A

Abatement - A complete or partial cancellation of a levy imposed by a government. Abatements usually apply to tax levies, special assessments and service charges.

Account - A formal record of a particular type of transaction expressed in money or other unit of measurement and kept in a ledger.

Accountabilities - Those resources for which a person or organization must account/answer for.

Accounts Payable - An unpaid amount owing to private persons or organizations for goods or services received.

Accounts Receivable - An amount owed by a private person or organization for goods or services sold to them.

Accrual Basis - The basis of accounting under which transactions are recognized when they occur rather than when they are paid.

Accrued Expenses - Expenses incurred but not due until a later date.

Accumulated Depreciation - A contra-asset account used to accumulate the depreciation expense of fixed assets over their estimated service life.

Adjusting Entries - The record made of an accounting transaction, which does not originate from the company's basic journals.

AICPA - (American Institute of Certified Public Accountants) The primary national organization of CPAs headquartered in New York. Represents about 85% of all CPAs in the United States. In addition to its educational, public relations, and legislative aspects, it is the authoritative body for the development and review of the standards of accounting practice. www.aicpa.org

Annuity - A series of equal money payments made at equal intervals during a designated period of time.

Appropriation - A legal authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation is usually limited in amount and the time frame it may be used.

Assessed Valuation - A valuation set upon real estate or other property by a government as a basis for levying taxes.

Assessment - (1) The process of making the official valuation of property for the purpose of taxation. (2) The valuation placed upon property as a result of this process.

Assessment Roll - In the case of real property, the official list containing the legal description of each parcel of property and its assessed valuation. The name and address of the last known owner are also usually shown. In the case of personal property the assessment roll is the official list containing the name and address of the owner, a description of the personal property, and its assessed value.

Assets - Any owned physical object or intangible right having an economic value to its owner.

Audit - Any systematic investigation of procedures or operations for the purpose of determining conformity with prescribed criteria. The purpose of an audit by CPAs is to lend credibility to a company's financial statements.

Audit Program - A detailed outline of work to be done and procedures to be followed in any given audit.

Audit Report - The report prepared by an independent auditor, which is attached to the financial statements of a company.

Auditor's Opinion - A statement signed by an auditor which states he has examined the financial statements in accordance with GAAS (Generally Accepted Auditing Standards) with exceptions, if any, and which expresses an opinion about the financial statements of a company.

B

Bad Debt - An uncollectible account receivable.

Balance Sheet - The basic financial statement, which discloses the assets, liabilities and equities of an entity at a specified date in conformity with GAAP (Generally Accepted Accounting Principles).

Bank Discount - The amount of interest a bank deducts in lending money.

Bond - A written promise to pay a specified sum of money, (the face value or principal amount) at a specified date or date in the future (the maturity date), together with periodic interest at a specified rate. The difference between a note and a bond is that a bond runs for a longer period of time and requires greater legal formality.

Bond Anticipated Notes - Short-term interest bearing notes issued by a government in anticipation of bonds to be issued at a later date. The notes are paid off from proceeds of that bond issue.

Bond Discount - The amount by which the face value of a bond exceeds the actual price for which it is bought or sold.

Bond Premium - The amount by which the actual sales price of a bond exceeds its face value.

Book of Original Entry - The record in which the various transactions are formally recorded for the first time, such as the cash journal, check register, or general journal.

Book Value - The net amount at which an asset or group of assets appear on the records of a company, as distinguished from an asset's market value or some intrinsic value.

Bookkeeping - The record-making phase of accounting.

Budget - A plan of financial operation embodying an estimate of proposed expenditures for a given period and the proposed means of financing them. Used without any modifier, the term usually indicates a financial plan for a single fiscal year.

C

Calendar Year - A year that begins on January 1 and ends on December 31.

Callable Bond - A type of bond that permits the issuer to pay the obligation before the stated maturity date by giving notice of redemption in a manner specified in the bond con- tract. Synonym: OPTIONAL BOND.

