontaxelection in order to be treated as one.

Right of Rescission

Right granted by the Federal ConsumerCreditProtection Act of 1968 to void aCONTRACTwithin three business days with full refund of any down payment and withoutpenalty.

Right to Setoff

DEBTOR'S legal right, to discharge all or a portion of theDEBTowed to another party by applying against the debt an amount that the other party owes to the debtor.

Risk

Measurable possibility of losing or not gainingvalue.

Risk Averse

Termreferring to the assumption that, given the sameRETURNand differentRISKalternatives, a rational investor will seek theSECURITYoffering the least risk.

Risk Management

Process of identifying and monitoring business risks in a manner that offers a RISK /RETURNrelationship that is acceptable to an entity's operating philosophy.

Risk-Adjusted Discount Rate

Inportfoliotheory and capitalbudgetanalysis, the rate necessary to determine thePRESENT VALUEof an uncertain or risky stream ofINCOME; it is the RISK-free rate plus a riskpremiumthat is based on an analysis of the risk characteristics of the particularINVESTMENTor project.

ROI

Routine Transactions

Recurring financial activities reflected in theaccountingrecords in the normal course of business.

S

S Corporation

ACORPORATIONwhich, under theINTERNAL REVENUE CODE, is generally not subject tofederal income taxes. Instead,taxable incomeof the corporation is passed through to its stockholders in a manner similar to that of aPARTNERSHIP.

Safe Harbor Rule

Concept in statutes and regulations whereby a person who meets listed requirements will be preserved from adverse legal action. Frequently, safe harbors are used where a legal requirement is somewhat ambiguous and carries ariskof punishment for an unintended violation.

Sale

Any exchange of goods or services for money.

Sale-Leaseback Transaction

Saleof property by a seller who simultaneously leases the property back from the purchaser.

Sales Discount

Adiscountthat is given to a buyer for early payment for asalemade onCREDIT.

Sales Tax

ATAXthat is levied by a state or city government on the retailsaleof goods and services.

Salvage Value

Selling price assigned to retiredFIXED ASSETSormerchandiseunsalable through usual channels.

SAS

Statements issued by theAccountingStandards Board of theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA).

Savings Bond

U.S. governmentBONDissued inface valuedenominations ranging from $50 to $10,000.

Seasonality

Variations in business or economic activity that recur with regularity as the result of changes in climate, holidays, and vacations.

SEC

Agency authorized by the United States Congress to regulate the financial reporting practices of most public corporations.

SEC Filings

Financial and informational DISCLOSURES required by theSECin order to comply with certain sections of the Securities Act of 1933 and the Securities and Exchange Act of 1934. Some of the more common filings that publicly owned companies must submit are theFORM 10-K,FORM 10-QandFORM 8-K.

SEC Registration Statement

DISCLOSUREdocument that must be filed with theSECin connection with apublic offeringof SECURITIES, unless the offering is exempt.

Secondary Market

EXCHANGESandOVER-THE-COUNTERmarkets where securities are bought and sold subsequent to original issuance, which took place in the primary MARKET.

Secured Bond

ABONDthat gives the bondholders a pledge of certaincompanyassets as a guarantee of repayment.

Secured Debt

DEBTguaranteed by the pledge of assets or otherCOLLATERAL.

Securities and Commodities Exchanges

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

Securities and Exchange Commission (SEC)

Agency authorized by the United States Congress to regulate the financial reporting practices of most public corporations.

Securities Industry Association (SIA)

Tradegroup that represents broker-dealers.

Securitization

Source of financing whereby an entity's ASSETS (typicallymortgageloans,leaseobligationsor other types of RECEIVABLES) are placed in a special purpose vehicle that issues SECURITIES collateralized by such assets.

Security

Any kind of transferable certificate of ownership includingEQUITY SECURITIESandDEBTSECURITIES.

Security Interest

Legalinterestof one person in the property of another to assure performance of a second person under acontract.

Self Employment Tax

Most individuals that are in business for themselves, such as SOLE PROPRIETORS, PARTNERS or independent contractor, are subject to self employment taxes. The taxes provide coverage for the self employed individual for social security(OASDI) and Medicare benefits (HI) similar to the taxes withheld by employers from wages it pays the employees.

Sell Out

LIQUIDATIONof aMARGINACCOUNTby a broker after a margin call has failed to produce additionalEQUITYto bring the margin to the required level.

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

Grouping of expenses reported on a company’sPROFITandLOSSstatementbetweenCOST OF GOODS SOLDandINCOMEdeductions.

Sensitivity Analysis

Study measuring the effect of a change in a variable on theRISKorPROFITABILITYof anINVESTMENT.

SEP Plan

PENSIONplan in which both the employee and the employer contribute to anINDIVIDUAL RETIREMENT ACCOUNT (IRA).

Separate Entity

A business that is treated as distinct from its creditors, customers, and owners.

Serial Bond

BONDISSUE, usually of a municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired.

Settlement Method

Method ofACCOUNTINGfor SECURITIES whereby transactions are recorded on the date the securities settle by the delivery or receipt of securities and the receipt or payment ofcash.

SFAS

Statements issued by theFINANCIAL ACCOUNTING STANDARDS BOARD (FASB).

UnitofEQUITYin aCORPORATION.

