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A Complete Dictionary of Accounting with 6,000+ Accounting discipline related Terms, Abbreviations and Definitions

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# Term Definition
1 Face Value Amount due at maturity from a bond or note. Face Value Amount of principal the issuer must pay at the maturity date of the bond. Face Value Nominal amount of a debt obligation (e.g., note, bond, mortgage) or equity security as stated in the instrument. It excludes interest and dividends.
2 Facility-Level Activity (also called, a business/organization sustaining activity) is an activity that supports business operations in general and cannot be traced to individual units, batches, or products.
3 Factor A financial company or bank that buys receivables from business and then collects the payment directly from the customers.
4 Factor Market Markets in which the services of factors of production are sold.
5 Factor Mobility The ease with which factors can be transferred between uses.
6 Factor Services The services of factors of production that are used to produce outputs.
7 Factoring Selling a receivable at a discounted value to a third party for cash. Factoring The practice of buying debt at a discount. It is the outright sale of a firm's accounts receivable to another party (the factor) without recourse, which means the factor must bear the risk of collection. Some banks and commercial finance companies factor (buy) accounts receivable. The purchase is made at a discount from the accounts value.
8 Factoring Accounts Receivable T he sale of the accounts receivable (usually for a fee) to a third party known as a factor.
9 Factoring: Over-Advances Circumstance where a business receives more money from a factor than the value of the receivables, which is a loan against inventory in anticipation of future sales.
10 Factors of Production (Resources) Resources used to produce goods and services to satisfy wants; frequently divided into the basic categories of land, labour, and capital.
11 Factory Burden Also referred to as manufacturing overhead, factory overhead, indirect manufacturing costs, or manufacturing support costs.
12 Factory Overhead is any manufacturing cost that is not direct materials or direct labor. Factory Overhead Also referred to as manufacturing overhead, indirect manufacturing costs, factory burden, and manufacturing support costs. Factory Overhead Total of all costs of manufacturing except direct materials and direct labour, also called manufacturing overhead, indirect manufacturing expenses, factory expenses, and factory burden.
13 Factory Overhead Costs Various production-related costs that cannot be practically or conveniently traced to an end product.
14 FAF See Financial Accounting Foundation.
15 Fair Market Value The amount that would be agreed upon by two independent persons. The amount to be received in the ordinary course of business in an arm's length transaction. Fair Market Value The amount that could be received on the sale of an asset when willing and financially capable buyers and sellers exist and there are no unusual circumstances such as liquidation, shortages, and emergencies. Fair Market Value Price at which property would change hands between a buyer and a seller without any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts. Fair Market Value The price at which an item can be sold by a willing seller to a willing buyer, neither of which are under any pressure to buy or sell. Furthermore, it's assumed that both parties are dealing rationally, have knowledge of relevant facts, and are not related.
16 Fair Credit Reporting Act Federal law enacted in 1971 giving persons the right to see their credit records at credit reporting bureaus.
17 Fair Value Amount for which a security could be sold in a normal market. Fair Value The amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
18 Fairness A term indicating that an entity's financial condition and operating results are presented in a way that is understandable, appropriate, and comprehensive. Fairly presented financial statements are not slanted to favour one party over another and are not subject to management influence and limitations.
19 Falling-cost Industry An industry in which the lowest costs attainable by a firm fall as the scale of the industry expands.
20 Family Planning A health service which offers help and advice to couples to help the to decide if and when to have children and how many.
21 FAS Free Alongside Ship. Terms indicating that the seller's price includes delivery of goods at a ship's pier. Title to the goods will transfer to the buyer alongside the ship.
22 FASAB or Federal Accounting Standards Advisory Board An organization that sets GAAP in the U.S. for federal government entities.
23 FASB or Financial Accounting Standards Board A nongovernment private organization that sets GAAP in the U.S. for profit making entities and not-for-profit nongovernmental organizations.
