The document should be as specific as necessary in the circumstances for a reviewer to gain a thorough understanding of the significant findings or issues. 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. Gross income reduced by business and other specified expenses of individual taxpayers. COMPANY of which more than 50% of the voting shares are owned by another CORPORATION, called the PARENT COMPANY. Charge levied by a governmental unit on income, consumption, wealth, or other basis. Stock rights are rights issued to stockholders of a CORPORATION that entitle them to purchase new shares of stock in the corporation for a stated price that is often substantially less than the FAIR MARKET VALUE of the stock. Brokerage firm account whose transactions are settled on a cash basis. The transferee received assets of the transferor-taxpayer; and Activities that occur only periodically, the data involved are generally not part of the routine flow of transactions. 1. Transactions involving financial instruments are generally accounted for on the trade date. The labor cost is for specific work that can be easily and economically traced to an end product. Transaction wherein an owner of property, called the LENDER allows another party, the borrower, to use the property. A way of measuring how profitably and efficiently assets are being used to produce sales. It is found by dividing INCOME by average total assets. In business, a firm that uses borrowed funds to increase its return on equity incurs the risk that its return on assets is less than the cost of borrowed funds. A maximum allowable credit of $1,500 per student for each of the first 2 years of post-secondary education. Direct participation with UNLIMITED LIABILITY, as distinguished from passive LIMITED PARTNERSHIP shares. Excess of EXPENDITURES over REVENUE for a period or activity. ASSET provided to a CREDITOR as security for a loan. That is, a firm that is running a deficit is spending more than it makes. Total number of stock shares, bonds, or COMMODITIES futures contracts traded in a particular period. Taxable DEBT obligation of a state or local government entity, an outgrowth of the Tax Reform Act of 1986. Statistical technique used to establish the relationship of a dependent variable, such as the sales of a COMPANY, and one or more independent variables, such as family formations, gross national product, per capita income, and other economic indicators. Grant date does not occur until the conclusion of the 30 day periodwhen the price is known. Loan repayable on demand. Costs of a business that are not directly associated with the production or sale of goods or services. Type of reorganization in which, with shareholder approval, the management revalues 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. A business partnership, especially when it is unincorporated. Shares of a CORPORATION, authorized in the corporate charter, which have been issued and are outstanding. Consistent accounting basis other than GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) used for financial reporting. Reorganization within an entity. 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. Agreement between a CERTIFIED PUBLIC ACCOUNTANT (CPA) and his or her client to perform a review. Definite fixed amounts stated in terms of dollars, either by law or by contract agreement. Inquiries may range from formal written inquiries to informal oral inquiries. Property INTEREST a LESSEE owns in the leased property. Accumulated undistributed earnings of a company retained for future needs or for future distribution to its owners. Short-term (generally less than three months), highly liquid INVESTMENTS that are convertible to known amounts of cash. Letter provided by a company's independent public accountant to an underwriter when the underwriter has a DUE DILIGENCE responsibility under Section 11 of the Securities Act of 1933 regarding financial information included in an offering statement. Date on which the principal amount of a NOTE, DRAFT, acceptance, BOND, or other DEBT INSTRUMENTbecomes due and payable. Equal to the nominal or face value of a SECURITY. 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. Forecast: Prospective financial statements that 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. Original price of an ASSET, used in determining CAPITAL GAIN. Evidence of a DEBT with specific amount due and interest rate. Statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution. Criterion used to measure compliance with financial ratio requirements of indentures and other LOAN agreements. A procedure that consists of seeking information, both financial and non financial, of knowledgeable persons throughout the company. Organization engaged in any of the many aspects of finance including commercial banks, thrift institutions, investment banks, securities brokers and dealers, credit unions, investment companies, insurance companies, and REAL ESTATE INVESTMENT TRUSTS. Potential LIABILITY arising from a past transaction or a subsequent event. 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. Under a traditional IRA these earnings are not taxable until the time of withdrawal from the plan. An event that might happen but that is not likely or planned. Bulk goods such as grains, metals, and foods traded on a commodities exchange or on the SPOT MARKET. Written communication issued by an independent CERTIFIED PUBLIC ACCOUNTANT (CPA) describing the character of his or her work and the degree of responsibility taken. Taxpayers meeting statutory requirements MUST file various returns on the prescribed forms. Certain minimum choices and nondiscriminatory rules apply. 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. Evaluate the effectiveness of the design of controls. In any one given accounting period, 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 that expenditure. Taxes on NET INCOME that must be paid to the federal government by individuals and businesses. General term referring to the organized trading of securities through the various EXCHANGES and the OVER-THE-COUNTER MARKET. An officer of the employer earning more than $130,000; Expense allowance made for wear and tear on an ASSET over its estimated useful life. all areas of the profession, Content provided by Through committees, it develops guidance for specialized industries. Individuals responsible for overseeing the affairs of an entity, including the election of its officers. A small amount of CASH that a company keeps on hand to pay for minor expenses in an office. Restating foreign currency in equivalent dollars; unrealized gains or losses are postponed and carried in Stockholder's Equity until the foreign operation is substantially liquidated. The number of units of a product that must be sold before a company makes enough money to pay for direct and indirect costs of making the product. F: 866-495-1354, Contact Us  |  Advertise With Us  |  Work For Us  |  Terms of Use/Privacy Policy, ©2020 New York State Society of Certified Public Accountants, Accounting Terminology Guide - Over 1,000 Accounting and Finance Terms, 100% Membership (1) Costs, excluding acquisition costs, incurred to bring a new unit into production. Right giving existing stockholders the opportunity to purchase shares of a new ISSUE before it is offered to others. The ability to increase earnings for stockholders by earning more on ASSETS than is paid in INTEREST on DEBTincurred to finance the assets. Method that determines the discount rate at which the present value of the future CASH FLOWS will exactly equal investment outlay. FINANCIAL STATEMENT presentation in which the current amounts and the corresponding amounts for previous periods or dates also are shown. For TAX purposes, the PROFIT or LOSS realized from the sale of securities or other capital assets held six months or less. Person skilled in the recording and reporting of financial transactions. In a review, a CERTIFIED PUBLIC ACCOUNTANT (CPA) does not conduct an examination under GENERALLY ACCEPTED AUDITING STANDARDS (GAAS). Organized, national EXCHANGES where securities, options, and futures contracts are traded by members for their own accounts and for the accounts of customers.

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