Shareholder

Owner of one or more shares of stock in aCORPORATION.

Shares Authorized

Number of shares of stock provided for in the articles ofINCORPORATIONof aCOMPANY.

Shares Outstanding

The number of shares in aCOMPANYthat have been issued and remain in circulation.

Short Bond

BONDwith a shortMATURITY; a somewhat subjective concept, but generally meaning two years or less.

Short Coupon

BONDINTERESTpayment covering less than the conventional six-monthperiod.

Short Interest

Total amount of shares of stock that have been sold short and have not yet been repurchased tocloseout short positions.

Short Sale

Saleof an item before it is purchased. A person entering into ashort salebelieves the price of the item will decline between the date of the short sale and the date he or she must purchase the item to deliver the item under the terms of the short sale.

Short-Term

Current; ordinarily due within one year.

Short-Term Debt

AllDEBTobligationscoming due within one year; show on abalancesheet as CURRENT LIABILITIES.

Short-Term Gain or Loss

ForTAXpurposes, thePROFITorLOSSrealized from thesaleof securities or other capital assets held six months or less.

Short-Term Investment

The temporaryINVESTMENTof excessCASH, intended to be held until needed to pay currentOBLIGATIONS.

SIA

Tradegroup that represents broker-dealers.

Significant Accounts

Anaccountis significant if there is more than a remote likelihood that the account could contain misstatements that individually or when aggregated with others, could have amaterialeffect on thefinancial statements, considering the risks of both overstatement and understatement.

Significant Deficiency

Acontrol deficiencyor combination of control deficiencies, that adversely affects thecompany's ability to initiate, authorize, record, process orreportexternal financial data reliably in accordance withGAAPsuch that there is more than a remote likelihood that a misstatement of the company's annual orinterim financial statementsthat is more than inconsequential will not be prevented or detected.

Significant Findings or Issues

Substantive matters that are important to the procedures performed, evidence obtained, or conclusions reached and include but are not limited to:
1. significant matters;
2. results of auditing procedures indicating a need for significant modification of planned auditing procedures;
3. audit adjustments;
4. disagreements among members of the engagement team;
5. circ*mstances that cause difficulty in applying auditing procedures;
6. significant changes in the assessed level of AUDIT RISK;
7. matters that could result in modification of the AUDITORS' REPORT.

Simple Interest

INTERESTcalculation based only on the originalPRINCIPALamount.

Simple Plans

An employer may adopt a simplified retirement plan called a SIMPLE Plan (Savings incentive match plan for employees) if it has fewer than 100 employees that received at least $5,000 in compensation in the preceding year.

Simple Trust

This type ofTRUSTis required to distribute all itsincomecurrently, whether or not theTRUSTEEactually does so, and it has no provision in the trustinstrumentfor charitable contributions. It is to be distinguished from aCOMPLEX TRUST. A trust may be asimple trustin one year and a complex trust in another year. In the year in which the trust distributes its corpus, it loses its classification as a simple trust.

Simplified Employee Pension (SEP) Plan

PENSIONplan in which both the employee and the employer contribute to anINDIVIDUAL RETIREMENT ACCOUNT (IRA).

Single Audit Act

TheSingle Audit Actof 1984 and the Single Audit Act Amendments of 1996 establish requirements for audits of states, local governments, and nonprofit organizations that administer federal financial assistance programs above a certain threshold.

Single-Premium Deferred Annuity (SPDA)

TAX-deferredINVESTMENTsimilar to anINDIVIDUAL RETIREMENT ACCOUNT (IRA), without many of the IRA restrictions.

Sinking Fund

Money accumulated on a regular basis in a separate custodialACCOUNTthat is used to redeemDEBTsecurities orPREFERRED STOCKissues.

Small Business Stock

Noncorporate investors may exclude up to 50 percent of theGAINthey realize on the disposition of qualifiedsmall business stockissued after Aug. 10, 1993, and held for more than five years. The amount of gain eligible for the 50 percent exclusion is subject to per-issuerlimits. In order to qualify for the EXCLUSION, theCORPORATIONissuing the stock must be a C Corporation (but excluding certaininvestmentcorporations) and it must use at least 80 percent of its assets in active conduct of one or more qualifiedtradeor businesses. In addition, its gross assets cannot exceed $50 million.

Sole Proprietorship

See Proprietorship.

Solvency

State of being able to meet maturingOBLIGATIONSas they come due.

Solvent

Capable of paying one’s financialobligations.

SPDA

TAX-deferredINVESTMENTsimilar to anINDIVIDUAL RETIREMENT ACCOUNT (IRA), without many of the IRA restrictions.

Special Assessment

Charge made by a local government for the cost of animprovementor service. It is usually levied on those who will benefit from the service.

Special Report

Atermapplied to AUDITORS' REPORTS issued in connection with various types of financial presentations, including:FINANCIAL STATEMENTSthat are prepared in conformity with a comprehensive basis ofaccountingother than generally accepted accounting principles. Specified elements, accounts or items of a financial statement. Compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements. Financial presentations to comply with contractual agreements or regulatory provisions. Financial information presented in prescribed forms or schedules that require a prescribed form ofauditor's reports.

Specialist

Member of astock exchangewho maintains a fair and orderlyMARKETin one or more securities.

