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NEED INSTANT ONLINE FINANCIAL ANALYSIS? VENTURELINE IS THE WORLDWIDE LEADER FOR SEC TRACEABLE COMPANY & INDUSTRY ANALYSES ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARYOVER 3,000 ACCOUNTING TERMS The Web's Most Complete Accounting Dictionary-Accounting Glossary of Accounting Terms Download the Accounting Dictionary-Accounting Glossary of Accounting Terms
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T-ACCOUNT is the basis for journal entry in accounting. T-accounts have three basic elements. A title, a left side (debit side) and a right side (credit side). To make an entry in a t-account, put the currency (dollar, pound, etc.) amount on the appropriate side (debit or credit). There are five basic types of accounts: assets, liabilities, equity, revenue and expenses. Assets, liabilities and equity are the balance sheet accounts. TAFR is Treasurer’s Annual Financial Report. TAINTED ACCOUNTS RECEIVABLE is receivables that are considered to be legally suspect due to acts of fraud, misuse, or abuse. TAG-ALONG is to go along with. TAG-ALONG RIGHTS is a contractual obligation used to protect a minority shareholder (usually in a venture capital deal). Basically, if a majority shareholder sells their stake, then the minority shareholder has the right to join the transaction and sell their minority stake in the company. Also referred to as co-sale rights. TAKEOVER refers to one company (the acquirer) purchasing another (the target). Such events resemble mergers, but without the formation of a new company. TAKE OR PAY AGREEMENT is where a buyer must pay for the contracted amount of the contracted item(s) delivered whether or not he/she can take delivery. TALLY SHEET is a form for counting, i.e. a form on which quantities are recorded, especially when conditions make counting errors likely. T&E is an acronym for Travel & Entertainment. T&M is Time and Materials. T&R, among others, can mean: Technical & Research or Termination & Recoupment. TANGIBLE normally refers to assets that can be held or seen and that are capable of being appraised at an actual or approximate value (e.g. inventory, land & buildings, etc.). TANGIBLE BOOK VALUE is different than book value in that it deducts from asset value intangible assets, which are assets that are not hard (e.g., goodwill, patents, capitalized start-up expenses and deferred financing costs). TANGO SHEETS is a not often used slang term refering to a document that compares forecasted financial data to actual financial performance for the purposes of illegally adjusting the reported financial data to more closely match the prior forecasted performance. TARE WEIGHT is the weight of packing container and packaging material without the weight of the goods contained therein. TARGET is the goal intended to be attained and which is believed to be attainable, e.g. sales target, margin target, or profit target. TARGET COSTING is a disciplined process for determining and realizing a total cost at which a proposed product with specified functionality must be produced to generate the desired profitability at its anticipated selling price in the future. TARGET MARGIN is the desired profit on each sale; used to determine the selling price where the average total cost is known. TARIFF, usually, a country's tax on imports. May sometimes refer to the rate of tax; and, is used interchangeably with the term “duty”. TARIFF, AD VAL OREM is a tariff determined as a percentage of the value of the goods. TAX is a charge against a legal entity's person or property or activity for the support of government, e.g. income taxes, sales taxes, duties and levies. TAXABLE refers to goods or funds subject to taxation. TAXABLE BENEFITS are employer provided "non-cash" taxable compensation or fringe benefits, such as employer-provided vehicles, complementary tickets, and graduate level educational assistance, are subject to federal income, state income, social security, and Medicare tax rules. According to Internal Revenue Code Section 1.61-1, all compensation paid to, or on behalf of, an employee constitutes wages subject to income and employment tax withholding, unless specifically excluded by IRS code. TAXABLE INCOME is that income that is reported to the government for the purposes of calculating income taxes. Taxable income normally is not aligned with the financial income reported within financial statements. See FINANCIAL INCOME. TAX ACCOUNTING is the planning of business strategies based on tax consequences and avoidance. TAX EFFECT METHOD is where, irrespective of when is a tax payable, its effect should be recognized in the year in which the relevant income has been recorded. TAX EQUIVALENT YIELD is the yield that must be offered before factoring in taxes so that an investment pays off a certain after-tax yield. This measure is often necessary to compare taxable and tax-free investments, since tax-free issues tend to have lower pre-tax yields due to the fact that the investment's proceeds will not be reduced by taxes. Tax equivalent yield is equal to required after-tax yield divided by (1 minus the tax rate). TAX LOSS CARRY FORWARD/BACKWARD is a tax benefit that lets a company or individual to deduct losses in order to reduce a tax liability. TAX PAYABLE METHOD is where the tax expense is equal to the provision for taxes payable in a particular period and