24 FASB Statements of Financial Accounting Standards These are the official rules that have been released by the Financial Accounting Standards Board. These are part of the generally accepted accounting principles. Before a standard is released, the public had been able to review a discussion memorandum and an exposure draft and to make comments. To read these accounting pronouncements, go to www.fasb.org and select the Standards tab at the top of the page. FASB Financial Accounting Standards Board. A nongovernment private organization that sets GAAP in the U.S. for profit making entities and not-for-profit nongovernmental organizations. FASB Independent, private, non-governmental authority for the establishment of accounting principles in the United States.
25 FASB Interpretation An official pronouncement by the Financial Accounting Standards Board that involves a previously issued FASB Standard. FASB Interpretations are part of the generally accepted accounting principles.
26 FASB Pronouncements The statements, standards, interpretations and other financial reporting guidelines issued by the Financial Accounting Standards Board. The FASB pronouncements are available at www.FASB.org.
27 FASB Statement 116 The statement of the Financial Accounting Standards Board with the title Accounting for Contributions Received and Contributions Made. This statement was originally issued in June 1993 and applies to both nonprofit organizations and to for-profit businesses. This statement can be read at no cost at www.FASB.org.
28 FASB Statement 117 The statement of the Financial Accounting Standards Board entitled Financial Statements of Not-for-Profit Organizations. This statement was originally issued in June 1993 and can be read at no cost at www.FASB.org.
29 FASB Statements of Financial Accounting Concepts This series of output by the Financial Accounting Standards Board is part of the board's conceptual framework project. The original goal in the 1970's was to articulate the definitions, practices, and rules that were used in accounting. It was hoped that from this structured compilation new rules will flow more easily and logically. However, this series of statements is not viewed as part of the generally accepted accounting principles. Seven concepts statements have been issued and can be read at www.fasb.org under the tab entitled Standards.
30 Favorable Variance A difference between an actual cost and a budgeted or standard cost, and the actual cost is the lesser amount. In the case of revenues, a favorable variance occurs when the actual revenues are greater than the budgeted or standard revenues. Favorable Variance Excess of actual revenue over projected revenue, or actual costs over projected costs. Favourable Variance A variance which is the result of by using/spending a lesser amount of any given resource than the amount specified as the standard level or rate (spending less on labour for any given level of output than was expected), efficiency (less hours than expected for a given level of output), usage (less materials used for a given level of output) or price (less money paid to a supplier for a given level purchases).
31 Federal Income Tax Withholdings Payable This current liability account reports the amount a company owes the U.S. government as of the balance sheet date for the federal income taxes withheld from its employees' salaries and wages.
32 Federal Insurance Contributions Act (FICA) A reference used to indicate the combination of the Social Security tax and the Medicare tax. For the year 2011, the employee's portion of the FICA tax is 5.65% (the Social Security tax of 4.2% plus the Medicare tax of 1.45%) on the first $106,800 of an employee's salary and wages. On an employee's salary and/or wages in excess of $106,800 the employee's portion of the FICA tax is 1.45% (consisting of only the Medicare tax). In the year 2011, the employer's portion of the FICA tax is 7.65% (the Social Security tax of 6.2% plus the Medicare tax of 1.45%) on each employee's first $106,800 of salary and wages. On each employee's salaries and wages in excess of $106,800 the employer's portion is the Medicare tax of 1.45%. Therefore, the combined employee and employer FICA tax for 2011 is 13.3% (5.65% + 7.65%) on each employee's first $106,800 of salary and wages and then 2.9% (1.45% + 1.45%) on each employee's salary and wages in excess of $106,800.
33 Federal Reserve (Fed) The central bank of the United States of America.
34 Federal Reserve Board The central bank of the United States. Founded by Congress in 1913, the Fed is responsible for maintaining the stability of the U.S. economy. Its duties include balancing the supply of money and credit, regulating the banking system, and providing financial services to banks and the U.S. government. Investors closely watch the Fed?s moves, especially when it changes the discount rate, which is the interest rate banks pay for borrowing overnight from the Fed. Raising or lowering the discount rate influences short-term interest rates.