Specialized Mutual Fund

Fund that limits its investments to a particular sector of the marketplace.

Specific Identification Method

A way of pricing the cost ofINVENTORYas coming from a specific purchase.

Speculation

Assumption ofRISKin anticipation ofgainbut recognizing a higher than average possibility ofLOSS.

Spinoff

Transferof all, or a portion of, asubsidiary's stock or other ASSETS to the stockholders of itsPARENT COMPANYon aPRO RATAbasis.

Split Offering

NewMUNICIPAL BONDISSUE, part of which is represented by serial bonds and part byTERMMATURITYbonds.

Spot Market

MARKETfor buying and sellingCOMMODITIESor financial instruments for immediate delivery and payment based on the settlement conventions of the particular market.

Spread

Difference between two prices, usually a buying and selling price.

Spreadsheet

AnACCOUNTINGorBOOKKEEPINGapplication for use on a computer.

SSARS

Statements issued by theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)that specifically relate to REVIEWS and COMPILATIONS.

Standard

A widely known and accepted measurement or weight used as a basis for a system of measurements.

Standard Cost

Realistic costs for direct materials, directlabor, and factoryoverheadthat have been determined before they occur.

Standard Deduction

Individual taxpayers who do not itemize their deductions are entitled to astandard deductionamount by which to reduceADJUSTED GROSS INCOMEin arriving attaxable income. The amount of thestandarddeduction varies by the type of the taxpayer and changes each year. A schedule of standard deductions is easily found in the instructions for the federal form 1040. Each state may also use a standard deduction format, but the amounts and computations differ from the federal and from state to state. Certain taxpayers may not be entitled to use the standard deduction. An example of this would be a married filing separate taxpayer. If one taxpayer itemizes then the other is required to by law even if the married filing separate taxpayer is unknowing of what is included on the spouses separatereturn. A reason for this might be the prevention of pooling and duplication of deductions.

Standard Deviation

Statistical measure of the degree to which an individualvaluein a probability distribution tends to vary from the mean of the distribution.

Start-Up Costs

(1) Costs, excludingacquisitioncosts, incurred to bring a newunitintoproduction. (2) Costs incurred to begin a business.

Stated Value

Pershareamount set by theBOARD OF DIRECTORSto be placed in theCAPITAL STOCKaccountupon issuance ofNO-PAR VALUE.

Statement

Summary for customers of the transactions that occurred over the preceding month.

Statement of Cash Flows

One of the basicFINANCIAL STATEMENTSthat isGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) required as part of a complete set of financial statements prepared in conformity with. It categorizesnet cashprovided or used during aperiodas operating,investingand financing activities, and reconciles beginning and ending cash and cash equivalents.

Statement of Cost of Goods Manufactured

A formalSTATEMENTsummarizing the flow of all manufacturing costs incurred during anaccountingperiod.

Statement of Financial Accounting Standards (SFAS)

Statements issued by theFINANCIAL ACCOUNTING STANDARDS BOARD (FASB).

Statement of Financial Condition

Basic FINANCIALSTATEMENT, usually accompanied by appropriate DISCLOSURES that describe the basis of ACCOUNTINGused in its preparation and presentation as of a specified date, the entity's ASSETS, LIABILITIES and theEQUITYof its owners. Also known asBALANCESHEET.

Statement of Owner’s Equity

The financialSTATEMENTthat shows how and why anOWNER’S EQUITY, or capital,ACCOUNThas changed over s specific financialPERIOD.

Statements on Auditing Standards (SAS)

Statements issued by theAccountingStandards Board of theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA).

Statements on Standards for Accounting and Review Services (SSARS)

Statements issued by theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)that specifically relate to REVIEWS and COMPILATIONS.

Statute of Limitations

This sets out theperiodwithin which actions may be brought upon claims or within which rights may be enforced. As it pertains totaxreturns, thestatute of limitationsis generally three years from the date a return is due or filed.

Stepped Up Basis

Generally, the basis of property acquired by INHERITENCE,BEQUESTor device from a DECENDANT is theFAIR MARKET VALUEof the property on the date of the decendant's death. Thus if the fairmarketvalue is more than thedecedent's basis, a taxpayers basis in the property received is stepped-up.

Stock Compensation Plan

FRINGE BENEFIT that gives employees theoptionto purchase the employer's stock at a specified price during a specifiedperiod.

Stock Exchange

Organized marketplace in which stocks,COMMON STOCKequivalents, and bonds are traded by members of the exchange, acting both as agents and principals.

Stock Market

General

term

referring to the organized trading of securities through the various

EXCHANGES

and the

OVER-THE-COUNTERMARKET

Stock Options

Right to purchase or sell a specified number of shares of stock at specified prices and times.

