PHANTOM PROFIT Definition

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PHANTOM PROFIT is hypothetical profit, i.e., no cash flow is generated. Appreciation on any asset, e.g. stock, is considered phantom profit unless or until the asset is sold, thereby generating cash flow.

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PERPETUAL INVENTORY is an inventory accounting system whereby book inventory is kept in continuous agreement with stock on hand. A daily record is maintained of the dollar amount and physical quantity. There are periodic physical inventories taken to reconcile at short intervals.

TAXABLE EQUIVALENT YIELD is the yield that must be received on a taxable security to provide the holder with the same after-tax return as that earned on a tax-exempt bond or preferred stock.

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