QUICKBOOKS Flashcards
ABA transit number
The number that identifies the bank against which a check is drawn. Every check has an one, usually located in the top-right corner. It identifies the bank’s location and the bank’s name.
ABC (activity-based costing) management
An approach to cost accounting that tries to more accurately assign overhead costs and more precisely measure the profits of a firm’s products, services, and business units. Refer to Book 4, Chapter 4 for a more complete discussion.
account
The record of transactions in a checking, savings, securities, trust, or charge account, including the accountant’s up-to-date balance.
account number
The number that identifies the holder of an account. All accounts must have an account number.
Accountant’s copy
Allows an accountant to review/edit a client’s company file while at the same time the client can continue using and updating the file at his or her location.
accountant’s opinion
The results of an audit of a company’s records and books.
accrual basis
An accounting method in which income gets recorded as it’s earned (typically, when you prepare an invoice) and expenses are recorded as they occur (typically, when you receive an invoice).
accrued interest
Interest earned on a bond of certificate of deposit but paid at some future date, such as when the bond or certificate of deposit is sold.
ad valorem
Latin for “to the value.” Sales and property taxes are calculated ______, as a percentage of the property value or the thing being sold.
adjuster
The insurance company representative who decides how much insurance settlements should be.
affidavit
A signed statement promising that you will fulfill an obligation. The term means “has pledged his faith” in Latin.
altered check
A check whose signature, date, payee name, or amount has been changed or erased. Banks can refuse to honor these.
alternative minimum tax
A flat-rate tax that trusts, corporations, and individuals must pay, regardless of how much or how little tax they owe. This ensures that individuals and companies pay at least some tax.
Americans With Disabilities Act
Prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communication, and governmental activities. Also establishes requirements for telecommunications relay services.
amortization
The gradual paying off of a debt or a loan.
amortization schedule
A schedule for making payments on a mortgage. The schedule shows the number of payments, when payments are due, how much of each payment goes toward the principal and how much goes toward paying interest, and the declining amount of money owed on the loan as payments are made.
annual cap
A percentage rate above which payments on an adjustable-rate mortgage can’t rise, no matter how much interest rates rise.
annual percentage rate (APR)
The cost of a loan, expressed as a percentage of the amount of the loan.
annual percentage yield (APY)
The amount of interest income that an account will earn in a year, expressed as a percentage rate.
annual report
A report showing the financial status of a corporation. Public corporations are required to issue annual reports to their shareholders. Smaller firms typically don’t issue these.
arbitration
Submitting a dispute to a third party for settlement instead of to a court of law. If the ______ is “binding,” the parties involved are required to agree to the settlement.
arm’s-length transaction
A transaction made between a buyer and seller who have no relationship with each other. Transactions made between subsidiary companies of the same parent company aren’t arm’s-length transactions because the companies may be acting in the interest of a parent company instead of in their own interest.
assessed valuation
For tax purposes, the value of a property. Usually, property taxes are paid as a percentage of the _____ of the property.
assessment
The amount charged, such as for property taxes.
asset
Any property that has value. Real estate, personal items, and even trademarks are examples of this. The value of all your _____ is called your “total _____.”
asset dividend
A dividend paid as property instead of cash. In lieu of cash, a corporation may pay dividends in the form of stock certificates to its stockholders.
asset-based lending
A lending method in which a company’s accounts receivable and inventory are used as collateral for the loan and as the basis for determining whether the company is worthy of receiving a loan.
assumable mortgage
A mortgage in which the borrower, if he or she subsequently sells the property, has the right to pass on the unpaid portion of the mortgage to the new buyer.
attorney-in-fact
A person hired to act in the name of another person. See also “power of attorney.”
audit
A formal examination of the accounts, assets, liabilities, and transactions of a company or an individual.
auditor’s opinion
The results of an audit of a company’s records and books.
average annual yield
The interest income you can earn on a certificate of deposit (CD) or bank account, expressed as a percentage.