35 Federal Reserve System System established by the Federal Reserve Act of 1913 to regulate the U.S. monetary and banking system.
36 Federal Unemployment Tax A payroll tax paid solely by the employer and usually calculated as 0.8% times each employee's first $7,000 of annual wages or salaries. (The tax rate is 6.2% but a credit of up to 5.4% is usually given for contributions to the state unemployment fund.)
37 Federal Unemployment Taxes Taxes imposed on the employer by the federal government that provides benefits for a limited time period to employees who lose their job through no fault of their own.
38 Feedback Term used to refer to information concerning actual performance, particularly in comparison with the plan. The feedback process is a critical part of a management control system in order to test a given system or model to see if it is performing as planned. Timely feedback enables quick corrective action when things get out of hand.
39 Fees Charges billed for services rendered. They are tied into the montary value of those services. Professional fees apply to accounting, tax, and legal work. They may be on a flat basis or an hourly one. Fees payments made for the services of professionals.
40 Fees Earned An income statement account that reports the amount of service revenues earned during the time interval indicated in the heading of the income statement. (Under the accrual basis of accounting, fees earned are reported in the time period in which they are earned and not in the period in which the company receives payment.)
41 FEI Financial Executives Institute.
42 Fertility Rate The average number of children born to each woman in a country.
43 FG Inventory See inventory: finished goods.
44 Fiat Money Paper money or coinage that is neither backed by nor convertible into anything else but is decreed by the government to be accepted as legal tender and is generally accepted in exchange for goods and services and for the discharge of debts.
45 FICA Federal Insurance Contribution Act. FICA indicates the payroll taxes for both Social Security taxes and Medicare taxes.
46 FICA Expense: Delivery Under the accrual method of accounting, this account reports the employer's portion of the Social Security and Medicare tax that pertains to the period indicated in the heading of the income statement, whether or not the company has paid/remitted the FICA taxes within this time period. Since this account involves the delivery function of the business, the expense should be reported in the operating expense section of the company's income statement.
47 FICA Expense: Selling & Admin Under the accrual method of accounting, this account reports the employer's portion of the Social Security and Medicare tax that pertains to the period indicated in the heading of the income statement, whether or not the company has paid/remitted the FICA taxes within this time period. Since this account involves the selling and administrative functions of the business, the expense should be reported in the operating expense section of the company's income statement.
48 FICA Expense: Warehouse Under the accrual method of accounting, this account reports the employer's portion of the Social Security and Medicare tax that pertains to the period indicated in the heading of the income statement, whether or not the company has paid/remitted the FICA taxes within this time period. Since this account involves the warehouse functions of the business, the expense should be reported in the same section of the company's income statement as the warehouse salaries and wages are reported.
49 FICA Tax Payable This current liability account reports the amount a company owes (must remit) for its employees' Social Security and Medicare taxes as of the date of the balance sheet.
50 FICA Taxes Taxes designed to provide workers with supplement retirement. Employment disability, and medical benefit.
51 Fidelity Bond A bond which pays an employer up to an amount stated in the bond for losses caused by dishonesty or infidelity on the part of an employee.
52 Fiduciary A person to whom property is entrusted to hold, control, or manage for another. The fiduciary of a trust is the person who is legally responsible for managing the assets of the trust in a competent manner. Fiduciary An individual or institution responsible for holding or administering property owned by another. An executor, guardian, trustee, and administrator are examples of a fiduciary. Fiduciary Person who is responsible for the administration of property owned by others. Corporate management is a fiduciary with respect to corporate assets which are beneficially owned by the stockholders and creditors. similarly, a trustee is the fiduciary of a trust and partners owe fiduciary responsibility to each other and to their creditors.
