A Misstatement is Inconsequential
If a reasonable person would conclude after considering the possibility of further undetected misstatements that the misstatement either individually or when aggregated with other misstatements would clearly be immaterial to the FINANCIAL STATEMENTS. If a reasonable person could not reach such a conclusion regarding a particular misstatement, that misstatement is more than inconsequential.
Abatement
Complete removal of an amount due, (usually referring to a tax ABATEMENT a penalty abatement or an INTEREST abatement within a governing agency).
Absorption Costing
An approach to product costing that assigns a representative portion of all types of manufacturing costs--direct materials, direct labor, variable factory overhead, and fixed factory overhead--to individual products.
Accelerated Depreciation
Method that records greater DEPRECIATION than STRAIGHT-LINE DEPRECIATION in the early years and less depreciation than straight-line in the later years of an ASSET'S HOLDING PERIOD.
Account
Formal record that represents, in words, money or other unit of measurement, certain resources, claims to such resources, transactions or other events that result in changes to those resources and claims.
Account Payable
Amount owed to a CREDITOR for delivered goods or completed services.
Account Receivable
Claim against a DEBTOR for an uncollected amount, generally from a completed transaction of sales or services rendered.
Accountable Plan
Any reimbursement or other expense allowance arrangement of an employer that meets all of the following requirements (therefore excluding it from gross w-2 EARNED INCOME and tax): (1) it provides reimbursements advances or allowances including per diem and meals, to employees for any job related deductible business expense; (2) employees must be able to substantiate expenses covered in the plan; (3) employee must return any excess advances or payments.
Accountant
Person skilled in the recording and reporting of financial transactions.
Accountants' Report
Formal document that communicates an independent accountant's: (1) expression of limited assurance on FINANCIAL STATEMENTS as a result of performing inquiry and analytic procedures (REVIEW REPORT); (2) results of procedures performed (AGREED-UPON PROCEDURES REPORT); (3) non-expression of opinion or any form of assurance on a presentation in the form of financial statements information that is the representation of management (COMPILATION REPORT); or (4) an opinion on an assertion made by management in accordance with the Statements on Standards for Attestation Engagements (ATTESTATION REPORT). An accountants' report does not result from the performance of an AUDIT.
Accounting
Recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the FINANCIAL STATEMENTS.
Accounting Change
Change in (1) an accounting principle; (2) an accounting estimate; or (3) the reporting entity that necessitates DISCLOSURE and explanation in published financial reports.
Accounting Cycle
The sequence of steps followed in the accounting process to measure business transactions and transform the measurements into FINANCIAL STATEMENTS for a specific period.
Accounting Principles Board (APB)
Senior technical committee of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) which issued pronouncements on accounting principles from 1959-1973. The APB was replaced by the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB).
Accounts Payable Subsidiary Ledger
A financial record of an individual ACCOUNT PAYABLE in which entries can be made daily.
Accounts Receivable Turnover
Used to measure a company’s ability to collect cash from credit customers. Found by dividing net sales by average net ACCOUNT RECEIVABLE.
Accrual
The recognition of an expense or revenue that has occurred but has not yet been recorded.
Accrual Accounting
The attempt to record the financial effects of transactions and other events in the periods in which those transactions or events occur rather than only in the periods in which cash is received or paid by the business, using all the techniques developed by accountants to apply the MATCHING PRINCIPLE.
Accrual Basis
Method of ACCOUNTING that recognizes REVENUE when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.
Accrued Expense
An expense that has occurred but is not recognized in the accounts.
Accrued Interest
INTEREST that has accumulated between the most recent payment and the sale of a BOND or other fixed-income security.
Accumulated Depreciation
Total DEPRECIATION pertaining to an ASSET or group of assets from the time the assets were placed in services until the date of the FINANCIAL STATEMENT or tax return. This total is the CONTRA ACCOUNT to the related asset account.
Accumulation
Profits that are not paid out as DIVIDENDS but are instead added to the company’s capital base.
Acid-Test Ratio
The relationship of a company’s current assets that can be converted into cash to its current liabilities. It is determined by dividing QUICK ASSETS by current liabilities.
Acquisition
One company taking over controlling interest in another company.
Actuary
Mathematician employed by an insurance company to calculate PREMIUMS, RESERVES, DIVIDENDS, and insurance, PENSION, and ANNUITY rates, using risk factors obtained from experience tables.