back-end load
A sales commission that the investor pays to the broker only if the investor sells or disposes of mutual funds. With (the opposite), the investor pays the sales commission when purchasing the funds from an investment house.
bad check
A check that a pay refuses to honor or pay. A check that the bank refuses to honor or pay. The most common reason for this is that there are insufficient funds in the account the check draws on.
balloon maturity
A bank loan in which the last payment is a large lump-sum payment.
balloon mortgage
A mortgage in which the last payment is much larger than the other payments. Typically, this is given to home buyers who anticipate a large appreciation of their property and who intend to sell before the mortgage matures. These are also given to borrowers whose incomes are likely to rise.
balloon payment
A large lump-sum payment made as the last payment on a loan.
bank discount rate
The rate that banks charge customers for the use of banker’s acceptances and other financial instruments.
bank draft
A check written by a bank that draws on funds that the bank holds in another bank. If a customer in Las Vegas needs funds immediately, for example, a bank in Boston may issue a _____ on its account in Las Vegas so that they customer can get the money more quickly. Banks charge for this service.
banker’s acceptance
A short-term credit instrument used by importers and exporters to speed international trade. The exporter sends a bill of exchange to a bank in the United States, which accepts the bill of exchange and agrees to pay it if the importer can’t pay.
bankruptcy
The legal procedure for deciding how to handle the debts of a business or individual who can’t meet credit obligations.
basis
The original cost of an asset, used to calculate capital gains and capital gains taxes.
basis point
A percent of 0.01, the smallest percentage point for quoting bond yields. If a bond yield changes from 6.00 to 6.85 percent, it has moved 85 _____ in yield.
beneficiaries
The people who benefit, or receive annuities, from a life insurance policy or other type of account when the policyholder dies.
bequest
A gift of money or personal items made in a will.
beta
A measure of how volatile the price of an investment or stock is, compared with the entire market. If the price changes dramatically, the investment has a high _____. If the price is stable, it has a low _____.
bill of exchange
A financial instrument by which one party instructs another party to pay a third party; also called a “draft.”
Bitcoin
An online payment system; also, the virtual currency unit used by the online payment system that has split into completing currencies _____ and Bitcash.
blank endorsement
A check or bill of exchange in which the “Pay to the order of” line is left blank.
blanket mortgage
A mortgage that covers more than one piece of property.
blanket policy
An insurance policy that covers more than one piece of property or that offers insurance of more than one type for a single piece of property.
board of directors
Advisors elected by stockholders to manage an incorporated company. The _____’s job is to represent stockholder interests and oversee the company’s management.
bond
An interest-bearing certificate of public or private indebtedness. These pay a fixed interest rate and are redeemable after a certain time period.
bond, discount
A bond sold for less than the value that its issuer promises to pay when the bond reaches maturity.
bond, fidelity or surety
Binding promises that the principal will perform certain acts for the obligee, with the obligee being paid sums of money if the principal doesn’t fulfill the obligations. _____ bonds pay employers in case their bonded employees prove to be dishonest; whereas _____ bonds guarantee that the principal- often, an employer, will fulfill certain duties.
bond, premium
A bond sold for more than the value its issuer promises to pay when the bond reaches maturity.
bond issue
Bonds of the same type of class offered at the same time.
bond rating
A ranking system for assessing the financial solvency of bonds. AAA is the highest ranking. Bonds are ranked by Standard & Poor’s and Moody’s Investors Service, among others.
book value
The original value of an asset less the accumulated depreciation. The _____ is the value of an asset on the balance sheet and is different from the market value.
bridge loan
A short-term loan provided while long-term financing is being finalized.
bullet loan
A loan for which the principal is paid in one payment, in one lump sum. A ten-year _____, for example, probably would require regular interest payments but wouldn’t require any principal payments until the end of the ten years.
business plan
A plan explaining to loan officers or potential investors how a new business or a business that is restructuring will use the loan or investment money. See book 6, Chapter 3 for more information.