53 Fiduciary Bond
54 Field Special Agent An IRS special agent in one of the Division's 29 field offices.
55 Field work The performance of audit procedures outside the CPA's office. Much field work, but not all, is done in the client's offices after the balance sheet date.
56 FIFO “First In First Out” inventory cost flow. FIFO or First In First Out inventory cost flow. FIFO Cost Flow Assumption See first in, first out (FIFO).
57 FIFO (First-In, First-Out) A method of valuing stock. This method is recording inventory and its associated cost flow where the first items that were purchased are then assumed/recorded as to be the first items sold. This means ending inventory holds the most recent purchased items. FIFO (First-in, First-out) The assumption that the items of inventory which were purchased first are sold first; and consequently at the items remaining in inventory at the end of the period are those most recently purchased or produced.
58 File Collection of information stored as records. For example, the records for all charge customers at the local department store collectively form the accounts receivable file.
59 Filing of Returns Taxpayers meeting statutory requirements must file various returns on the prescribed forms. And they must be filed timely or the y may not be considered as filed.
60 Final Accounts Accounts produced at the end of the year giving details of the profit and loss and balance sheet made over the year and the worth of the business.
61 Final Demand Demand for the economy's final output.
62 Final Goods Goods that are not used as inputs by other firms but are produced to be sold for consumption, investment, government, or exports during the period under consideration.
63 Finance The field that studies how people make decisions regarding the allocation of resources over time and the handling of risk.
64 Finance The science of the management of money and other financial ASSETS.
65 Finance Charge Refers to the amount in total $ a loan will cost. It includes all the interest payments over the full life of the specified loan, interest to be paid at closing of the loan, any origination fee or other charges that were paid to the lender/broker.
66 Finance Charges I nterest charged on loans made to you. For example, the interest rate on a credit card or the interest rate on a car loan is a finance charge.
67 Finance House A specialist institution which provides funds for hire purchase agreements.
68 Finance Lease A lease that transfers substantially all the risks and rewards incident to ownership of an asset. Title may or may not eventually be transferred.
69 Financial Account of the Balance of Payments The record of the flows of money into and out of the country for the purposes of investment or as deposits in banks and other financial institutions.
70 Financial Accounting Information developed in conformity with generally accepted accounting principles (GAAP). It involves the recording and summarisation of business transactions and events. Financial accounting relates to the preparation of financial statements for external users such as creditors, investors, and suppliers. The financial statements include the balance sheet, income statement, and statement of changes in financial position. Financial Accounting provides information that is designed to satisfy the needs of external users. Such reporting is usually done in the form of financial statements. Financial Accounting Refers to the accounting associated with the preparation of the main financial statements: income statement, balance sheet, statement of cash flows, statement of retained earnings, statement of shareholders' equity.
71 Financial Accounting the flied of accounting that provide economic and financial information for inventors, creditors and other external users.
72 Financial Accounting Foundation (FAF) This organization oversees the Financial Accounting Standards Board (FASB). It selects the members of the FASB and raises funds to assist in paying for its operations.
73 Financial Accounting Standards Official promulgations, known as Statements of Financial Accounting Standards, by the Financial Accounting Standards Board (FASB) which are part of Generally Accepted Accounting Principles (GAAP) In The United States.
74 Financial Accounting Standards Board (FASB) A private organization that establishes generally accepted accounting principles (GAAP). Financial Accounting Standards Board (FASB) Independent, private, non-governmental authority for the establishment of accounting principles in the United States. Financial Accounting Standards Board (FASB) A nongovernment group of seven members assisted by a large research staff which is responsible for the setting of accounting standards, rules, and principles. Go to www.fasb.org for more information.
75 Financial Activities Activities that result in changes in the size and composition of the equity capital and borrowings of the enterprise.
76 Financial Analysis Use and transformation of financial data into a form that can be used to monitor and evaluate the firm's financial position, to plan future financing, and to designate the size of the firm and its rate of growth.
