CAPITALIZATION RATE Definition

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CAPITALIZATION RATE, also known as CAP RATE, is the rate of return a property will produce on the owners investment. It is stated as a rate of interest or discount rate used to convert a series of future payments into a single present value. In real estate, the rate includes annual capital recovery in addition to interest.

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SIGNIFICANT RISK is an identified and assessed risk of material misstatement that, in the auditor's judgment, requires special audit consideration.

NOMINAL LEDGER is the account book showing expenditure on nominal accounts i.e. named business accounts such as postage, printing, etc.

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