call option
An option to purchase shares of a stock at a specific price in a certain time period. Brokers exercise a _____ if the price of the stock rises above the option price during the option period.
callable bonds
Bonds that issuers can pay off before the maturity date is reached.
canceled check
A check that has been endorsed by a payee and paid by the bank on which it was drawn.
capital
All items of value owned by an individual or corporation, including cash, inventory, and property.
capital gain (or loss)
The difference between the purchase price of a capital asset and the resale price. If the resale price is higher than the purchase price, a _____ results. If the resale price is lower than the purchase price, a _____ results. _____ of individuals are subject to favorable tax treatment.
capital lease
For accounting purposes, a lease that is treated as an owned asset. Equipment is often leased to companies on a capital basis. The company leasing the asset enjoys the tax benefits of ownership, including deductions for maintenance expenses. When the lease expires, the company leasing the asset is usually allowed to purchase it.
capital market
A general term referring to stock markets and bond markets where governments and corporations can sell securities, stocks, and bonds to raise capital.
cash
Money that can be used for financial transactions, including funds held in checking accounts.
cash basis
An accounting method in which income and expenses are recorded when money actually changes hands. _____ accounting is generally easier to do than accrual accounting- and often produces tax benefits.
cash dividend
Stock dividends paid in cash, not in shares of stock.
cash surrender value
The amount of money that a life insurance policy pays if the holder gives up the policy or cancels it. The _____ of a life insurance policy can be used as collateral on a loan.
cashier’s check
A check written by a bank against its own funds. _____ are guaranteed to be redeemable because they’re drawn on banks.
certified check
A check that has been guaranteed by a bank and can be considered as good as cash. Before giving its acceptance, the bank makes sure that enough money is in the account to cover the check and that the signature is valid.
certified public accountant (CPA)
A person who has been certified by the state to issue opinions about the accuracy and fairness of a business’s financial reports. _____’s also typically provide tax planning and preparation services for businesses and individuals.
charitable contribution
A contribution to a charity that can be deducted for income tax purposes.
check
A written order instructing a bank to pay a sum to a third party.
check kiting
An illegal scheme for fraudulently inflating the account balance of checking accounts. Consider this example. A man with two checking accounts- one in Bank A and one in Bank B- writes a check on account A for $5,000 to his Bank B account. He deposits the check in Bank B. Until the check clears, he has $5,000 in both Bank B and Bank A. Next, he writes a check on account B for $5,000 to his Bank A account. He deposits this check, too. Until the check clears, he has $10,000 in his Bank A account and $5,000 in his Bank B account. On paper, he has $15,000; actually, he has only $5,000.
claim
A demand for money from an insurance company. You file a _____ when you believe that you’re entitled to compensation from an insurer.
class action
A lawsuit filed on behalf of a group of people who have been wronged in the same way.
clear
To settle or discharge an account. Checks are ____ed when they’re redeemed for cash.
clearinghouse
A convenient place where banks in a given area exchange checks written against one another. _____’s make it easier for banks to clear and settle checks because bank representatives can meet in a central place without needing to visit one another’s banks. These day’s _____’s are mostly electronic.
closed-end fund
A fund that issues a fixed number of shares instead of continuously offering new shares to buyers.
closing price
The final price of a stock or commodity at the time the exchange closes for the day.
cloud on title
A title that can’t be transferred to someone else because liens, court judgements, or other impediments prevent the owner from selling it.
co-insurance
A percentage amount for which an insurance policyholder must be covered. If a fire insurance policy has a 70 percent co-insurance clause, the insured must be covered for at least 70 percent of the value of his or her home.
collateral
As part of a loan agreement, the property or securities that the borrower pledges to the lender in case the borrower can’t pay back the loan.
collateral loan
A loan given on the strength of the borrower’s collateral, as opposed to the borrower’s good standing in the community or good character.
collateral value
The value of the properties and securities that a prospective borrower has pledged when applying for a loan.
collection agency
An organization whose job is to collect outstanding debts from individuals on behalf of companies and businesses.