77 Financial Asset Any asset that is: (a) cash; (b) a contractual right to receive cash or another financial instruments with another enterprise under conditions that a potentially favorable; or (c) a contractual right to exchange; financial instrument with another enterprise under conditions that a potentially favorable; or (d) An equity instrument of another enterprise.
78 Financial Asset or Liability Held for Trading A financial asset or liability that was acquired or incurred principally for the purpose of generating a profit form short-term fluctuations in price dealer’s margin. A financial asset should be classified as held for trading if, regardless of why it was acquired it is part of a portfolio for which there evidence of a recent actual pattern of short-term profit-taking. Derivative financial assets and derivative financial liabilities are always deemed held for trading unless they are designated; effective hedging instruments.
79 Financial Audit Financial audit, or more accurately, the audit of financial statements, is the review of the financial statements of a company or any other legal entity (including governments), resulting in the publication of an independent opinion on whether those financial statements are relevant, accurate, complete, and fairly presented. Financial audits are typically performed by firms of practicing accountants due to the specialist financial reporting knowledge they require. The financial audit is one of many assurance or attestation functions provided by accounting and auditing firms, whereby the firm provides an independent opinion on published information. Many organisations separately employ or hire internal auditors, who do not attest to financial reports but focus mainly on the internal controls of the organization. External auditors may choose to place limited reliance on the work of internal auditors.
80 Financial Auditing The auditor’s objective in a financial audit is to render an opinion on whether the information appearing a set of financial statements is presented fairly in conformity with General Accepting Accounting Principles (GAAP). These engagements are conducted after the transaction have occurred, and are performed in accordance with Generally Accepted Auditing Standards (GAAS). The financial audit is an attest function and the auditor is responsible to the client and any third parties that may rely on the financial statements issued.
81 Financial Budget Is one that embraces the impacts of the financial decisions of the firm. It is a plan including a budgeted balance sheet, which shows the effects of planned operations and capital investments on assets, liabilities, and equities. It also includes a cash budget, which forecasts the flow of cash and other funds in the business.
82 Financial capital Money that a firm raises to carryon its business, including both equity capital and debt. Also called money capital.
83 Financial Crowding Out When an increase in government borrowing diverts money away from the private sector.
84 Financial Decisions Decisions that involve: (1) determining the proper amount of funds to employ in a firm; (2) selecting projects and capital expenditure analysis; (3) raising funds on the most favourable terms possible; and (4) managing working capital such as inventory and accounts receivable.
85 Financial Deregulation The removal of or reduction in legal rules and regulations governing the activities of financial institutions.
86 Financial Engineering Application of economic principles to the dynamics of securities markets, especially for the purpose of structuring, pricing, and managing the risk of financial contracts.
87 Financial Expense 1. generally refers to a firm's interest expense on its long-term debt. Or 2. it may include interest and other related charges including losses on foreign exchange due to debt; also the net expense for the selling of securities; the amortisation relating to any bond redemption premiums; and any additions or changes to the provisions for financial liabilities and any possible charges and other related impairment losses relating to the firms other investments.
88 Financial Flexibility Where employers can vary their wage costs by changing the composition of their workforce or the terms on which worker are employed.
89 Financial Forecasts are prospective financial statements that present expected future financial position, results of operations, and cash flows based on expected conditions. A financial forecast is of the most likely future scenario.
90 Financial Gearing Reflects the borrowing levels that the firm has undertaken. The operating income of the firm will see increased volatility with higher levels of financial gearing i.e. borrowing.
91 Financial Institution An institution or organisation which may be public or private that is engaged in the act of collecting funds from the public and/or other organisations with the intention of investing these funds into financial assets. Financial Institution confirmation request A confirmation sent to the client's bank or other financial institution asking the bank to confirm directly to the auditor information about balances at a particular date. Financial Institution Organization engaged in any of the many aspects of finance including commercial banks, thrift institutions, investment banks, securities brokers and dealers, credit unions, investment companies, insurance companies, and real estate investment trusts.