1) Terminology

a) Grant date - The date at which an employer and an employee reach a mutual understanding of the key terms and conditions of a share-based payment award. The employer becomes contingently obligated on the grant date toissueequityinstruments ortransferassets to an employee who renders the requisite service. Awards made under an arrangement that is subject toshareholderapproval are not deemed to be granted until that approval is obtained unless approval is essentially a formality (or perfunctory), for example, ifmanagementand the members of theboard of directorscontrol enough votes to approve the arrangement. Similarly, individual awards that are subject to approval by the board of directors, management, or both are not deemed to be granted until all such approvals are obtained. The grant date for an award of equity instruments is the date that an employee begins to benefit from, or be adversely affected by, subsequent changes in the price of the employer’s equity shares.

b) Measurement Date – The date at which the equity share price and other pertinent factors, such as expectedvolatility, that enter into measurement of the total recognized amount of compensation cost for an award of share-based payment are fixed

c) Fairvalue- The amount at which an asset (orliability) could be bought (or incurred) or sold (or settled) in a currenttransactionbetween willing parties, that is, other than in a forced orliquidationsale.

d) In the Moneyoption- Option granted with an exercise price below themarket priceon the grant date

e) Out of the Money option – Option granted with an exercise price above themarketprice.

f) Backdating

i) Exercise price is based on a lower share price prior to the option grant date. The practice of marking a document with a date that precedes the actual date.
ii) Example – Option is approved by the board permits the stock to be priced based upon the lowest price in the past 30 days- permits options to be in the money when issued. Options are suppose to be issued at option price that is neutral at time of issuance.
iii) May not be illegal if

(1) Clearly communicated to shareholders
(2) No documents forged
(3) Reflected in earnings of thecompany

(a) If under A PB 25 –the granting of in the money options resulted in recognition of compensationexpensein earnings. If options were neutral or out of the money then. no compensation would be recognized
(b) If under 123R expense is based upon fair value at grant date. and compensation is recognized it the earningsstatement

g) Spring loading - Timing of option grants to take place before good news or after bad news is released

i) Concerns about insider trading

h) Forward loading – Term used for setting the option grant date to occur after predicted fall in stock price or before predicted stock price increase

i) Terms might involve option to be issued with price to be determined based upon the lowest price as of the issue date or for the next 30 days after the issuance. Grant date does not occur until the conclusion of the 30 dayperiodwhen the price is known. To determine the price the company needs to look back at the stock price for the last 30 days to determine what the exercise price should be. This is another version of backdating.

i) Discounted options – options that have an exercise price that is less than fair value on the date of grant.

2)AccountingandTaxRamifications

a) Accounting ramifications

i) Restatement
ii) Unable to file on timely basis while go back and determine what periods are effected
iii) Calls into questions company’s internal controls and governance
iv) Will be unable to file shelf registration
v) May be delisted from exchange

b)SECreporting implications

i) Potentially inaccurate reporting of executive compensation inproxystatements and annual reports
ii) Potential violation of securities and Law for executive oficiers and directors with Section 16 (a) of the Securities and exchange Act of 1934. required to report on form 4
iii) Potential false or misleading disclosures about the company’sstock optionplan in periodic reports filed with the SEC – Failure to disclose the practice of backdating may violate securities and laws against false or misleading disclosures
iv) Potential false Section 302 certifications –Principaland financial executives are required to sign certifications in quarterly and annual reports certifying that among other things that the report filed with the SEC does not include any false statements of amaterial fact or state material facts necessary in order to make the disclosures not misleading.

c) Tax Ramifications

i) Exercise price effects capital gains of the individual and effects compensation expense used bycorporationfor calculating company’s compensation expense for tax purposes,
ii) Tax ramifications – company

(1) Discounted options that become vested on or after January 1, 2005 are subject to non qualifying deferred compensation rules -
Holder is required to select a fixed exercise date no later than December 31, 2006 or be subject to immediate taxation onvesting, a 20 percentpenaltyand aninterestassessment.
(2) May cause thelossof tax deductions under Section 162 (m), the deduction that public companies take for compensation to chief executive officer and next four highest compensated officers is limited to $1 million each. The deduction for stock options in not usually limited. However, discounted options do not qualify as performance based compensation and therefore the deduction that the company would get may be partially or completely lost. In addition discounted stock options do not qualify for Incentive Stock option (ISO) treatment. (ISO there is no payroll tax orwithholdingrequirements for ISO’s) – If company mistakenly treats backdated stock as an ISO the company my fail to meet payroll tax andincometax withholding requirements.

d) New Rules SEC

i) Effective for years after December 15, 2006
ii) New Disclosures mandated

(1) Fairvalue of options on grant date
(2) Value of grant per 123R
(3) Closing price market price on the date of grant if it is greather than the excericise price of the award
(4) The date the compensation committee or board took action to grant an award if theat date is different than the actual grant date.
(5) Also if the exercise price of an option grant differs from the closing market price per share on the grant date companies must include a description of the method for determining the exercise price.

Stock Rights

Stock rights are rights issued to stockholders of aCORPORATIONthat entitle them to purchase new shares of stock in the corporation for a stated price that is often substantially less than theFAIR MARKET VALUEof the stock. These rights may be exercised by paying the stated price, may be sold, or may be allowed to expire or lapse. Stock rights are generally treated as stockDIVIDENDS.

Stock Split

Increase in the number of shares of acompany'sCOMMON STOCKoutstandingthat result from the issuance of additional shares proportionally to existing stockholders without additional capitalinvestment. ThePAR VALUEof each share is reduced proportionally.

Stockholder

A person who owns shares of STOCK in aCOMPANY.

Stockholders’ Equity

The OWNER'SEQUITYin aCORPORATION.

Straight-Line Depreciation

ACCOUNTINGmethod that reflects an equal amount of wear and tear during eachperiodof anASSET'S useful life. For instance, the annualSTRAIGHT-LINE DEPRECIATIONof a $2,500 asset expected to last five years is $500.