deferred income tax is not recognized. TAX SHELTER are legal methods taxpayers can use to reduce tax liabilities. An example is the use of depreciation of assets. T-BILL see TREASURY BILL. TCO see TOTAL COST OF OWNERSHIP. TECHNICALLY BANKRUPT means that the company has, at least temporarily, run out of cash to pay its bills and is, at the moment, bankrupt. However, it may recover by raising capital, collecting monies owed to it, or selling off various assets. When a company does not do this on its own, its creditors may, through the courts, put a company officially or legally into bankruptcy. TEMPORARY ACCOUNT see NOMINAL ACCOUNT. TENDER is to offer a product for sale at a specified price. A tender is issued usually in response to a specific request from a potential purchaser, e.g. government procurement. TERM BONDS are bonds whose principal is payable at maturity. Sometimes referred to as bullet-maturity bonds or bullet bonds. TERM DEBT, as in Term Bonds, is debt that mature in one lump sum at a specified future date. Term debt is usually carried as one type of long-term debt. TERM ENDOWMENT are endowments with time restrictions required by the donor such as a restriction that the income from the endowment may not be utilized until a future period or a specific date for condition is met. TERMINAL VALUE, when used in a discounted cash flow valuation, the cash flow is projected for each year into the future for a certain number of years, after which unique annual cash flows cannot be forecasted with reasonable accuracy. At that point, rather than attempting to forecast the varying cash flow for each individual year, one uses a single value representing the discounted value of all subsequent cash flows. This single value is referred to as the terminal value.When a firm's cash flows grow at a "constant" rate forever, the present value of those cash flows can be written as: Value = Expected Cash Flow Next Period / (r - g)where, r = Discount rate (Cost of Equity or Cost of Capital) g = Expected growth rate. This "constant" growth rate is called a stable growth rate and cannot be higher than the growth rate of the economy in which the firm operates. While companies can maintain high growth rates for extended periods, they will all approach "stable growth" at some point in time. When they do approach stable growth, the valuation formula above can be used to estimate the "terminal value" of all cash flows beyond. TERM LOAN is a bank loan, typically with a floating interest rate, for a specified amount that matures in between one and ten years and requires a specified repayment schedule. TESTIMONY is evidence given by a competent witness under oath. THEFT, as legally defined, encompasses a broad range of activities when one person uses, transfers, conceals, or retains possession of another person's property without the other person's consent. This definition is much broader than what most persons believe to be theft and can include writing bad checks, unauthorized use of a credit card, keeping found property without making a reasonable attempt to find its rightful owner, misusing trade secrets, unlawfully tapping into cable television services, wrongfully receiving public assistance, and removing serial numbers from movable property with the intent of concealing the identity of the true owner. THEORETICAL USAGE, in a manufacturing environment, is the projected or budgeted usage of parts, materials or supplies as opposed to the actual usage that may occur. THEORY OF CONSTRAINTS is a management approach that focuses on identifying and relaxing the constraints that limit an organization's ability to reach a higher level of goal attainment. THIRD PARTY is someone other than the principals directly involved in a transaction or agreement. THIRD PARTY RECOVERY normally refers to delinquent accounts receivable recovered by a collection agency for a fee. THREE PERCENT (3%) RULE is a rule used in vesting pension plan benefits. The participant's accrued benefit must be at least equal to 3% of the participant's normal projected retirement benefit for each year of participation, with a maximum of 100% after 33 1/3 years of participation. TI icould mean, among others, Total Income or Tenant Improvements. TIC is Total Invested Capital. TIC/EBIT is one of the earnings multiples ratios used in determining company value. TILL ROLL is a roll of paper on which the separate amounts of money paid for goods are recorded in a retail shop's cash register. TIME DEPOSIT is a bank deposit that can be withdrawn only after a set period of time or with prior notice, e.g. a certificate of deposit (CD). TIME DRAFT is a draft that matures either a certain number of days after acceptance or a certain number of days after the date of the draft. See SITE DRAFT. TIME INTERVAL CONCEPT, in accounting, requires that financial statements be prepared at regular intervals, e.g. monthly, quarterly, annually. TIME LAG see LAG TIME. TIME PERIOD CONCEPT provides that accounting take place over specific time periods known as fiscal periods. These fiscal periods are of equal length, and are used when measuring the financial progress of a business. TIME SERIES is an ordered sequence of values of a variable at equally spaced time intervals. TIME SERIES ANALYSIS is the branch of quantitative forecasting in which data for one variable are examined for patterns of trend, seasonality, and cycle. TIMES