92 Financial Institution Confirmation Request A confirmation sent to the client's bank or other financial institution asking the bank to confirm directly to the auditor information about balances at a particular date.
93 Financial Instrument Any contract that gives rise to both financial asset to one enterprise and financial liability or equity instrument of anther enterprise.
94 Financial Leverage The ability to increase earnings for stockholders by earning more on ASSETS than is paid in interest on debt incurred to finance the assets. Financial Leverage The portion of a firm's assets financed with debt instead of equity. It involves contractual interest and principal obligations. Financial leverage benefits common stockholders as long as the borrowed funds generate a return in excess of the cost of borrowing, although the increased risk can offset the general cost of capital. Financial Leverage Using debt (such as loans and bonds) to acquire more assets than would be possible by using only owners' funds. Also referred to as trading on equity.
95 Financial Liability Any liability that is a contractual obligation: (a) to deliver cash or another financial asset or another enterprise; or (b) To exchange financial instruments with another enterprise under condition those are potentially unfavorable.
96 Financial Markets Markets through which saving passes before it goes either to governments or to business firms for investment purposes.
97 Financial Planner A professional engaged in providing personal financial planning services to individuals. A financial planner assists a client in the following ways: (1) assesses a client's financial history, such as tax returns, investments, retirement plan, wills, and insurance policies; (2) helps decide on a financial plan, based on personal and financial goals, history, and preferences; (3) identifies financial areas where a client may need help, such as building up retirement income or improving investment return; (4) prepares a financial plan based on the individual situation and discusses it thoroughly; (5) helps implement the financial plan, including referring the client to specialists, such as lawyers or accountants, if necessary; and (6) reviews the situation and financial plan periodically and suggests changes when needed.
98 Financial Planning Is the task of determining how a business will afford to achieve its strategic goals and objectives.
99 Financial Position The relationship of the assets, liabilities, and equities of an enterprise, as reported in the balance sheet. Financial Position The status or position of a firm's or other entity assets, liabilities, and owners equity position. This is shown by the financial statements of the entity.
100 Financial Ratio Mathematical relationship between one quantity and another. There are many categories of ratios such as those that evaluate a business entity's liquidity, solvency, return on investment, operating performance, asset utilization, and market measures. An example of a ratio is the earnings yield that equals dividends per share divided by market price per share.
101 Financial Ratio Analysis Is a method used by interested parties such as investors, creditors, and management to evaluate the past, current, and projected conditions and performance of the firm. Ratio analysis is the most common form of financial analysis. It provides relative measures of the firm's conditions and performance. When using the financial ratios, a financial analyst makes two types of comparisons: (1) Industry comparison. The ratios of a firm are compared with those of similar firms or with industry averages or norms to determine how the company is faring relative to its competitors. Industry average Or (2) trend analysis. A firm's present ratio is compared with its past and expected future ratios to determine whether the company's financial condition is improving or deteriorating over time. Financial Ratio Analysis Here is the list of ratios
102 Financial Reporting Presenting financial data of a company's position, operating performance, and funds flow for an accounting period. Financial Reporting is a process through which companies communicate information to the public.
103 Financial Reporting Includes the main financial statements (income statement, balance sheet, statement of cash flows, statement of retained earnings, statement of stockholders' equity) plus other financial information such as annual reports, press releases, etc.
104 Financial Reporting Framework is a set of criteria used to determine measurement, recognition, presentation, and disclosure of all material items appearing in the financial statements. financial statements are a structured representation of historical financial information, including related notes, intended to communicate an entity's economic resources and obligations at a point in time or the changes therein for a period of time in accordance with a financial reporting framework.