collection letter
A letter, always very polite but vaguely threatening, asking you to please pay an overdue bill.
collusive bidding
When bidders agree among themselves to offer one (usually low) bid. _____ always results in a lower bid than competitive bidding, in which the bidders don’t know one another’s bids.
commercial bank
A full-service bank owned by stockholders that makes loans, accepts deposits, and offers other commercial financial services.
commercial paper
Promissory notes, such as check, drafts, and IOUs, that constitute debts of some kind. _____ is negotiable and can be traded.
commission
The fee that brokers and agents charge for their services. A _____ is often a percentage of the total value of a sale.
common law
The body of law developed in England, based on precedents and custom, that forms the basis of the legal system in all U.S. states except Louisiana, where Napoleonic law is practiced.
common stock
Securities that represent ownership in a corporation. By law, holders of _____ can receive dividends only after claims by preferred stockholders, creditors, and bondholders have been satisfied. _____ holders are the last to be paid if a corporation goes bankrupt.
compensating balance
A minimum balance that borrowers who want to secure a loan from a bank must keep on deposit with the bank.
compound interest
Interest calculated on the original principal of a deposit plus all accrued interest.
consent decree
A judicial decree in which the parties settle their differences by agreeing to change their practices rather than by going through litigation.
conservator
A person appointed by a court to manage the affairs of an estate or the affairs of a person deemed to be incompetent.
consignment
An arrangement in which the manufacturer or person who made the goods is paid only after the goods are sold (referred to as “sold on _____”).
construction loan
A loan covering construction costs, paid out at intervals as the construction project is completed; also called a “construction mortgage.”
constructive notice
A notice published in a newspaper announcing some action, such as a lien or the confiscation of property by the state. By law, some actions must be given _____ so that anyone who objects can take action.
consumer credit
Credit given to individuals so that they can buy personal things.
Consumer Credit Protection Act
An act passed by Congress in 1969 requiring lenders to be truthful about how they compute finance charges. Under this Act, finance charges must be expressed as an annual percentage rate (APR) of the loan amount. See also “Truth in Lending.”
consumer durables
Items that consumers purchase infrequently and use over a period of years, such as television sets and washing machines; also called “durable goods.”
consumer lease
The lease of a consumer item, such as a car, with a value of less than $50,000 and a term exceeding four months.
Consumer Price Index
An index that measures the cost of living in the United States. The U.S. Labor Department is responsible for monitoring this index.
Contract
A legally binding agreement between two or more parties, in which the responsibilities of each party are clearly outlined.
co-payment
In a health insurance plan, a percentage of a medical bill that you pay. (The insurer covers the rest.) Typically, you _____ bills until you reach a certain dollar limit. After that point, the insurer pays 100 percent of your medical bills.
co-signer
A joint signer of a promissory note. _____’s are jointly responsible for paying back loans.
cost-of-funds index (COFI)
An index that banks use to help determine the cost of “adjustable-rate mortgages (ARMs). If the index goes up, so do ARM payments.
cost-of-living increases
Payment increases that pensioners and Social Security recipients receive to offset rising costs caused by inflation.
counterfeit
Money, bank cards, or checks that look real but are not. If you accept a _____ dollar bill from a customer, by the way, you’re the only one who loses.
countersign
A signature that asserts the authenticity of a document already signed by another. In most companies, large checks require a _____. A _____ is also called a “countersignature.”
covenant
A written agreement between parties that has been sealed from public disclosure.
credit
Money that a bank or other lending institution places at your disposal when you agree to pay it back later; also, the portion of a bookkeeping entry that appears on the right side of the ledger (as discussed in Book 1, Chapter 2).
credit agency
An agency that obtains data about the credit history of individuals and companies and then offers that data to creditors and others.
credit insurance
Insurance purchased by banks as a defense against large credit losses.
credit limit
The most that a consumer or company can borrow at one time from a bank or other creditor.
