Accountant's Glossary

Accountant's Glossary

Here at PSVS we are in the trenches every day helping you navigate your way through the various complexities of your accounting-related activities. It is easy to forget that not everyone knows all the accounting-specific terminology we use daily.

We have created this fairly comprehensive glossary to supplement your knowledge and understanding and hopefully answer some of your questions.

Of course, if you have any additional questions send us an email or give us a call: (650) 578-1200.

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Abandonment

The act of voluntarily and permanently giving up possession and use of property with the intention of ending ownership without transferring ownership to another person.

Academic Period

A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution.

Accelerated Cost Recovery System (ACRS)

The name given to tax rules relating to recovering, through depreciation deductions, the cost of property used in a trade or business to produce income.ACRS applies to property first used before 1987.

Accelerated Death Benefits

Any amounts paid under a life insurance contract, prior to death, for an individual who is terminally or chronically ill.

Account

Subdivision under the three sections of the accounting equation used to summarize increases and decreases in assets, liabilities, and owner's equity.

Accountable Plan

A reimbursement or allowance arrangement that requires an employee to account to their employer for their business expenses within a reasonable time.

Accountant

A person who handles a broad range of jobs related to the making of choices and decisions about the design of a business's accounting system and the preparation and explanation of financial reports.

Accounting Clerk

Entry-level job that can vary with the size of the company from specialization in one part of the system to a wide range of recordkeeping tasks.

Accounting Cycle

The accounting period of a business is separated into activities that help the business keep its accounting records in an orderly fashion.

Accounting Equation

The basis for keeping all accounting records in balance. Assets = liabilities + owner's equity

Accounting Method

The way a taxpayer accounts for income and expenses.

Accounting Period

A period of time covered by an accounting report.

Accounting System

A systematic process of recording and reporting the financial information resulting from business transactions.

Accounts Payable

The amount of money owed, or payable, to the creditors of a business.

Accounts Payable Subsidiary Ledger

A separate ledger that contains accounts for all creditors; it is summarized in the Accounts Payable controlling account in the general ledger.

Accounts Receivable

The total amount of money owed to a business.

Accounts Receivable Subsidiary Ledger

A separate ledger that contains accounts for all charge customers; it is summarized in the Accounts Receivable controlling account in the general ledger.

Accumulated Depreciation

The total amount of depreciation for a plant asset that has been recorded up to a specific point in time.

Accumulated Earnings

The employee's year-to-date gross earnings, or the employee's gross earnings from the beginning of the year through the end of each pay period.

Active Conduct of Trade or Business

To participate meaningfully in the management or operations of a trade or business.

Active Participation

Participation in a rental real estate activity in which the taxpayer owns at least 10% of the rental property and makes significant and bona fide management decisions, such as approving new tenants, deciding on rental terms, and approving expenditures.

Adjustment

An amount that is added to or subtracted from an account balance to bring that balance up-to-date.

Administrative Expenses

Costs related to the management of a business (for example, office expenses).

Aging Of Accounts Receivable Method

A method of estimating bad debts expense in which each customer's account is examined and classified by age; the age classifications are multiplied by certain percentages; and the total estimated uncollectible amounts are added to determine the end-of-period balance of Allowance for Uncollectible Accounts.

Allowance

Reduces the amount of income tax to be withheld.

Allowance Method

A method of accounting for uncollectible accounts in which an estimate is made of the amount of sales on account for which payment will not be received.

Assets

Property or items of value owned by a business.

Authorized Capital Stock

The maximum number of shares of stock a corporation may issue.

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