Additional Paid in Capital
Amounts paid for stock in excess of its PAR VALUE or STATED VALUE. Also, other amounts paid by stockholders and charged to EQUITY ACCOUNTS other than CAPITAL STOCK.
Adjusted Basis
After a taxpayer's basis in property is determined, it must be adjusted upward to include any additions of capital to the property and reduced by any returns of capital to the taxpayer. Additions might include improvements to the property and subtractions may include depreciation or depletion. A taxpayer's adjusted basis in property is deducted from the amount realized to find the gain or loss on sale or disposition.
Adjusted Gross Income
Gross income reduced by business and other specified expenses of individual taxpayers. The amount of adjusted gross income affects the extent to which medical expenses, non business casualty and theft losses and charitable contributions may be deductible. It is also an important figure in the basis of many other individual planning issues as well as a key line item on the IRS form 1040 and required state forms.
Adjusted Trial Balance
A trial balance prepared after all adjusting entries have been recorded and posted to the accounts. Should have equal credit and debit totals.
Adjusting Journal Entry
An accounting entry made into a subsidiary ledger called the General journal to account for a periods changes, omissions or other financial data required to be reported "in the books" but not usually posted to the journals used for typical period transactions (the cash receipts journal, cash disbursements journal, the payroll journal, sales journal and so on) the entry is posted to the general ledger accounts directly and usually will be numbered itself, dated and have an explanation. Example: AJE# 1 12-31-2003, debit Cash in bank $1,000. Credit interest income $1,000, to record interest income on business bank account at year end, not recorded in cash receipts journal but credited by the bank. (Cross-reference bank reconciliation and account where it was found)
ADR
Receipts for shares of foreign company stock maintained by an intermediary indicating ownership.
Adverse Opinion
Expression of an opinion in an AUDITORS' REPORT which states that FINANCIAL STATEMENTS do not fairly present the financial position, results of operations and cash flows in conformity with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).
Affiliated Company
Company, or other organization related through common ownership, common control of management or owners, or through some other control mechanism, such as a long-term LEASE.
Agency Fund
Fund consisting of ASSETS where the holder agrees to remit the assets, income from the assets, or both, to a specified beneficiary in due course or at a specified time.
AICPA
National professional membership organization that represents practicing CERTIFIED PUBLIC ACCOUNTANTS (CPAs). The AICPA establishes ethical and auditing standards as well as standards for other services performed by its members. Through committees, it develops guidance for specialized industries. It participates with the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and the GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB) in establishing accounting principles.
Allocate
To set aside for a specific reason.
Allowance for Doubtful Accounts
A contra-asset account used to reduce ACCOUNTS RECEIVABLE to the amount that is expected to be collected in cash.
Alternative Dispute Resolution
An alternative to formal litigation which includes techniques such as arbitration, mediation, and a non-binding summary jury trial.
Alternative Minimum Tax (AMT)
Tax imposed to back up the regular income tax imposed on CORPORATION and individuals to assure that taxpayers with economically measured income exceeding certain thresholds pay at least some income tax.
American Depository Receipt (ADR)
Receipts for shares of foreign company stock maintained by an intermediary indicating ownership.
American Institute of Certified Public Accountants (AICPA)
National professional membership organization that represents practicing CERTIFIED PUBLIC ACCOUNTANTS (CPAs). The AICPA establishes ethical and auditing standards as well as standards for other services performed by its members. Through committees, it develops guidance for specialized industries. It participates with the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and the GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB) in establishing accounting principles.
Amortization
Gradual and periodic reduction of any amount, such as the periodic writedown of a BOND premium, the cost of an intangible ASSET or periodic payment Of MORTGAGES or other DEBT.
AMT
Tax imposed to back up the regular income tax imposed on CORPORATION and individuals to assure that taxpayers with economically measured income exceeding certain thresholds pay at least some income tax.
Analyst
Person in a brokerage house, bank trust dept., or mutual fund group who studies a number of companies and makes buy or sell recommendations on the securities of particular companies and industry groups.
Analytical Procedures
Substantive tests of financial information which examine relationships among data as a means of obtaining evidence. Such procedures include: (1) comparison of financial information with information of comparable prior periods; (2) comparison of financial information with anticipated results (e.g., forecasts); (3) study of relationships between elements of financial information that should conform to predictable patterns based on the entity's experience; (4) comparison of financial information with industry norms.