credit line
A prearranged agreement whereby a lender will extend credit to an individual or company. You typically pay an annual fee for a _____ even if you don’t use it the _____.
credit rating
A lender’s appraisal of a borrower’s ability to pay back loans. _____’s are based primarily on the borrower’s history of paying back loans.
credit risk
The risk that a borrower won’t be able to pay back a loan.
credit slip
A notice removing a credit card charge from a cardholder’s bill. If you return something that you’ve purchased with a credit card, you’re issued a _____ in the amount of the charge to reverse its effect on your credit card balance.
creditor
A bank or other agency that extends credit to borrowers. The opposite of a _____ is a “debtor.”
cross-collateral
Collateral that backs up several loans, not just one, as arranged by agreement with the lender.
currency
Paper money in circulation; also, the paper money issued by a nation. The dollar is the _____ of the United States.
current assets
Assets that either are equivalent to cash or that can easily and readily by converted to cash, including cash, money market funds, accounts receivable, inventory, and short-term investments.
current yield
The annual interest rate paid by a bond or other security, expressed as a percentage of the principal.
cushion
The time between the date a bond is issued and its first call date- that is, the day it can be redeemed, either in whole or in part.
custodian
An institution or a broker that oversees the management of a group of assets.
custody account
A bank account held in trust by a parent or guardian on behalf of a minor.
customs
Taxes placed on goods being imported.
cycle billing
Billing one set of customers from a customer list on specific days on the month. Customers whose last names begin with “A” would be billed on the first day of the month, customers whose last names begin with “B” would be billed on the second day, and so on. The idea is to spread out the paperwork over a month and keep bill payments coming in regularly.
daily interest
Interest compounded daily on a bank deposit. Although the interest is compounded daily, it’s deposited in accounts at weekly, biweekly, or monthly intervals.
dealer
A person who trades in securities on his or her own. _____’s trade with their own money and take the risks themselves; brokers trade on behalf of others.
debentures
Unsecured bonds backed by the general credit of the issuer, not by the issuer’s assets.
debit
An entry made on the left side of a ledger that records an expense. Refer to Book 1, Chapter 2 for a complete discussion.
debt
Money owed.
debt service
Interest or principal payments on a mortgage. _____ usually describes either the monthly payments or the total annual payment.
deed
A signed document describing a legal agreement or contract.
deed of trust
A legal document giving the bearer title to a property. Banks usually hold the _____ until the borrower has paid the mortgage in full. After that, title is given over to the borrower.
default
To fail to pay back a loan or meet an obligation.
deferred compensation
Earnings to be received in the future, not when they’re earned. Deferring compensation sometimes has tax advantages.
deficiency
The amount by which a taxpayer fails to fulfill tax obligations. If you underpay by $500, for example, you have a $500 _____.
deficiency judgement
A court order giving a lender authority to collect part of the proceeds from a sale of property when the seller of the property has defaulted on a mortgage or other financial obligation.
defined benefit plan
A retirement plan set up for an organization’s employees whereby the retirement benefit is set (defined) with a formula. These plans pay no taxes on their investments and must be managed according to federal standards.
defined contribution plan
Blanket term for various plans by which employees can make tax-deferred contributions to retirement plans. A key feature of these plans is that the contribution amount is set (defined) with a formula.
deflation
A decline in prices. “Inflation,” a rise in prices, is the opposite of _____.
delinquency
Failure to fulfill a financial obligation. Loans with two or more payments overdue are considered to be delinquent.
demand loan
A loan that can be paid back at any time and has no maturity date. Interest is paid until the principal has been paid off.
deposit
Money entered in a bank account.
deposit insurance
Insurance on bank deposits to protect depositors in the event of a bank failure. The Federal Deposit Insurance Corporation (FDIC), a government agency, insures bank accounts up to $250,000.
depository
A bank where funds and securities are deposited.
depreciation
A method of calculating the expense of using certain long-lived assets; also, the decline in value of an asset.
direct deposit
Automatic depositing of paychecks in employees’ bank accounts. Many companies now offer their employees _____.