Capital - The amount invested in a company by its owners. The word capital can also mean the amount of money needed by a company to finance a particular project.

Capital Assets - See FIXED ASSETS.

Cash Basis - A basis of accounting under which transactions are recognized only when cash changes hands.

Cash Discounts - An allowance received or given if payment is completed within a specific period of time. This term is not to be confused with "trade discount."

Cash Flow - The increase or decrease in a company's cash during a period of time. A cash flow statement shows where the company got the cash and the uses it made of cash.

Certified Public Accountant (CPA) - A professional license granted by the various states to persons meeting certain educational, experience and examination requirements. The education and experience requirements vary from state to state, but typically would include a bachelor's or master's degree with accounting and auditing coursework and at least two years qualified accounting experience. The examination requirements include passing the Uniform CPA Examination, a rigorous computerized exam covering auditing and attestation, financial accounting and reporting, regulations, and business environment. The exam is coordinated and graded by the AICPA (American Institute of CPAs), but is administered by the National Association of State Boards of Accountancy (NASBA www.nasba.org). It is given by Prometric at their computer testing centers in the United States and its territories. A person certified in one state may generally obtain a CPA certificate/license in another state via the "reciprocity" agreements among the states.

Contingent Liabilities - Items which may become liabilities as a result of pending conditions, such as guarantees, pending law suits, judgments under appeal, unsettled disputed claims, unfilled purchase orders and uncompleted contracts. All contingent liabilities should be disclosed within the basic financial statements, including the notes thereto.

Contracts Payable - A liability resulting from agreement with a third party.

Controller - The chief accounting officer of a business.

Corporation - A business incorporated under the laws of a state or other jurisdiction.

Cost Accounting - An accounting process that provides for accumulating all cost incurred to accomplish a purpose, or to complete a unit of work on a specific job.

Coupon Rate - The interest rate specified on interest coupons attached to a bond. The term is synonymous with nominal interest rate.

Credit - The ability to buy or borrow in consideration for a promised pay within a period.

Credit Entry - An accounting entry made to record or increase an equity or liability account or decrease an asset account on a company's books.

Creditor - A person or enterprise to whom a debt is owed.

Cross Indexing - The referencing of one item to another item in the records of a company or the work papers of an accountant.

Current Assets - Those assets that are available or can be made readily available to finance current operations or to pay current liabilities. Those assets that will be used up or converted into cash within one year. Some examples are cash, temporary investments, and notes receivable that will be collected within one year.

Current Liabilities - Liabilities that are payable within one year.

Current Rates - As it refers to interest rates, the rate one can borrow money at any particular point in time.

D

Data Processing - The preparation and handling of information through a prescribed procedure. This usually refers to the handling of information by mechanical or electronic means on a computer.

Debt - An obligation resulting from the borrowing of money or from the purchase of goods and services.

Debit Entry - An accounting entry made to record or increase an asset account or decrease an equity or liability account on a company's books.

Deferred Charges - Expenses that are not chargeable to the operations in the year in which they are made, but are carried on the asset side of the balance sheet and expensed in a later year.

Deferred Credits - Same as DEFERRED REVENUE.

Deferred Revenues - Revenue or income received or recorded before it is earned by a company.

Deferred Taxes - Taxes taken as an expense now to be paid to the government in a later year.

Deficit - Expenses or costs in excess of revenue being received over a measured period of time.

Depreciation - In accounting terms, the expensing of an asset over its estimated useful life on a systematic and rational basis. This expensing of an asset is usually related to its lost usefulness, expired utility, or diminution of services. Through this process the entire cost of an asset is ultimately charged off as an expense.

Direct Casts/Expenses - The cost of any good or service that contributes to and is readily describable to product service output. Any other cost incurred being regarded as a fixed or period cost.

Direct Labor - The cost of labor directly expended in the production of specific goods or rendition of specific services.

Direct Materials - The cost of materials that become an integral part of a specific manufactured product or when consumed in the performance of a specific service.

Disbursements - Payment in cash.