Annual Report
Report to the stockholders of a company which includes the company's annual, audited BALANCE SHEET and related statements of earnings, stockholders' or owners' equity and cash flows, as well as other financial and business information.
Annuity
Series of payments, usually payable at specified time intervals.
Anti-Dilution
Condition that may increase the computation of EARNINGS PER SHARE (EPS) or decrease loss per share solely because of the inclusion of COMMON STOCK equivalents, such as STOCK OPTIONS, WARRANTS, convertible DEBT or convertible PREFERRED STOCK, nomination or selection of the independent AUDITORs.
APB
Senior technical committee of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) which issued pronouncements on accounting principles from 1959-1973. The APB was replaced by the FINANCIAL ACCOUNTING STANDARDS BOARD (FASB).
Appreciation
Increase in the value of an ASSET such as a stock, BOND, commodity, or real estate.
Assembly of Financial Statements
The providing of various accounting or data-processing services by an accountant, the output of which is in the form of financial statements ostensibly to be used solely for internal management purposes.
Assertion
Explicit or implicit representations by an entity's management that are embodied in financial statement components and for which the AUDITOR obtains and evaluates evidential matter when forming his or her opinion on the entity's financial statements.
Asset
An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events. Anything of value to which the firm has a legal claim. Any owned tangible or intangible object having economic value useful to the owner.
Asset Turnover
A way of measuring how profitably and efficiently assets are being used to produce sales. This is determined by dividing net sales by average total assets.
At Par
At a price equal to the face, or nominal, value of a security.
Audit
A professional examination of a company’s financial statement by a professional accountant or group to determine that the statement has been presented fairly and prepared using GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).
Audit Documentation
The written record of the basis for the AUDITOR's conclusions that provides the support for the auditor's representations, whether those representations are contained in the auditor's report or otherwise. (May be referred to as work papers or working papers).
Audit Engagement
Agreement between a CPA firm and its client to perform an AUDIT.
Audit Risk
The risk that the AUDITOR may unknowingly fail to modify appropriately his or her opinion on financial statements that are materially misstated.
Audit Sampling
Application of an AUDIT procedure to less than 100% of the items within an account BALANCE or class of transactions for the purpose of evaluating some characteristic of the balance or class.
Auditing Standards
Guidelines to which an AUDITOR adheres. Auditing standards encompass the auditor's professional qualities, as well as his or her judgment in performing an AUDIT and in preparing the AUDITORS' REPORT. Audits conducted by independent CERTIFIED PUBLIC ACCOUNTANT (CPA) usually in accordance with GENERALLY ACCEPTED AUDITING STANDARDS (GAAS), which consist of standards approved and adopted by the membership of the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA).
Auditor
Person who AUDITS financial accounts and records kept by others. Includes both public accounting firms registered with the PCAOB and associated persons thereof.
Auditors' Report
Written communication issued by an independent CERTIFIED PUBLIC ACCOUNTANT (CPA) describing the character of his or her work and the degree of responsibility taken. An auditors' report includes a statement that the AUDIT was conducted in accordance with GENERALLY ACCEPTED AUDITING STANDARDS (GAAS), which require that the AUDITOR plan and perform the audit to obtain reasonable assurance about whether the FINANCIAL STATEMENTS are free of material misstatement, as well as a statement that the auditor believes the audit provides a reasonable basis for his or her opinion.
Authorized Shares
Maximum number of shares of any class a company may legally create under the terms of its articles of incorporation.
Average Days’ Inventory On-Hand
The average number of days required to sell the current inventory of products available for sale. It is found by dividing the number of days in a year by inventory turnover.
Average Days’ Sales Uncollected
A ratio that shows the average length of time it takes a company to receive payment for credit sales.
Average-Cost Method
A way of arriving at the cost of inventory that computes the average cost of all goods available for sale during a fixed period in order to determine the value of inventory.
B
Backup Withholding
Payors of interest, dividends and other reportable payments must withhold income tax equal at a rate equal to the fourth lowest rate applicable to single filers if they fail to supply a federal id # or if they fail to certify that they are not subject to it.
Bad Debt
All or portion of an ACCOUNT, loan, or note receivable considered to be uncollectible.
Balance
Basic FINANCIAL STATEMENT, usually accompanied by appropriate DISCLOSURES that describe the basis of ACCOUNTING used in its preparation and presentation of a specified date the entity's ASSETS, LIABILITIES and the EQUITY of its owners. Also known as a STATEMENT OF FINANCIAL CONDITION.
