30 Basic Accounting Terms, Acronyms and Abbreviations Students Should Know

Standard rate used to calculate the OVERHEAD cost of a given activity. An amount of something produced, especially during a given period of time. Written promise to pay a specified amount to a certain entity on demand or on a specified date. Stock authorized to be issued but for which no PAR VALUE is set in the ARTICLES OF INCORORATION. A STATED VALUE is set by the BOARD OF DIRECTORS on the issuance of this type of stock.

Any citizen that is not a resident or citizen of the United States. Income of such individuals is subject to taxation if it is effectively connected with a United States trade or business. An incorporated organization which exists for educational or charitable purposes, and from which its shareholders or trustees do not benefit financially. Activities that occur only periodically, the data involved are generally not part of the routine flow of transactions. BOND issued by a government or public body, the INTEREST on which is typically exempt from federal taxation.

Earned Income Tax Credit (EITC)

Suppose you purchase manufacturing equipment for your business. Furthermore, they can identify easily which accounting method and financial records for their company. Especially, business owners will understand the importance to have an accountant expert in their company. Gross profit is the amount of money a business has left after subtracting all the direct costs of producing or purchasing the products or services it sells. The higher the gross profit, the more the business can contribute to its indirect costs and other expenses such as interest. The gross margin represents the tax-free difference between the selling price and the total cost of goods and services sold.

When money earned is distributed or released to another entity or person. Accrued interest begins on the first date the loan is borrowed. The following list comprises 75 basic account terms to know and their definitions.

Savings Bond

In a partnership, the drawings of each partner are recorded separately to track their personal withdrawals. The total amount of drawings for all partners is then deducted from the partnership’s total capital to calculate the remaining capital balance. A listing of all transactions between a business and a customer, or between two businesses, over a period of time. A document that records the details of a transaction between a seller and a buyer. This is usually issued with a request for payment by a designated future date.

• EXPENDITURES for making good or whole the portions of property that have deteriorated through use or have been destroyed through accident.
• The direct production costs involved in making a product or service that is intended for purchase.
• This is an internal document that is usually generated at the end of an accounting period in order to make sure all credits and debits are in balance.
• Net of cash outflows and inflows attributable to a corporate investment project.

A federal or employer ID number is assigned to other types of entities and will use that as their TIN. It has no jurisdiction over other taxes such as employment taxes. Financial contract in which two parties agree to exchange net streams of payments over a specified period. The payments are usually determined by applying different indices (e.g., interest rates, foreign exchange rates, equityindices) to a NOTIONAL amount.

Market Value

An individual entitled to special tax rates that fall midway between single rates and married filing joint rates, if they fit the qualifying profile. Any amount a corporation pays to a shareholder to directly technology in the classroom or indirectly buy back its stock. A valid transfer of property from one taxpayer to another without consideration or compensation. A gift may be subject to the unified estate and gift transfer tax.

The non technical term used by some to describe any cash or other property that is received in exchange of property that would be otherwise nontaxable. A periodic statement, usually monthly, that a bank sends to the holder of a checking account showing the balance in the account at the beginning of the month, during, and at the end of the month. 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. Any owned tangible or intangible object having economic value useful to the owner.

Operating Agreement

A qualified REMIC is generally taxed like a partnership, unless it takes contributions after its start up day or engages in a prohibited transaction. 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.