Discount - The difference between what an item is worth and what someone requires you to pay for it.

Disclaimer -The statement in an audit report, made by an auditor indicating the inability to express an opinion on the fair- ness of one or more of the financial statements presented.

Dividends - An amount paid to an investor either in cash or additional stock by a corporation.

E

Earnings Statement - One of the basic financial statements presented in a financial report that analyzes a company's profit for the year.

Encumbrances - The uncompleted or undelivered portion of a purchase commitment.

Entitlements - The amount of payment to which a state or local government is entitled as determined by the federal government (e.g., The Director of the Office of Revenue Sharing) according to a predetermined allocation formula.

Entry - (1) The record of a financial transaction in its appropriate book of account. (2) The act of recording a transaction in the book of account.

Equity - A right, claim or interest in property.

Expenditures - The incurring of a liability, the payment of cash or the transfer of property for the purpose of acquiring an asset or service or settling a loss.

F

Face Value - As applied to securities, this term designates the amount of liability stated in the security document.

FICA Taxes - Federal Insurance Contributions Act Taxes, otherwise known as Social Security Taxes.

FIFO - The abbreviation for "First In, First Out." An accounting method of pricing inventory under which the costs of the first goods acquired are the first costs charged to expense.

Financial Accounting Standards Board (FASB) - Independent, private (non-governmental) authority for establishment of accounting principles in the United States. Funded by the Financial Accounting Foundation (FAF), which derives its support from CPA firms, industry, commerce and other private sources. www.fasb.org

Financial Statements - Financial statements are the means by which the information accumulated and processed in financial accounting is periodically communicated to those who use it. They are designed to serve the needs of a variety of users, particularly owners and creditors. Through the financial accounting process, the effects of the economic activities of a reporting entity are accumulated, analyzed, classified, recorded, summarized, qualified and reported as information of two basic types: (1) financial position, which relates to a specific point in time, (2) changes in financial position, which relates to a period of time. Notes to the statements, which may explain headings, captions or amounts in the statements or present information that cannot be expressed in money terms, and descriptions of accounting policies are an integral part of the statements.

Fiscal Year - A period of any 12 consecutive months that begins in any month other that January used as an accounting period.

Fixed Assets - Assets of a long-term character that are intended to continue to be held or used, such as land, buildings, machinery and equipment.

Forensic Accounting - Forensic accounting is the practice of utilizing accounting, auditing, and investigative skills to assist in legal matters.

Full Faith & Credit - A pledge of the general taxing power for the payment of debt obligations. Bonds carrying such pledges are referred to as general obligation bonds or full faith and credit bonds.

Fund - In regard to governmental units, a fund is a set of accounts recording cash and other financial resources, which are separated by legal or other limitations, to carryon specific activities or attain certain objectives.

Fund Balance - The assets (less liabilities) of a particular fund.

G

General Fund - A governmental unit's fund used to account for all financial resources except those required to be accounted for in another fund.

General Ledger - A book, file, or other device that contains the accounts needed to reflect the financial position and the results of operations of an entity. In double entry book- keeping, the debits and credits in the general ledger are equal.


Generally Accepted Accounting Principles (GAAP) - Uniform minimum standards of and guidelines to financial accounting and reporting. They govern the form and content of the basic financial statements of an entity. GAAP encompasses the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. They include not only broad guidelines of general application, but also detailed practices and procedures. GAAP provides a standard by which to measure financial presentations.

Generally Accepted Auditing Standards (GAAS) - Measures of the quality of the performance of auditing procedures and the objectives to be attained through their use. They are concerned with the auditor's professional qualities and with the judgment exercised in the performance of an audit. Generally Accepted Auditing Standards have been prescribed by The American Institute of Certified Public Accountants (AICPA).

General Obligation Bonds - Bonds for the payment of which the full faith and credit of the issuing government are pledged.

Going Concern - Any enterprise that is expected to continue operating indefinitely in the future hints its collective assets, liabilities, revenues, operating costs, personnel policies and prospects. Basic axiom essential to the accounting and reporting of business transactions.