Bank Reconciliation
A process by which an accountant determines whether and why there is a difference between the balance shown on the bank statement and the balance of the cash account in the firm’s GENERAL LEDGER.
Bank Statement
A periodic statement, usually monthly, that a bank sends to the holder of a checking account showing the balance in the account at the beginning of the month, during, and at the end of the month.
Bankruptcy
Legal process, governed by federal statute, whereby the DEBTS of an insolvent person are liquidated after being satisfied to the greatest extent possible by the DEBTOR'S ASSETS. During bankruptcy, the debtor's assets are held and managed by a court appointed TRUSTEE.
Base Market Value
Average market price of a group of securities at a given time.
Beginning Inventory
The quantity of merchandise available for sale at the beginning of an ACCOUNTING period.
Bequest
Legal process, governed by federal statute, whereby the DEBTS of an insolvent person are liquidated after being satisfied to the greatest extent possible by the DEBTOR'S ASSETS. During bankruptcy, the debtor's assets are held and managed by a court appointed TRUSTEE.
Beta Coefficient
Measure of a stock’s relative volatility. The beta is the covariance of a stock in relation to the rest of the stock market.
Bid and Asked
Bid is the highest price a prospective buyer is prepared to pay at a particular time for a trading unit of a given SECURITY; asked is the lowest price acceptable to a prospective seller of the same security. The difference between the prices is the SPREAD.
Blue Sky Laws
State laws that regulate the ISSUANCE of SECURITIES. These laws are coordinated with federal acts.
Board of Directors
Individuals responsible for overseeing the affairs of an entity, including the election of its officers. The board of a CORPORATION that issues stock is elected by stockholders.
Bond
One type of long-term PROMISSORY NOTE, frequently issued to the public as a SECURITY regulated under federal securities laws or state BLUE SKY LAWS. Bonds can either be registered in the owner's name or are issued as bearer instruments.
Bond Discount
The amount below PAR VALUE that a BOND sells for.
Bond Indenture
An additional agreement to a BOND issue that defines the rights, privileges, and limitations of BONDHOLDERS.
Bondholder
A person who owns a BOND certificate issued by a government or CORPORATION.
Book Value
Amount, net or CONTRA ACCOUNT balances, that an ASSET or LIABILITY shows on the BALANCE SHEET of acompany. Also known as CARRYING VALUE.
Bookkeeping
The process of recording financial transactions and keeping financial records.
Boot
The non technical term used by some to describe any cash or other property that is received in exchange of property that would be otherwise nontaxable.
Bottom Line
The line in a FINANCIAL STATEMENT that shows NET INCOME or LOSS.
Break-Even Point
The point at which TOTAL REVENUES equals TOTAL COSTS.
Break-Even Units
The number of units of a product that must be sold before a company makes enough money to pay for direct and indirect costs of making the product.
Budget
Financial plan that serves as an estimate of future cost, REVENUES or both.
Burden Rate
Standard rate multiplied by a level of activity to determine the OVERHEAD cost of that activity. Activity measures include LABOR or machine hours.
Business Combinations
Combining of two entities. Under the PURCHASE METHOD OF ACCOUNTING, one entity is deemed to acquire another and there is a new basis of accounting for the ASSETS and LIABILITIES of the acquired company. In a POOLING OF INTERESTS, two entities merge through an exchange of COMMON STOCK and there is no change in the CARRYING VALUE of the assets or liabilities.
Business Segment
Any division of an organization authorized to operate, within prescribed or otherwise established limitations, under substantial control by its own management.
Buyout
Purchase of at least a controlling percentage of a company’s stock to take over its ASSETS and operations.
Bylaws
Collection of formal, written rules governing the conduct of a CORPORATION'S affairs (such as what officers it will have, what their responsibilities are, and how they are to be chosen). Bylaws are approved by a corporation's stockholders, if a stock corporation, or other owners, if a non-stock corporation.
C
Cafeteria Plan
A benefit plan maintained by an employer for the benefit of the employees under which each participant has the opportunity to select the benefits they desire. Certain minimum choices and nondiscriminatory rules apply.
Call Loan
Loan repayable on demand. Also known as DEMAND LOAN.
Call Price
A specified price, usually above face value, at which a CORPORATION may, at its option, buy back and retire BONDS before maturity.
Callable
Redeemable by the issuer before the scheduled maturity.