FIXED CHARGES EARNED see COVERAGE OF FIXED CHARGES. TIMES INTEREST EARNED (TIE) measures the extent to which operating income can decline before the firm is unable to meet its annual interest costs. The TIE ratio is used by bankers to assess a firm’s ability to pay their liabilities. TIE determines how many times during the year the company has earned the annual interest costs associated with servicing its debt. Normally, a banker will be looking for a TIE ratio to be 2.0 or greater, showing that a business is earning the interest charges two or more times each year. A value of 1.0 or less suggests that the firm is not earning sufficient amounts to cover interest charges. TIME TO MARKET (TTM) is the length of time it takes to develop a new product from an early initial idea for a new product to initial market sales. Precise definitions of the start and end point vary from one company to another, and may vary from one project to another within the company. TIME VALUE OF MONEY is the idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received. T-NOTE see TREASURY NOTE. TOBIN RATIO see MARKET TO BOOK VALUE. TO DATE is prior to the current date. TOMBSTONE is a newspaper advertisement that contains the details of a bond issue or major loan, and the investment banks that have underwritten it. TOP DOWN is a concept of analyzing a subject, such as costs or revenue, starting from the highest level working towards the bottom. TOP-DOWN BUDGETING is where budgets are created by starting from the highest level working towards the bottom using parametric relationships. A monetary value is placed on an individual unit (product, service, materials, and labor hour). An estimate of the number of units required is then converted to currency by multiplying the quantity of units by the unit price. TOPSIDE ACCOUNTING ADJUSTMENTS/DEVICES is an illegal practice to where accountants manipulate its accounting practices to close gaps between actual operating results and results reported to the investing public. Accountants then falsely represent to the public that their audits were conducted in accordance with generally accepted auditing standards (GAAS) and that an entity's financial reports fairly represent the entity's financial condition and were prepared in accordance with generally accepted accounting principles (GAAP). TOP-LINE of a company is its gross sales, or revenue figure. TOR; among many others; can mean Time of Receipt, Terms Of Reference, Time of Report, etc. TOTAL ASSETS is the total of all assets; both current and fixed. TOTAL ASSET TURNOVER measures management's efficiency in managing all of a firm’s assets - specifically the generation of revenues from the firm's total investments in assets. This ratio is extremely important in high asset firms such as manufactures and telecommunications companies. Generally, the higher this ratio as compared to like companies or the industry: · the smaller the investment required to generate sales, thus the more profitable the firm. · indicates the firm has less money tied up in fixed assets for each dollar of sales revenue. TOTAL COST OF OWNERSHIP (TCO) is a model developed by Gartner Group to analyze the direct and indirect costs of owning and using hardware and software. Managers of enterprise systems use various versions of TCO to lower costs while increasing the benefits of information technology deployments. The TCO includes: original cost of the computer and software, hardware and software upgrades, maintenance, technical support, and training. Most estimates place the TCO at about 3 to 4 times the actual purchase cost of the PC. TOTAL CURRENT ASSETS is total of cash & equivalents, trade receivables, inventory and all other current assets. TOTAL CURRENT LIABILITIES is the total of notes payable-short term, current maturities-LTD, trade payables, income taxes payable, and all other current liabilities. TOTAL LIABILITIES & NET WORTH is the sum of all liability items and Net Worth. TOTAL QUALITY MANAGEMENT (TQM) is a structured system for satisfying internal and external customers and suppliers by integrating the business environment, continuous improvement, and breakthroughs with development, improvement, and maintenance cycles while changing organizational culture. TQM see TOTAL QUALITY MANAGEMENT. TRACEABILITY, COST is where businesses rely on linking or tracing costs to outputs; managerial or cost accounting provides managers this information. Management accountants strive to establish causal relationships between costs and cost objects to determine why costs were incurred. The process of tracing costs to cost objects forges a necessary link so that ultimately costs can be traced to outputs, even if at an aggregated level to their main categories: Direct Costs, Indirect Costs, and General and Administrative Costs. TRACEABLE, in accounting, is to discover by going backward over the transactions (evidence) step by step establishing a "paper-trail" for a transaction. Non-traceable is where the "paper-trail" of a transaction is broken or non-existent. TRADE ACCEPTANCE is a draft drawn by the seller of goods upon the buyer who agrees to pay usually by signing "accepted" on the draft along with the buyer's signature. TRADE DEBTORS represent amounts of money owed by customers who have purchased goods/services from the company. TRADE DISCOUNT is a producer discount given to retail trade members