Goodwill - As defined in the purchase of a business, it is the excess of the price paid for a business over its underlying book value or asset value. Normally, purchase goodwill is the only type appearing on the financial statements of the company.

Grants - Contributions or gifts of cash or other assets from a government to be used or expended for a specific purpose, activity or facility.

I

Imprest Account - An account into which a fixed amount of money is placed for the purpose of minor disbursements. See PETTY CASH.

Improvements - Additions to an existing fixed asset on the books of a company. In accounting terms, it usually refers to additions to land or buildings.

Income - A term used in accounting to represent (1) revenues or (2) the excess of revenues over expenses.

Independence - In accounting terminology this refers to a CPA having no financial stake or other interest in the company on whose financial statements he has expressed his professional opinion. Independence is the focal point around which a CPA's credibility as an independent auditor is based. A CPA is required by his Code of Ethics to be independent with respect to the company on whose financial statements he is expressing an opinion. Without independence, an accountant might lose his objectivity or impartiality or otherwise interfere with the free exercise of his professional judgment.

Indirect Cost - Functional cost not attributed to the production of a specified group or service, but to an activity associated with the production of it.

Industrial Revenue Bonds - Bonds issued by governments, the proceeds of which are used to construct facilities for a private business enterprise. Lease payments made by the business enterprise to the government are used to service the bonds. Such bonds may be in the form of general obligation bonds, combination bonds, or revenue bonds.

Intangible Assets - An asset having no physical existence but having value because of the rights conferred as a result of its ownership and possession -trademarks, patents, etc.

Intergovernmental Revenues - Revenues from other governments in the form of grants, entitlements, shared revenues or payments in lieu of taxes.

Interim - In accounting terms, the preparation of a financial statement covering a period less than a company's full fiscal year.

Internal Auditing - An audit conducted by a company's own personnel as opposed to independent certified public accountants.

Internal Controls System - The methods and procedures adopted by a business to control its operations and protect its assets from waste, fraud and theft.

Internal Revenue Code - The codification of the numerous revenue acts passed by Congress that comprise our existing tax laws.

Inventory - A systematic valuation by a company of the products that it sells or manufactures. An inventory represents the detailed listing of these items required to be valued on a consistent basis from period to period by a company.

Investment - An expenditure to acquire property, tangible or intangible, which yields some income or service.

Investments in Default - Investments on which there is a delinquency in the payment of principal or interest.

Invoice - A document listing items sold, together with prices, the customer's name and the terms of sale.

J

Journal - The place where an enterprise records its financial transactions. The journal can take the form of a written document or a computerized information center.

Junior Accountant - An entry-level employee of a public accounting firm whose activities are closely supervised by a senior accountant.

L

Lease - The conveyance of land, buildings or equipment or other assets from one person (lessor) to another (lessee) for a specific period of time in return for rent or other consideration.

Lease-Purchase Agreements - Contractual agreements that are termed "leases," however, in substance, amount to purchase contracts.

Ledger - A group of accounts in which are recorded the financial transactions of an entity.

Levy - (Verb) To impose taxes, special assessments, or service charges for the support of activities. (Noun) The total amount of taxes, special assessments, or service charges imposed by an entity, often a government.

LIFO - The abbreviation for "Last In, First Out." An accounting method of pricing inventory under which the costs of the last goods acquired are the first costs charged to expense.

Liability - Debts or obligations owed by one entity, a debtor, to another entity, a creditor, payable in money, goods or services. The liabilities appearing on an entity's financial statement represent the debtor's obligation in a transaction.

Liquidation - The winding up of a business by converting its assets to cash and distributing the cash to the proper parties.

Long-Term Debt - Debt with a maturity of more than one year after the date of issuance.

M

Machinery & Equipment - Tangible property, other than land or buildings and improvements thereon (i.e. machinery, tools, trucks, cars, furniture, and furnishings).