direct placement
Selling a security issue to one group of investors without the use of underwriters. Long-term securities are sometimes sold to institutions this way.
discharge of bankruptcy
A court order giving a bankrupt debtor release from all debt obligations. The debtor is no longer responsible for the debts, although the record of bankruptcy remains on the debtor’s credit record for seven to ten years.
disclosure
Information about the annual percentage rate (APR), method of computing interest, and minimum monthly payment that banks must give to mortgage customers. Federal law requires banks to disclose this information.
discount
A reduction in price. In the bond market, the _____ is the difference in price between what a bond costs today and its face value (what it will cost at maturity).
discount point
One percent of the principal of a mortgage. Home buyers typically pay the lender one _____ when their loans close.
discount rate
Rate used to measure the value of money over time. As a practical matter, a _____ is the same thing as an interest rate.
discount yield
Method for computing Treasury bill yields, in which the par value is computed instead of the purchase price. The formula for computing _____’s is the discount, divided by the par value amount multiplied by 360, divided by the number of days to maturity.
discounted cash flow
A mathematical technique used by financial analysts in which future-day dollars are converted to present-day dollars by adjusting for inflation and compound interest.
discounting
Converting future-day dollars to present-day dollars by adjusting for inflation and compound interest. Because _____ calculations are cumbersome, one typically uses a computer to perform the actual calculations.
diversification
Investing in many areas- real estate, stocks, and bonds, for example- as a hedge against decline in one area. _____ really means not putting all your eggs in one basket.
divest
To sell off assets or businesses because they’re unprofitable or because they don’t fit in a company’s plan for the future.
dividend
A profit share paid out to a stockholder.
dividend reinvestment plan
A plan that allows corporate stockholders to be paid in cash or in stock.
double taxation
Refers to federal taxes on corporate earnings and how these earnings are taxed twice, once in the form of corporate taxes and again when earnings are distributed to shareholders.
duties
Taxes on imported or exported items.
earnest money
A sum of money paid for property to assure the seller that the buyer is sincere. When the sales transaction is completed, the _____ is counted toward the purchase price of the property.
earning asset
Any asset that generates interest income.
earnings per share
The amount that each stock share earns in dividends after both preferred stockholders and taxes have been paid.
Economic Value Added (EVA)
Measures the true economic profit of a business by comparing a firm’s profit with the return on investment that shareholders should have earned. Refer to Book 5, Chapter 2 for a more complete discussion.
effective annual yield
What a depositor earns on a certificate of deposit (CD) or savings account on a yearly basis, provided that the money isn’t withdrawn.
electronic funds transfer (EFT)
Transferring money by electric wire instead of by traditional paper means, such as check writing.
embargo
Keeping ships from entering port or leaving port by government decree.
embezzlement
Fraudulently appropriating money for personal use.
Employee Retirement Income Security Act (ERISA)
Federal act describing how managers of profit-sharing funds and private pension funds may invest those funds. ERISA sets guidelines for fund managers.
employee stock ownership plan (ESOP)
A plan that allows employees to buy stock in the company that they work for.
Employer Identification Number (EIN)
A unique nine-digit number assigned by the IRS to business entities. Similar to a Social Security Number for individuals.
endorsement
A signature that allows for the transfer of a negotiable item. The signature on the back of a check, for example, is an _____.
enrolled agent
A tax accountant who has proved her skills to the Internal Revenue Service by passing three tests about tax law. An _____ is essentially an alternative to a CPA for individual taxpayers and some small businesses.
escrow
An agreement whereby a deed, a bond, or property is held in trust by a third party until some obligation is fulfilled.
estate
A deceased’s property at the time of death. An _____ is passed to the deceased’s heirs if he or she left a will. If not, the matter of how to divid the _____ is decided by a probate court.
estate tax
Taxes levied by federal and state governments on the transfer from an estate to its beneficiaries. _____’s are paid by the estate. Inheritance taxes are paid by heirs for the property that they receive.