to assist them in increasing sales of the producer's product. TRADE DRAFT is a draft addressed to a commercial enterprise. TRADE EXCHANGE is a barter system where people or companies trade goods and services without the use of money. In the U.S., income from barter transactions is considered taxable. TRADEMARK is a formally registered symbol identifying the manufacturer or distributor of a product. TRADE NAME is a distinctive name used to identify a product or company and build recognition. Many corporations; e.g. Coca Cola, Ford, IBM, etc.; aggressively protect their trade names within the market. TRADE PAYABLE, also known as an account payable, is an amount owed to a creditor for goods and services received. TRADE RECEIVABLES (NET) are all accounts from trade, net of allowance for doubtful accounts. TRADE INVESTMENT is shares held by one company in another. Also known as fixed asset investment. TRADE SPENDING is that marketing expense directed towards brand building, e.g. promotional allowances, slotting, and advertisements. Total expenditure often represents 20-25% or more of total sales and is a significant expenditure for any size company. Managing this investment more wisely and reducing any fraction of a percentage of these dollars is vital. TRADING ACCOUNT is an account held at a financial institution and administered by an investment dealer that the account holder uses to employ a trading strategy rather than a buy-and-hold investment strategy. TRADING CONCERN is an entity that derives its products for sale, thereby revenue, through purchasing products for sale from other producers / manufacturers for resale to their customer base. TRADING PROFIT is that profit earned from the short-term trading of securities that were held for less than one year. Such profit is usually subject to tax at regular income tax rates. TRAILING, in time periods, is the most recently completed time period. For example, trailing twelve months would be the twelve-month period which ended on the final day of the last month. TRANCHES are related securities that are offered at the same time but have different risk, reward, and/or maturity. TRANSACTION is an event or happening that changes financial position and/or earnings. TRANSACTION ANALYSIS is coupled with data event analysis. Transaction analysis looks at the data carriers which move data and information around the firm. Some of these transactions may be externally generated and some are internally generated. See DATA EVENT ANALYSIS. TRANSACTION DATE is the date on which an activity occurs. TRANSACTION DRIVERS are used to count the frequency of an activity, i.e., the number of times an activity is performed. TRANSACTION EXPOSURE, in foreign exchange, is the possibility of incurring exchange gains or losses on transactions already entered into and denominated in a foreign currency. It is typified by real exchange gains or losses and mixes retrospective and prospective views. It is short-term in nature. TRANSFER JOURNAL ENTRY is used to allocate an expense or revenue from one account or sponsored project to another, or to transfer funds between object codes within an account or sponsored project. Transfers journal entries should include a description of the item(s) and explanation of why the transfer is necessary. TRANSFER PRICE is the price charged by an individual entity in a multi-entity corporation on transactions among the entities involved. TRANSLATION EXPOSURE, in foreign exchange, is to convert the results of foreign operations from the local currency to the home currency in the areas of paper exchange gains or losses; it is retrospective and short-term in nature. TRANSPARENCY, in economics, (1) Principle adopted in the General Agreement on Tariffs and Trade that governments must make their rules, regulations, and practices open and accessible to the public and other governments. (2) General Agreement on Trade in Services requirement that its member states publish their regulations affecting trade in services, that they notify the Council for Trade in Services of any relevant changes, and that they respond promptly to requests for information from other members. TRANSPORTATON IN is freight costs paid by the buyer therefore added to the costs of merchandise, i.e. part of inventory cost. TRANSPORTATION OUT is part of cost of selling therefore included as selling expense, i.e. part of SG&A. TRANSPOSITION ERROR is the unintentional exchange of two elements of an ordered list with all others staying the same. A transposition is therefore a permutation of two elements. For example, the swapping of 2 and 5 to take the list 123456 to 153426 is a transposition. In this example, if the newly ordered list of 153426 was unintentional, it would be commonly called a transposition error. In accounting, an error in copying a number from one place to another is a transposition error. TREASURY BILL (T-BILL) is a government security that matures in one year or less. They are zero-coupon bonds that are sold at a discount of the par value to create a positive yield to maturity. Treasury bills are considered by many the most risk free investment. Treasury Bills are commonly issued with maturity dates of 91 days, 6 months, or 1 year. TREASURY CERTIFICATE is a U. S. Treasury security usually issued at par with a specified rate of interest and a maturity of one year or less. It is issued payable to the bearer and