Marketable Securities - The balance sheet title for negotiable stocks, bonds and treasury securities carried as an asset by a company.

Materiality Concept - In accounting terms, a judgment decision by an auditor as to the relative importance of an item for purposes of disclosure in financial statements. In audit testing, materiality is used to determine the relative importance of an audit coverage such as the testing of sales, purchases, etc. The "subject to" phrase is sometimes included in audit reports to introduce a qualified opinion indicating the auditor's endorsement of the financial statement is tempered by an unwillingness to approve specified items or by the limited scope of the examination.

Matured Bonds Payable - A liability account reflecting unpaid bonds that have reached or passed their maturity date.

Matured Interest Payable - A liability account reflecting unpaid interest on bonds that have reached or passed their maturity date.

Mortgage Debt - Debt secured by a mortgage against specified properties of an entity.

Municipal Bond - A bond issued by a state or local government.

N

Net Earnings - The final line of a company's profit and loss statement. This amount reflects the company's final profit for the period after income taxes.

Net Loss - This amount reflects a company's loss for the period after any refundable income taxes.

Net Sales - This amount reflects a company's sales for a period less any adjustments for discounts, credits or other miscellaneous items.

Non-Operating - This refers to items in a company's statement of earnings that are not directly related to their main service or business activity.

Notes Payable - In general, an unconditional written promise signed by the maker to pay a certain sum in money on demand, or at a fixed or determinable time, either to the bearer or to the order of a designated person.

Notes to the Financial Statements - The summary of significant accounting policies and other disclosures required for a fair presentation of the basic financial statements of an entity in conformity with GAAP (Generally Accepted Accounting Principles) that are not included on the face of basic financial statements themselves. The notes to the financial statements are an integral part of the basic financial statements.

O

Obligations - Amount that an entity may be legally required to pay. This includes actual liabilities, as well as guarantees made to assure the payment of liabilities of others.

Obsolescence - The decrease in the value of fixed assets resulting from economic, social, technological or legal changes.

Operating Income - The excess of operating revenues over operating expenses.

Outlays - The paying out of cash; the incurring of the liability to pay cash; or the issue of a corporate equity for the transfer of property in exchange for goods or services.

Overdraft - The amount by which checks, drafts, or other demands for payment on the treasury or on a bank exceed the amount of the credit against which they are drawn.

Overhead - Those costs necessary in the production of an article or the performance of a service that are of such a nature that the exact amount applicable to the product or service cannot be determined accurately or readily. Usually they refer to those costs which do not become an integral part of the finished product or service, such as rent, heat, light, supplies, management, supervision, etc.

P

Partnership - A contractual relationship based on a written, oral or implied agreement between two or more persons. Unlike a corporation, a partnership does not stand on its own as a separate legal entity. Rather, a partnership acts as a legal vehicle binding two or more persons together in a business.

Par Value - An arbitrary value placed on a share of stock at the time the corporation seeks authorization of the stock.

Perpetual Inventory - The system whereby the inventory quantities of a company are maintained on a continuous basis as opposed to resorting to a physical count at any particular point in time.

Petty Cash - A relatively small amount of cash on hand or on deposit available for minor disbursements and usually maintained under the imprest system.

Posting - The act of transferring to an account in a ledger, the data, either detailed or summarized, contained in a book or document of original entry.

Prepaid - The payment of an asset in advance of the period to which it will benefit. (i.e. paying insurance or rent in advance.)

Present Value - The value today of future payments made either in a lump sum or in a series. The present value of these future payments is usually less than the actual cash outlay because money has a time value called interest.

Pretax - This term refers to the earnings of a company for a period before any reduction for federal, state and local income taxes.

Pro Forma - In accounting terminology, pro forma refers to an ''as if" financial statement. In other words, a financial statement modified to show the effects of a proposed transaction that has not yet been consummated. Pro Forma reflects how these statements might look.

Promissory Note - An unconditional written promise to pay a definite sum of money on demand or at a fixed or determinable future date.