Callable Instrument
BOND which accords an issuer the right to redemption before it is due.
Capital Asset Pricing Model (CAPM)
Sophisticated model of the relationship between expected risk and expected return.
Capital Expenditure
Outlay of money to acquire or improve capital assets such as buildings and machinery.
Capital Gain
Portion of the total GAIN recognized on the sale or exchange of a noninventory asset which is not taxed as ORDINARY INCOME. Capital gains have historically been taxed at a lower rate than ordinary income.
Capital Projects Funds
Funds used by a not-for-profit organization to account for all resources used for the development of a land improvement or building addition or renovation.
Capital Stock
Ownership shares of a CORPORATION authorized by its ARTICLES OF INCORPORATION. The money valueassigned to a corporation's issued shares. The BALANCE SHEET account with the aggregate amount of the PAR VALUE or STATED VALUE of all stock issued by a corporation.
Capitalize
Convert a schedule of INCOME into a principal amount, called capitalized value, by dividing by a rate of INTEREST.
Capitalized Cost
Expenditure identified with goods or services acquired and measured by the amount of cash paid or the market value of other property, CAPITAL STOCK, or services surrendered. Expenditures that are written off during two or more accounting periods.
Capitalized Interest
INTEREST cost incurred during the time necessary to bring an ASSET to the condition and location for its intended use and included as part of the HISTORICAL COST of acquiring the asset.
Capitalized Lease
LEASE recorded as an ASSET acquisition accompanied by a corresponding LIABILITY by the LESSEE.
CAPM
Sophisticated model of the relationship between expected risk and expected return.
Carrying Value
Amount, net or CONTRA ACCOUNT balances, that an ASSET or LIABILITY shows on the BALANCE SHEET of a company. Also known as BOOK VALUE.
Carryovers
Provision of tax law that allows current losses or certain tax credits to be utilized in the tax returns of future periods..
Cash
ASSET account on a balance sheet representing paper currency and coins, negotiable money orders and checks, bank balances, and certain short-term government securities.
Cash Account
Brokerage firm account whose transactions are settled on a cash basis.
Cash Basis
Method of bookkeeping by which REVENUES and EXPENDITURES are recorded when they are received and paid.
Cash Dividend
Distribution of a CORPORATION’s earnings to stockholders in the form of CASH.
Cash Equivalents
Short-term (generally less than three months), highly liquid INVESTMENTS that are convertible to known amounts of cash.
Cash Flow to Assets
Used to measure the ability of ASSETS to generate operating CASH FLOWS.
Cash Flow to Sales
A way of measuring the ability of sales to generate operating CASH FLOWS.
Cash Flows
Net of cash receipts and cash disbursements relating to a particular activity during a specified accounting period.
Cash Payments Journal
A multicolumn journal used to record sums of cash paid out for expenses.
Cash Ratio
Ratio of CASH and MARKETABLE SECURITIES to CURRENT LIABILITIES.
Cash Receipts Journal
A multicolumn journal used to record business transactions involving the receipt of CASH from other individuals or businesses.
Casualty Loss
Any loss of an asset due to fire storm act of nature causing asset damage from unexpected or accidental force. Generally it is deductible regardless of whether it is business or personal.
CD
Formal instrument issued by a bank upon the deposit of funds which may not be withdrawn for a specified time period. Typically, an early withdrawal will incur a penalty.
CEO
Officer of a firm principally responsible for the activities of a COMPANY.
Certificate of Deposit (CD)
Formal instrument issued by a bank upon the deposit of funds which may not be withdrawn for a specified time period. Typically, an early withdrawal will incur a penalty.
Certified Financial Planner (CFP)
Individual who is trained to develop and implement financial plans for individuals, businesses, and organizations, utilizing knowledge of income and estate tax, investments, risk management analysis and retirement planning. CFPs are certified after completing a series of requirements that include education, experience, ethics and an exam. CFPs are not regulated by a governmental authority.
Certified Internal Auditor (CIA)
Internal AUDITOR who has satisfied the examination requirements of the Institute of Internal Auditors.
Certified Management Accountant (CMA)
An accreditation conferred by the Institute of Management Accountants that indicates the designee has passed an examination and attained certain levels of education and experience in the practice of accounting in the private sector.
Certified Public Accountant (CPA)
ACCOUNTANT who has satisfied the education, experience, and examination requirements of his or her jurisdiction necessary to be certified as a public accountant.