sold in minimum amounts of $l0,000. TREASURY CYCLE is the timing and frequency of the various maturities or treasury instruments; transactions include those related to financing the operations of the business (e.g. issuance of capital stock or long-term debt). TREASURY NOTE is a intermediate term debt obligation of the US government that has a maturity from one to ten years. They are issued in $1,000 denominations and pay interest semiannually. Treasury notes are commonly abbreviated as "T-notes". TREASURY SHARE see TREASURY STOCK. TREASURY STOCK is stock reacquired by the issuing company and available for retirement or resale. It is issued but not outstanding. It cannot be voted and it pays or accrues no dividends. It is not included in any of the ratios measuring values per common share. TREND is the general direction in which something tends to move. TREND ANALYSIS is the analysis of changes over time through the use of analytical techniques, such as time series analysis, to discern trends. TRIAL BALANCE is a listing of the accounts in your general ledger and their balances as of a specified date. A trial balance is usually prepared at the end of an accounting period and is used to see if additional adjustments are required to any of the balances. Since the basic accounting system relies on double-entry bookkeeping, a trial balance will have the same total debit amount as it has total credit amounts. TRIPLE BOTTOM LINE (TBL) is a metric for a corporation's social, environmental, and economic performance. TBL is the latest series of buzz words to describe business involvement in sustainability. TBL is all about dropping the financial bottom line as a meaningful indicator of where you stand in the market place and replacing it with a bottom line that properly acknowledges the interplay of the social economic and environmental dimensions of our lives. TRIPLE NET (NNN) is a lease that includes on top of the basic rent, a share of the real property taxes, insurance, and maintenance. "Triple-net-leases' are standard in commercial property leases in shopping centers and malls. Usually done under a limited partnership, resulting in lower risk for investors. TRIPLE P is a productivity model wherein the interrelationship between productivity, profitability and performance, as well as, effectiveness and efficiency are plotted in a schematic view where the main difference between these five terms can be captured. TRUE AND FAIR VIEW is one of the most prominent principles of accounting. It suggests that an enterprise should provide a true and fair view about its financial conditions and operating results. The concept of true and fair view does not mean absolute truth about enterprises. Financial statements are a product of management's judgments and estimates. The principle of true and fair view requires comparative truth about the enterprises' picture. True and fair view is rather defined operationally; it is thought to be accomplished by complying with all other lower accounting principles. TRUE-UP, generally, is to make level, square, balanced, or concentric. Used in business as an expression meaning to "bring into alignment" with predetermined criteria or process. TRUE VALUE is the amount that a buyer is finally willing to pay. TRUST ACCOUNT is a separate bank account, segregated from a broker's own funds, in which the broker is required by state law to deposit all monies collected for clients; in some states called an ESCROW ACCOUNT. TRUST DEED is an instrument of conveyance of title to property wherein the transferee will be holding the title to the property on behalf of another person. TRUST FUND is a fiduciary relationship calling for a trustee to hold the title to assets, usually monetary, for the benefit of the beneficiary. T/T is a payment or financial transaction designation meaning "Telegraphic Transfer" of funds. TTM see Time To Market. TURNAROUND is the reversal of unfavorable circumstances of a business where an investment opportunity may exist. A firm may work with such a business to restructure the management and finances in order to take the greatest advantage of more favorable circumstances. There are organizations like the Turnaround Management Association that specialize in turning around failing companies. TURNAROUND DOCUMENT is a document that has been created by a computer to be used for data entry. It is a called a turnaround document because once it has been filled in by users it is then used for input back into the computer. An example of a turnaround document is the mark sheet that is filled in by your teacher. The mark sheet is generated by the computer, filled in by the subject teacher and then used for input back into the computer so that reports can be printed. TURNOVER, in U.S. accounting, is the number of times an asset is replaced during a financial period; often used in terms of inventory turnover or accounts receivable turnover. In securities, for either a portfolio or exchange, TURNOVER is the number of shares traded for a period as a percentage of the total shares. In Great Britain, TURNOVER means sales. TWO PARTY CHECK is a check made out from one individual to another, i.e. only two entities are involved in the transaction. TWO PARTY ENDORSEMENT, normally, is when two signatures are required to make a document or bank draft legal or authorized. |
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