Public Company Accounting Oversight Board - The PCAOB is a private-sector, non-profit corporation, 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 independent audit reports. www.pcaobus.org

R

Receipts - Cash received.

Reconcile - To account for the difference between two amounts.

Register - A record for the consecutive entry of a certain class of events, documents, or transactions, with proper notation of all the required particulars. The form of registers varies from a one-column to a multi-columnar sheet of special design where the entries are distributed, summarized, and aggregated for convenient posting to the accounts.

Replacement Cost - The cost at current prices in a particular locality or market area of replacing an item of property or a group of assets.

Requisition - A written demand or request, usually from one department to the purchasing officer or to another department, for specified articles or services.

Reserve - (1) An account used to earmark a portion of equity or fund balance to indicate that it is not appropriate for expenditure; and (2) an account used to earmark a portion of equity or, fund equity as separated legally for a specific future use.

Restricted Assets - Monies or other resources, the use of which is restricted by legal or contractual requirements.

Retained Earnings - The accumulated earnings of a company since its inception retained in a business for future needs or for future distribution to its owners. When a company has a loss for a year, it is subtracted from retained earnings.

Revenue - Sales of products, merchandise and services and earnings from interest, dividends, and rents reflected as one amount on a company's statement of earnings.

S

Securities - Bonds, notes, mortgages, or other forms of negotiable or nonnegotiable instruments. See INVESTMENTS.

Segment/lntersegment - A fairly autonomous unit or division of a company based upon the nature of sales or form of operations. The financial statements of a company will reflect the operations and the earnings of its various segments. This is sometimes referred to as segment accounting.

Shared Revenues - Revenues resulting from levies by one government but shared on a predetermined basis with another government or class of governments often in proportion to the amount collected at the local level.

Shareholder - A person or enterprise owning a share or shares of stock in a corporation.

Special Assessment - A compulsory levy made against certain properties to defray part or all of the cost of a specific improvement or service deemed to primarily benefit those properties.

Standard Cost - The predetermined cost of performing an operation or producing a product when labor, materials, and equipment are utilized efficiently under reasonable and normal conditions. Normal conditions exist when there is an absence of special or extraordinary factors affecting the quality or quantity of the work performed, or the time or method of performing it.

State Board of Accountancy - The state government agency that monitors the CPAs in its state. Each state has its own Board of Accountancy. The Delaware State Board of Accountancy's web site is http://www.professionallicensing.state.de.us. For other state boards of accountancy web sites, go to http://www.aicpa.org/.

Statement of Changes in Financial Position - The basic financial statement which presents information on the amount (but not necessarily the nature) of the sources and uses of an entity's cash or working capital during an accounting period in conformity with GAAP (Generally Accepted Accounting Principles).

Statement of Changes in Equity - The basic financial statement that reconciles the equity balances of an entity at the beginning and end of an accounting period in conformity with GAAP (Generally Accepted Accounting Principles).

Statement of Financial Condition & Statement of Financial Position - See BALANCE SHEET.

Statement of Income - This statement presents the revenue, expenses, gains, losses, and net income (net loss) recognized during a period. Also, it presents an indication of the results of an enterprise's profit-directed activities during a period. The information presented in an income statement is usually considered the most important information provided by financial accounting since profitability is of supreme concern to those interested in the economic activities of an enterprise.

Statements of Revenues & Expenditures - This statement presents increases (revenue and other financial sources) and decreases (expenditures and other financial uses) of an entity's assets over a specified period of time.

Subsidiary - A corporation, owned or controlled by a holding or parent company, most often through the option of voting stock. The operations of a subsidiary are usually included in the financial statements of the parent company.

Subsidiary Ledger - The supporting ledger consisting of a group of accounts the total of which is in agreement with the control account. Examples include, customer's ledger, creditor's ledger and factory ledger.

Surplus - The use of the term "surplus" in accounting is generally discouraged because it creates a potential for misleading inference in reference to a company's retained earnings.