Straight-Line Percentage

A percentage used to determine the amount ofDEPRECIATIONto be recorded eachACCOUNTINGperiodfor the straight-line method.

Strike Price

Price of a financialinstrumentat whichconversionor exercise occurs.

Subsequent Event

Materialevent that occurs after the end of theaccountingperiodand before the publication of an entity'sFINANCIAL STATEMENTS. Such events are disclosed in the notes to the financial statements.

Subsidiary

COMPANYof which more than 50% of the voting shares are owned by anotherCORPORATION, called the PARENT COMPANY.

Sum-of-the-Years-Digits Method

An accelerated method ofDEPRECIATIONin which the depreciablevalueif anASSETis multiplied by a decreasing fraction each year of the asset’s useful life.

Surplus

Not needed; extra.

Surviving Spouse

This is a person whose husband or wife died during the tax year. A surviving spouse may file a JOINT RETURN for the year in which the death occurred. In addition a joint return may be filed for the two succeeding tax years if during that time the surviving spouse:
1. Remains unmarried; and
2. Maintains as his home a household that is the principal place of abode during the entire TAX YEAR for a child for whom a dependency exemption may be claimed.

Swap

Financialcontractin which two parties agree to exchangenetstreams of payments over a specifiedperiod. The payments are usually determined by applying different indices (e.g., interest rates,foreign exchangerates,equityindices) to aNOTIONALamount. The term notional is used becauseswapcontracts generally do not involve exchangesofPRINCIPAL.

T

T Account

The simplest form of anACCOUNT, shaped like the letter T, in which increases and decreases in the account can be recorded.

Takeover

The act or an instance of taking control of something, especially by force.

Tangible Asset

ASSETS having a physical existence, such ascash,land, buildings, machinery, or claims on property, investments or goods in process.

Target Costing

A pricing method that (1) identifies the price at which a product will be competitive in the marketplace, (2) identifies the minimum desiredPROFITto be made on the product, and (3) computes a target cost for the product by subtracting the desired profit from the competitiveMARKET PRICE.

Tax

Charge levied by a governmentalunitonincome, consumption, wealth, or other basis.

Tax Basis

Original costof anASSET, lessACCUMULATED DEPRECIATION, that goes into the calculation of aGAIN or LOSSforTAXpurposes.

Tax Court

The U.S.Tax Courtis a legislative court functioning to adjudicate controversies between taxpayers and theIRS arising out of deficiencies assessed by the IRS forINCOME,GIFT, ESTATE, windfallprofitand certain EXCISE TAXES. It has no jurisdiction over other taxes such as employment taxes. Various sales taxes and certain excise taxes.

Tax Credit for the Elderly and Disabled

Taxpayers age 65 or older or those under 65 who are retired with permanent and total disability are eligible to claim acreditto reduce the amount of their taxliability. It is designed primarily to benefit those individuals who receive small amounts of retirementINCOME. Each taxpayer is allocated an initial base amount based on his or her filing status determining the credit. The base amount is then reduced by the amount of nontaxable income, or is phased out for taxpayers whoseADJUSTED GROSS INCOMEexceeds certain levels.

Tax Lien

ENCUMBRANCEplaced on property assecurityfor unpaid taxes.

Tax Shelter

Arrangement in which allowabletaxdeductions orEXCLUSIONSresult in thedeferralof tax onINCOMEthat would otherwise be payable currently.

Tax Year

Theperiodused to compute a taxpayer'sTAXABLE INCOMEistax year. It is an annual period that is either a calendar year ,FISCAL YEARor fractional part of a year for which thereturnis made.

Taxable Earnings

The amount of an employee’s earnings subject to aTAX.

Taxable Income

Taxable incomeis generally equal to a taxpayer'sADJUSTED GROSS INCOMEduring theTAX YEARless any allowable EXEMPTIONS and deductions.

Taxable Municipal Bond

TaxableDEBTobligation of a state or local government entity, an outgrowth of the Tax Reform Act of 1986.

Taxpayer Identification Number (TIN)

Any individual or other taxable entity that is required to file areturn,statementor any other document with theIRSmust indicate his (or its) taxpayer identification number. For an individual, thesocial securitynumber is used, and if you do not have a social security number, the IRS will assign you aTIN. A federal or employer ID number is assigned to other types of entities and will use that as their TIN.

Tenancy-in-Common

Co-ownership of property. In a validtenancy-in-common, a deceased co-owner'stitlepasses to his or her heirs without being included in the estate of the deceased co-owner.

Term

Periodof time during which the conditions of aCONTRACTwill be carried out.

Term Loan

Loanfor a specified timeperiod.

Test

Criterion used to measure compliance with financial ratio requirements of indentures and otherLOANagreements.

Time Value

Price put on the time an investor has to wait until anINVESTMENTmatures, as determined by calculating the PRESENT VALUEof the investment atMATURITY.

Time Value of Money

The concept thatCASH FLOWSof equal dollar amounts separated by a time interval have different present values because of the effect of compoundINTEREST.

Timing of Tests of Control

TheAUDITORmust perform tests of controls over aperiodof time that is adequate to determine whether, as of the date specified inmanagement's report, the controls necessary for achieving the objectives of the control criteria are operating effectively.

