Accounting Key Terms

Gain a foundation in or expand your current knowledge of accounting industry terminology

Accounting is an important field for any individual or business. All business owners need to understand what is happening with their money in order to retain control over it. The industry may be vast, but it can be much easier to understand and navigate when the individuals interested in accounting are familiar with popular and prominent key terms, concepts and phrases associated with the many aspects of the financial world known as accounting.

 

Tax free

When investments are tax free, the earnings are never taxed. However, there are some exceptions to tax-free items. To illustrate, municipal bond fund dividends are not going to be taxed at the federal level. Nonetheless, individuals may still have to pay capital gains taxes if the municipal bonds are ever sold for a profit.
Try: The tax free holidays for 2009 can be found at About.com.

Abatement

An abatement is the term used to describe the complete removal of an amount due. In many cases, an abatement is used in reference to a tax, penalty or interest abatement.
Try: A straightforward analysis and guide to abatement can be found at WiseGeek.com.

Income tax basis

An income tax basis is used to determine the proper and correct amount of gain that should be reported when a particular asset is sold. In most instances, the income tax basis will be the cost that has been paid for the asset in addition to the money paid to improve the asset(s), minus the deductions taken against the asset.
Try: Common issues with respect to income tax basis are discussed at Online-Financial-Planning.

Generally Accepted Accounting Principles

Generally Accepted Accounting Principles, which is abbreviated by the acronym GAAP, include the conventions, concepts, rules and procedures necessary in the world of accounting to define the accepted accounting practices at any given time. The highest possible level of these types of principles is set in a league of its own and determined by the Financial Accounting Standards Board, or FASB.
Try: FASAB.gov goes into great detail explaining and reviewing Generally Accepted Accounting Principles.

Net income

Net income, in terms of a company, is the total amount of sales attained by the company that remains after all costs are subtracted from the amount. The net income is used to express the total sales at any particular time. It is a very important figure for companies, and it's the best possible measure when it comes to the company's current operating state.
Try: Data and an explanation of net income can be found at WikInvest.com.

Securities

"Securities" is a very general accounting term used by professionals and others in the world of accounting. It is used to describe publicly traded stocks, bonds and other instruments of finances.
Try: For detailed information on securities, review the information available at BLS.gov.

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