Suspense Account - An account which carries charges or credits temporarily pending the determination of the proper account or accounts to which they are to be posted.

T

Tax Anticipated Notes - Notes (sometimes called war- rants) issued in anticipation of collection of taxes, usually retireable only from the proceeds of the tax levy whose collection they anticipate.

Tax Credit - A direct reduction in the amount of tax liabilities.

Tax Liens - Claims that governments have upon properties until taxes levied against them have been paid. This term is sometimes limited to those delinquent taxes for the collection of which legal action has been taken through the filing of liens.

Taxable Income - Taxable income is the same as pretax. Earnings succeed pretax.

Taxes - Compulsory charges levied by governments for the purpose of financing services performed for the common benefit. This term does not include specific charges made against particular persons or property for current or permanent benefits such as special assessments.

Trade Discount - An allowance, usually varying in percent- age with the volume of transactions, made to those engaged in certain businesses and allowable without respect to the time when the account is paid.

Transactions - In accounting theory, transactions take place when one party to an agreement has completely fulfilled their obligations. The term is noteworthy because accountants traditionally do not record items in a company's records until a transaction has taken place.

Trial Balance - A list of the balances of the accounts in a ledger kept by double entry, with the debit and credit balances shown in separate columns. If the totals of the debit and credit columns are equal or their net balance agrees with a control account, the ledger from which the figures are taken is said to be "in balance."

Treasury Stock - Full-paid capital stocks reacquired by the issuing company through gifts or purchase. This stock may be reissued by the company at a later date.

U

Unamortized - This accounting term refers to the portion of an intangible asset which has not yet been expensed.

Unbilled - This refers to revenues or costs of a company which have not yet been billed to customers or have not yet been billed to the company by its vendors.

Unearned Income - See DEFERRED CREDITS.

Unearned Revenue - Same as UNEARNED INCOME.

Unqualified Opinion - This refers to a standard report issued by the CPA on the financial statement of a company. This report contains no exceptions, qualifications or disclaimers. It is the report most commonly seen attached to the financial statements of a company. An unqualified opinion states the basic financial statements of a specified company are fairly presented in conformity with Generally Accepted Accounting Principles (GAAP) applied on a basis consistent with the prior year.

Uniform Accountancy Act (UAA) - The UAA is a model bill and set of regulations that American Institute of CPAs (AICPA) and the National Association of State Boards of Accountancy (NASBA) designed to provide a uniform approach to regulation of the accounting profession.

U.S. Securities & Exchange Commission (SEC) - An agency of the federal government that regulates the public trading of securities. Sets broad accounting standards and reporting requirements for all corporations whose stocks, bonds, etc. are publicly traded. Also regulates (to some extent) the CPA firms which serve these corporations. www.sec.gov

V

Voucher - A written document used in summarizing a transaction and approving it for recording and payment.

W

Warrant - An order drawn by a legislative body or an officer of a government upon its treasurer directing the latter to pay a specified amount to the person named or to the bearer. It may be payable upon demand, in which case it usually circulates the same as a bank check; or it may be payable only out of certain revenues, when and if received, in which case it does not circulate freely.

Wasting Assets - Mines, timberland, quarries, oil fields, and similar assets that diminish in value by the removal of their contents.

Working Capital - Capital in current use in the operations of a business. The excess of its current assets over its current liabilities is generally referred to as the company's working capital. The amount of working capital has long served as a credit test and often as a measure of debt paying ability of a company.

Working Papers - The body of information prepared by an independent CPA used to support his conclusions and findings in an audit engagement. Working papers are the property of the CPA and do not become a permanent part of the records of the particular company which is being audited. These working papers are the privileged and private information of the CPA, available only to third parties with his consent.

Work in Process - The cost of partially completed products manufactured or processed, such as a partially completed printing job.

Y

Yield - The effective interest rate or rate of return on a given investment.

Z

Zero-Base Budgeting - A budgeting approach under which each expense starts at zero each planning period. Each dollar in a zero-base budget must be justified on its own.