TIN

Tip

Information passed by one person to another as a basis for buy or sell action in aSECURITY.

Title

The written evidence, such as a deed, that proves legal right of possession or control.

Ton

BONDtraders’ jargon for $100 million.

Total Capitalization

Capital structure of aCOMPANY, including LONG-TERMDEBTand all forms ofEQUITY.

Total Cost

Sum ofFIXED COSTS, semi-variable costs, and VARIABLE COSTS.

Total Direct Labor Cost Variance

The difference between the actualLABORcosts incurred and thestandardlabor costs for the good units produced.

Total Direct Materials Cost Variance

The difference between the actual materials costs incurred and the standard costs of those items.

Total Gain

Excess of the proceeds realized on thesaleof eitherINVENTORYor noninventory goods.

Total Inventory Method

A lower-of-cost-or-marketmethod of valuingINVENTORY.

Total Quality Management

An organizational environment in which all business functions work together to buildqualityinto the firm’s products or services.

Trade

Buying or selling goods and services among companies, states, or countries, called commerce.

Trade Date

Date when aSECURITYtransactionis entered into, to be settled on at a later date. Transactions involving financial instruments are generally accounted for on thetrade date.

Trademark

Distinctive name, symbol, motto, or emblem that identifies a product, service, orfirm.

Trader

Anyone who buys and sells goods or services forPROFIT; aDEALERor merchant.

Transaction

The act of transacting, especially a business agreement or exchange; event or condition recognized by an entry in the bookACCOUNT.

Transfer

To move or cause to go from one place, person, or thing to another.

Transfer Agent

Agent, usually a commercial bank, appointed by a COPORATION, to maintain records of stock andBONDowners, to cancel andissuecertificates, and to resolve problems arising from lost, destroyed, or stolen certificates.

Transfer Price

Price charged by individual entities in a multi-entity COPORATION on transactions among themselves; also termed transfercost.

Transfer Tax

Combined federalTAXon gifts and estates.

Transferee Liability

A person may be held LIABLE for another taxpayer's delinquent taxes if:

1. The transferee received assets of the transferor-taxpayer; and
2. The transferor was INSOLVENT at the time or was rendered insolvent by that transfer or related series of transfers.

However the insolvency requirement does not apply to GIFT taxes. The transferee is only liable to the extent of the value of the property received from the transferor. Thus, transferee liability merely provides a means for the IRS to recover any assets the transferor-taxpayer attempts to transfer to avoid paying taxes.

Transferred Basis

Atransferred basisis the basis of property in the hands of a transferor, donor orGRANTOR. In this sense a prior owner's basis in the property is transferred to the taxpayer. Transferred basis occurs in the following transactions: GIFTS, transfers in trusts, certain transfers to controlled CORPORATIONS, contributions to PARTNERSHIPS and LIQUIDATINGdistributionsfrom a corporation.

Treasurer

COMPANYofficer responsible for the receipt, custody,INVESTMENT, andDISBURsem*nTof funds, for borrowings, and, if it is a public company, for the maintenance of aMARKETfor its securities.

Treasury

A place where private or public funds are controlled.

Treasury Bill

Short-termobligation that bears noINTERESTand is sold at adiscount.

Treasury Bond

Long-termobligation that matures more than five years from issuance and bearsINTEREST.

Treasury Instruments

Direct financialobligationsof the United States government.

Treasury Note

Intermediate-term obligation that matures one to five years from issuance and bearsINTEREST.

Treasury Stock

Stock reacquired by the issuingcompany. It may be held indefinitely, retired, issued upon exercise of STOCK OPTIONS or resold.

Trend

Long-termprice or tradingvolumemovements either up, down, or sideways, which characterize a particular MARKET, commodity orSECURITY.

Trend Analysis

A type ofhorizontal analysisin which percentage changes are calculated for related items for several successive years instead of for two years.

Trial Balance

A comparison of the total ofDEBITand CREDIT balances in theLEDGERto check that they are equal.

Troubled Debt Restructuring

Agreement betweenDEBTORandCREDITORwhich amends the terms of aDEBTthat has little chance of being paid in accordance with its contractual terms. The agreement may involve thetransferof ASSETS in full or partial satisfaction of the debt.

Trust

Ancient legal practice where one person (theGRANTOR) transfers the legaltitleto anASSET, called theprincipal or corpus, to another person (theTRUSTEE), with specific instructions about how the corpus is to be managed and disposed.

Trustee

Person who is given legaltitleto, andmanagementauthority over, the property placed in aTRUST.

Turnover

The number of times a particular product is sold and restocked during a fixedperiodof time.

U

UAA

The proposal for a new regulatory framework for the publicaccountingprofession which was developed jointly by theAMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)and theNATIONAL ASSOCIATION of STATE BOARDS of ACCOUNTANCY (NASBA). The new framework is intended to enhance interstate reciprocity and practice across state lines by CPAs, meet the future needs of the profession, respond to the marketplace and protect the public that the profession serves.

Unamortized Bond Discount

Difference between theFACE VALUEof aBONDand the proceeds received from thesaleof the bond by the issuingCOMPANY, less whatever portion has been amortized, that is, written off toEXPENSEas recorded periodically on thePROFITandLOSSstatement.

