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GLOSSARY OF TERMS
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GLOSSARY OF TERMS
A B C D EF GH I JKL MN OP QR ST UVWXYZ
Engagement Letter
Written communication between an accountant and a client with respect to a professional engagement, outlining the scope of the accountant’s responsibilities and arrangements agreed upon.
The ownership of a shareholder in a corporation. See Capital.
Real and personal property owned by a person at the time of death (real property is land and anything permanently attached to it).
Consumption of an asset or payment for an expense. Incurrence of a liability.
An independent accountant engaged to determine if the financial statements of an entity represent the economic events that occurred during the period audited. The external audit is for the shareholders/owners (rather than for management).
The highest price available in an open and unrestricted market between informed, prudent parties, acting at arm’s length and under no compulsion to transact expressed in terms of money or money’s worth.
A number given to a corporation or other business entity by the federal government for tax purposes. Banks generally require a tax identification number to open bank accounts.
A person who holds something in trust for another (often used to describe executors and administrators of estates and trusts).
Formal financial reports prepared from accounting records (for example, Profit & Loss Statement, Balance Sheet, Statement of Retained Earnings).
A period of one year for which financial statements are prepared that may or may not coincide with the calendar year. Any twelve-month period used by a business as its accounting period.
A mortgage with an interest rate which does not increase or decrease during the term of the loan.
See Capital Assets
Shipping term meaning "free on board" to inform the purchasers of the location at which they become responsible for the shipping charges (for example, F.O.B. Toronto means the vendor pays the charges to Toronto’s freight yard and the purchaser is responsible from there).
A Corporation is referred to as a foreign corporation in all states except for the state where it is incorporated. If a corporation conducts business in a state other than where it was incorporated, it must register for a certificate of authority to transact business in the other state or possibly lose access to that state’s courts and face fines.
A tax imposed by the State for the privilege of carrying on business as a corporation or LLC. The value of the franchise tax may be measured by amount of earnings, total value of capital or stock, or by amount of business done.
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