CFO
Executive officer who is responsible for handling funds, signing CHECKS, keeping financial records, and financial planning for a CORPORATION.
CFP
Individual who is trained to develop and implement financial plans for individuals, businesses, and organizations, utilizing knowledge of income and estate tax, investments, risk management analysis and retirement planning. CFPs are certified after completing a series of requirements that include education, experience, ethics and an exam. CFPs are not regulated by a governmental authority.
Chief Executive Officer (CEO)
Officer of a firm principally responsible for the activities of a COMPANY.
Chief Financial Officer (CFO)
Executive officer who is responsible for handling funds, signing CHECKS, keeping financial records, and financial planning for a CORPORATION.
CIA
Internal AUDITOR who has satisfied the examination requirements of the Institute of Internal Auditors.
Claim for Refund
A refund is not automatically mailed if one is due. A taxpayer, whether business or individual, must file a request on a form. It must also be filed within the timeframe allotted or the refund may be lost. An individual can claim a refund back to whatever year it was due but it will only be paid three years back or less.
Clean Opinion
AUDIT opinion not qualified for any material scope restrictions nor departures from GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). Also known as UNQUALIFIED OPINION.
Close
To clear the BALANCES of temporary accounts in order to be ready for the next accounting period.
Closed-End Mutual Fund
MUTUAL FUND with a fixed number of shares outstanding that may be bought or sold. CMO - See COLLATERALIZED MORTGAGE OBLIGATION.
Closing Entry
A journal entry made at the end of an accounting period in order to prepare for the next accounting period by clearing the BALANCES of temporary accounts and summarizing the period’s REVENUES and expenses.
CMA
An accreditation conferred by the Institute of Management Accountants that indicates the designee has passed an examination and attained certain levels of education and experience in the practice of accounting in the private sector.
CMO
SECURITY whose cash flows equal the difference between the cash flows of the collateralizing ASSETS and the collateralized obligations of a securitized TRUST. Characteristics of CMO residuals vary greatly and can be extremely complex in nature.
Co-Mingling
Mixing ASSETS, e.g. customer-owned SECURITIES, with those owned by a firm in its proprietary accounts.
Collateral
ASSET provided to a CREDITOR as security for a loan.
Collateralized Mortgage Obligation (CMO)
SECURITY whose cash flows equal the difference between the cash flows of the collateralizing ASSETS and the collateralized obligations of a securitized TRUST. Characteristics of CMO residuals vary greatly and can be extremely complex in nature.
Combined Financial Statement
FINANCIAL STATEMENT comprising the accounts of two or more entities.
Comfort Letter
Letter provided by a company's independent public accountant to an underwriter when the underwriter has a DUE DILIGENCE responsibility under Section 11 of the Securities Act of 1933 regarding financial information included in an offering statement.
Commercial Paper
A way of borrowing money by using unsecured short-term loans sold directly to the public, usually through professionally managed investments firms.
Commission
Percentage of the selling price of the property, paid by the seller.
Committee of Sponsoring Organizations of the Treadway Commission (COSO)
An alliance of five professional organizations dedicated to disseminating appropriate internal control standards.
Commodities
Bulk goods such as grains, metals, and foods traded on a commodities exchange or on the SPOT MARKET.
Common Stock
CAPITAL STOCK having no preferences generally in terms of dividends, voting rights or distributions.
Company
Organization engaged in business as a PROPRIETORSHIP, PARTNERSHIP, CORPORATION, or other form of enterprise.
Company Level Controls
Controls that exist at the company level that have an impact on controls at the process, transaction, or application level.
Comparative Financial Statement
FINANCIAL STATEMENT presentation in which the current amounts and the corresponding amounts for previous periods or dates also are shown.
Compensate
To pay or make payment for something.
Compensatory Balance
Funds that a borrower must keep on deposit as required by a bank.
Compilation
Presentation of financial statement data without the ACCOUNTANT'S assurance as to conformity with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).
Compilation Engagement
Agreement between a CPA firm and its client to issue a COMPILATION REPORT.
Compilation Report
See ACCOUNTANTS' REPORT.
Complex Trust
A trust that is to be distinguished from a simple trust in the fact that it permits accumulation or distribution of current income during the tax year and provides for charitable contributions.
Compliance Audit
Review of financial records to determine whether the entity is complying with specific procedures or rules.
Compound Interest Principles