Unamortized Premiums on Investments

Unexpensed portion of the amount by which the price paid for aSECURITYexceeded itsPAR VALUE.

Unaudited Financial Statements

FINANCIAL STATEMENTSwhich have not undergone a detailedAUDITexamination by an independent CERTIFIED PUBLIC ACCOUNTANT (CPA).

Underlying Debt

MUNICIPAL BONDtermreferring to thedebtof government entities within the jurisdiction of larger government entities and for which the larger entity has partialCREDITresponsibility.

Underlying Security

SECURITYthat must be delivered if a put OPTIONS or call optioncontractis exercised.

Undervalued

SECURITYselling below itsLIQUIDATIONvalueor theMARKET VALUEanalysts believe it deserves.

Underwrite

To assume theRISKof buying a newISSUEof securities from the issuingCORPORATIONor government entity and reselling them to the public, either directly or through dealers.

Unearned Discount

ACCOUNTon the books of a lending institution recognizingINTERESTdeducted in advance and which will be taken intoINCOMEas earned over the life of theLOAN.

Unearned Income

Payments received for services which have not yet been performed.

Unearned Interest

INTERESTthat has already been collected on aLOANby aFINANCIAL INSTITUTION, but that cannot yet be counted as part of earnings because thePRINCIPALof the loan has not beenOUTSTANDINGlong enough.

Unequal Cash Flows

Cashflow from anASSETthat may vary from one year to the next.

Uniform Accountancy Act (UAA)

Uniform Capitalization Rules

These are a set of rules intended to be a single comprehensive set of rules to govern the capitalization, or inclusion inINVENTORYof direct andindirect costof producing, acquiring and holding property. Under the rules, taxpayers are required tocapitalizethe direct costs and an allocable portion of the indirect costs attributable to real and tangiblepersonal propertyproduced or acquired for resale. The obvious effect of theuniform capitalization rulesis that taxpayers may not take current deductions for these costs but instead must be recovered through DEPRECIATIONorAMORTIZATION.

Unissued Stock

Shares of a corporation’s stock authorized in its charter but not issued.

Unit

Any division ofquantityaccepted as astandardof measurement or of exchange.

Unlimited Liability

The responsibility of all the partners in aCOMPANYfor itsDEBT.

Unqualified Opinion

AUDITopinion not qualified for anymaterialscope restrictions nor departures fromGENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). TheAUDITORmayissueanunqualified opiniononly when there are no identified material weaknesses and when there have been no restrictions on the scope of the auditor's work. Also known asCLEAN OPINION.

Unrealized Loss or Gain on Long-Term Investments

ABALANCEsheetACCOUNTfor entering increases or decreases in thevalueof long-terminvestments.

Unrealized Profit (or Loss)

PROFITorLOSSthat has not become actual.

Unrestricted Funds

Resources of anot-for-profitentity that have no restrictions as to use or purpose.

Unsecured Bond

ABONDissued on the generalCREDITof aCOMPANY.

Use of Professional Skepticism when Evaluating the Results of Testing

TheAUDITORmust conduct theauditofinternal control over financial reportingand the audit of thefinancial statementswith professional skepticism, which is an attitude that includes a questioning mind and a critical assessment of audit evidence.

V

Valuation

The process of determining thePRESENT VALUEof aBONDbased on the currentMARKET INTEREST RATE.

Valuation Allowance

Method of lowering or raising an object'sCURRENT VALUEby adjusting itsacquisitioncost to reflect itsmarket valueby use of aCONTRA ACCOUNT.

Value

How much money something is worth.

Value-Added Tax (VAT)

ConsumptionTAXlevied on theVALUEadded to a product at each stage of its manufacturing cycle as well as at the time of purchase by the ultimate consumer

Variable Annuity

LifeinsuranceANNUITYCONTRACTwhoseVALUEfluctuates with that of an underlying securitiesPORTFOLIO or other INDEXof performance.

Variable Costs

Total costs that change in direct proportion to changes in productiveoutputor any other measure ofvolume.

Variable Manufacturing Costs

Costs that increase or decrease in direct proportion to the number of units produced.

Variable Overhead

The portion of mixed or semi-variable overheadcosts that changes proportionately with some measure of activity oroutput.

Variable Rate Loan

Loanwhoseinterest ratechanges over its life in relation to the level of anindex.

Variance

Deviation or difference between an estimatedvalueand the actual value.

VAT

ConsumptionTAXlevied on theVALUEadded to a product at each stage of its manufacturing cycle as well as at the time of purchase by the ultimate consumer.

Velocity

Rate of spending, orturnoverof money- in other words, how many times a dollar is spent in a givenperiodof time.

Vendor

Supplier of goods or services of a commercial nature; may be a manufacturer, importer, orwholesaledistributor.

Venture Capital

Investmentcompanywhose primary objective is capital growth. New ASSETS invested largely in companies that are developing new ideas, products, or processes.

Vertical Analysis

A technique for analyzingFINANCIAL STATEMENTSthat uses percentages to show the relationships of each stated item to the total, which is 100 percent of the figure in a single statement.

Vesting

Point at which certain benefits available to an employee are no longer contingent on the employee continuing to work for the employer.

Voidable

CONTRACTthat can be annulled by either party after it is signed becauseFRAUD, incompetence, or another illegality exists or because aright of rescissionapplies.

