Glossary
- Accounts payable (AP): The amount of money a company owes to vendors and suppliers for goods or services received but not yet paid for.
- Accounts receivable (AR): The amount of money owed to a company by its customers for goods or services delivered but not yet paid for.
- Accrual accounting: A method of accounting that recognizes revenue and expenses when they are incurred, regardless of when the cash is exchanged.
- Adjusted gross income (AGI): The amount of income earned in a year, minus specific deductions such as IRA contributions, alimony payments, and student loan interest.
- Amortization: The process of spreading the cost of an intangible asset (such as a patent or trademark) over its useful life.
- Assets: Anything of value that is owned by an individual or organization, such as cash, real estate, and investments.
- Audit: An independent examination of an organization’s financial records and processes to ensure accuracy and compliance with regulations.
- Balance sheet: A financial statement that shows a company’s assets, liabilities, and equity at a specific point in time.
- Bookkeeping: The process of recording financial transactions and maintaining financial records for a business.
- Capital gains tax: A tax on the profit made from the sale of an asset, such as a stock or property.
- Cash accounting: A method of accounting that recognizes revenue and expenses only when cash is received or paid.
- Charitable contributions: Donations made to a qualified charitable organization that are tax-deductible.
- Corporate tax: A tax on a corporation’s profits, paid to the federal government and sometimes to state and local governments.
- Depreciation: The process of spreading the cost of a tangible asset (such as a building or equipment) over its useful life.
- Direct deposit: A method of payment in which funds are electronically transferred directly into a bank account.
- Dividend: A distribution of a company’s profits to its shareholders.
- Earned income: Income earned from working, including wages, salaries, and tips.
- Estate tax: A tax on the transfer of property from a deceased person to their heirs.
- FICA tax: The federal tax on wages that funds Social Security and Medicare programs.
- Financial statements: Reports that summarize a company’s financial activities, including income statements, balance sheets, and cash flow statements.
- Gross income: The total income earned before deductions and taxes are applied.
- Independent contractor: A worker who is not an employee and is responsible for paying their own taxes and providing their own benefits.
- Inflation: The rate at which the general level of prices for goods and services is rising, resulting in a decrease in the purchasing power of currency.
- Interest: The cost of borrowing money, or the return on invested capital.
- IRS: The Internal Revenue Service, the federal agency responsible for collecting taxes and enforcing tax laws.
- Liability: A company’s financial debts or obligations.
- Net income: The amount of income earned after deductions and taxes are applied.
- Payroll taxes: Taxes paid by employers and employees to fund social insurance programs such as Social Security and Medicare.
- Profit and loss statement: A financial statement that summarizes a company’s revenue, costs, and expenses over a specific period of time.
- Property tax: A tax on real estate and other property owned by individuals and businesses.
- QuickBooks: A popular accounting software used by small businesses for bookkeeping and financial management.
- Return on investment (ROI): The measure of the profit or loss generated on an investment relative to the amount of money invested.
- Net Income: The amount of income left after deductions and taxes have been taken out.
- Payroll Tax: A tax that employers are required to withhold from their employees’ paychecks and pay to the government on their behalf.
- Profit and Loss Statement: A financial report that summarizes a company’s revenues, costs, and expenses over a period of time, usually a month or a year.
- Qualified Retirement Plan: A retirement savings plan that meets certain requirements set by the Internal Revenue Service (IRS) and offers tax benefits to both employers and employees.
- Real Estate Tax: A tax assessed by state or local governments on the value of real property, such as land and buildings.
- Sales Tax: A tax on the sale of goods and services, usually calculated as a percentage of the purchase price.
- Self-Employment Tax: A tax that self-employed individuals are required to pay to cover their Social Security and Medicare taxes.
- Standard Deduction: A fixed dollar amount that taxpayers can deduct from their income to reduce their taxable income.
- Taxable Income: The portion of a person’s income that is subject to taxation after deductions and exemptions have been applied.
- Tax Credit: A dollar-for-dollar reduction in the amount of tax owed, usually offered as an incentive for certain behaviors or expenses.
- Tax Deduction: An expense that can be subtracted from a person’s taxable income, reducing the amount of tax owed.
- Tax Exemption: An amount of income that is not subject to taxation, often offered for certain types of income or for dependents.
- W-2 Form: A form provided by employers to their employees that reports their annual earnings and taxes withheld for the year.
Take Control of Your Finances
Contact us to schedule an appointment with one of our knowledgeable team members. Let us show you how we can help you achieve your financial goals and provide you with the peace of mind that comes from knowing your finances are in good hands. Get in touch with us today to learn more about how we can help you.