Volatile

Tending to rapid and extreme fluctuations.

Volatility

Characteristic of aSECURITY, commodity, orMARKETto rise or fall sharply in price within aSHORT-TERM period.

Volume

Total number of stock shares, bonds, orCOMMODITIESfutures contracts traded in a particularperiod.

W

Wage

Payment for services of employees at an hourly rate.

Walkthroughs

The most effective means for an AUDITOR to confirm his understanding how internal control over financial reporting is designed and operates to evaluate and test its effectiveness. It includes making inquiries of and observing the personnel who actually perform the controls; reviewing documents that are used in, and that result from, the application of the controls; and comparing supporting documentation to the accounting records. In a walkthrough, the auditor traces a transaction from origination through the company's information systems to the point where it is reflected in the company's financial reports. Walkthroughs provide the auditor with evidence to:

1. Confirm the auditor's understanding of the process flow of transactions.
2. Confirm the auditor's understanding of the design of controls identified for all five components of internal control over financial reporting, including those related to the prevention or detection of fraud.
3. Confirm that the auditor's understanding of the process is complete by determining whether all points in the process at which misstatements related to each relevant financial statement assertion that could occur have been identified.
4. Evaluate the effectiveness of the design of controls.
5. Confirm whether controls have been placed in operation.

Warrant

Optionto purchase additional SECURITIES from theissuer.

Wash Sale

Awash saleoccurs if stock or securities are sold at aLOSSand the seller acquires substantially identical stock or SECURITIES 30 days before or after the sale. Stock or securities for this purpose includes contracts or operations to acquire or sell stock or securities. Losses incurred in a wash sale cannot be deducted. It does not matter if the total 60 dayperiodbegins in onetax yearand ends in another. However, the disallowed loss is not permanently lost. Instead, the basis in the newly acquired stock or securities is the same basis as of the stock or securities sold, adjusted by the difference in price of the stock or securities.

Weighted-Average-Cost Method

AnAVERAGE-COST METHODprocedure for determining the cost ofENDING INVENTORYunder thePERIODIC INVENTORY SYSTEM

Wholesale

Thesaleof goods in large quantities, especially to a person orCOMPANYthat plans to sell them at retail.

Wholesaler

Middleman or distributor who sells mainly to retailers, jobbers, other merchants, and industrial, commercial, and institutional users as distinguished from consumers.

With Recourse

Able to collect losses on uncollectible accounts from the seller.

Withholding

Amount withheld or deducted from employee salaries by the employer and paid by the employer, for the employee, to the proper authority.

Withholding Allowance

Each taxpayer is allowed to claim awithholding allowance, which exempts a certain amount of wages from being subject toWITHHOLDING. The allowance is designed to prevent too much taxes being withheld from a taxpayers wages and a person can compute this by completingform W-4and submitting it to their employer.

Without Recourse

Obligated to bear losses from uncollectible accounts.

Work in Progress

INVENTORYaccountconsisting of partially completed goods awaiting completion andtransferto finished inventory.

Working Capital

Excess of CURRENT ASSETS over CURRENT LIABILITIES.

Working Interest

Direct participation withUNLIMITED LIABILITY, as distinguished from passiveLIMITED PARTNERSHIPshares.

Working Papers

(1) Records kept by theAUDITORof the procedures applied, the tests performed, the information obtained, and the pertinent conclusions reached in the course of theAUDIT. (2) Any records developed by aCERTIFIED PUBLIC ACCOUNTANT (CPA)during an audit.

Worksheet

A type of working paper used as a preliminary step in the preparation ofFINANCIAL STATEMENTS.

Wrap-Around Mortgage

SecondMORTGAGEwhich conveniently expands the total amount of borrowing by the mortgagor without disturbing the original mortgage.

Write Off

Charging anASSETACCOUNTtoEXPENSEorLOSS.

Y

Yellow Book

Written by the GENERAL ACCOUNTABILITY OFFICE, theyellow booksets forth standards to be followed in auditing theFINANCIAL STATEMENTSof entities that receive federal financial assistance. "Yellow Book" is the name given to "GovernmentAuditing Standards" issued by the Comptroller General of the United States which contains standards for audits of government organizations, programs, activities and functions, and of government assistance received by contractors, nonprofit organizations and other nongovernment organizations.

Yield

Returnon anINVESTMENTan investor receives fromDIVIDENDSorINTERESTexpressed as a percentage of the cost of theSECURITY.

Yield Curve

Graph showing theTERMstructure of interest rates by plotting the yields of all bonds of the samequalitywith maturities ranging from the shortest to the longest available.

Yield to Call

YIELDon aBONDassuming the bond will be redeemed by theISSUERat the first call date specified in the INDENTUREagreement.

Yield to Maturity

Rate of returnon aSECURITYto itsmaturity, giving effect to the statedinterest rate,accrualofdiscount, or AMORTIZATIONofPREMIUM.

Z

Zero-Coupon Bond

BONDon which the holder receives only one payment atmaturitywhich includes bothPRINCIPALandINTERESTfrom issuance to maturity.

Zero-Coupon Convertible Security

ZERO-COUPON BONDconvertible into the COMMON STOCKof the issuingCOMPANYwhen the stock reaches a predetermined price.