105 Financial Restructuring Normally refers to a set of processes and procedure aimed at avoiding the possible liquidation of the firms. It often involves agreement with third parties/entities to help satisfy the creditors' claims under a variety of different terms and possible conditions.
106 Financial Results Refers to the different financial statements that need to be provided to be in compliance with the GAAP guidelines. They but usually relate to a month, quarter, or year.
107 Financial Statement Report containing financial information about an organisation. The required financial statements are balance sheet, income statement, and statement of changes in financial position. They may be combined with a supplementary statement to depict the financial status or performance of the organization.
108 Financial Statement Financial statement (or financial report) is the formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by accountants.
109 Financial Statement Analysis Analyzing financial statements by using financial ratios, horizontal analysis, and vertical analysis. Financial Statement Analysis It is a method used by interested parties such as investors, creditors, and management to evaluate the past, current, and projected conditions and performance of the firm. ratio analysis is the most common form of financial analysis. It provides relative measures of the firm's conditions and performance. When using the financial ratios, a financial analyst makes two types of comparisons: (1) Industry comparison. The ratios of a firm are compared with those of similar firms or with industry averages or norms to determine how the company is faring relative to its competitors. Industry average Or (2) trend analysis. A firm's present ratio is compared with its past and expected future ratios to determine whether the company's financial condition is improving or deteriorating over time.
110 Financial Statements Presentation of financial data including balance sheets, income statements and statements of cash flow, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for a period then ended. Financial Statements Usually financial statements refer to the balance sheet, income statement, statement of cash flows, statement of retained earnings, and statement of stockholders' equity. The balance sheet reports information as of a date (a point in time). The income statement, statement of cash flows, statement of retained earnings, and the statement of stockholders' equity report information for a period of time (or time interval) such as a year, quarter, or month. Financial Statements A complete set of financial statements includes the following components: (a) balance sheet; (b) income statement; (c) a statement showing either; (i) all changes in equity; or (ii) changes in equity other than those arising from capital transactions with owners and distributions to owners; (d) cash flow statement; and (e) accounting policies and explanatory notes.
111 Financial Statements of Nonprofits The financial statements of nonprofits include the statement of financial position, the statement of activities, the statement of cash flows, notes to the financial statements, and the statement of functional expenses. Learn more at Nonprofit Accounting.
112 Financial Viability Ability of a firm or other entity to be able to continue to accomplish its operating and other objectives and achieve its mission or goals over the long term period.
113 Financing Activities Cash flow activities that include (a) obtaining cash from issuing debt and repaying the amounts borrowed and (b) obtaining cash from stockholders, repurchasing shares, and paying dividends. Financing activities involve long-term liabilities and stockholders’ (or owner’s) equity. Financing activities are reported in its own section of the financial statement known as the statement of cash flows (SCF) or cash flow statement. Examples of financing activities that involve long-term liabilities include the issuance or redemption of bonds. An increase in bonds payable is reported as a positive amount in the financing activities section of the SCF. The positive amount signifies a source of cash, or that cash was provided by issuing additional bonds. A decrease in bonds payable will be reported as a negative amount in the financing activities section of the cash flow statement. A negative amount connotes that cash was used to repurchase or redeem the corporation’s bonds. Examples of financing activities involving stockholders’ equity include the issuance of common stock or preferred stock. Increases in these stock accounts will be reported as positive amounts in the financing activities section of the SCF. Positive amounts communicate that cash was provided by issuing more shares of stock—a source of cash. Examples of uses of cash (which are reported as negative amounts) in the financing activities section of the cash flow statement include a corporation’s purchase of its own stock, and dividends declared and paid on its stock. (The increase in retained earnings resulting from the corporation’s net income is reported in the operating activities section of the SCF.) Financing Activities The third section of the statement of cash flows.
114 Finished Goods are completed manufactured items that a company has produced for sale to customers. Finished Goods The products that have been made and are ready for sale.
115 Finished Goods Inventory An inventory account unique to manufacturing operations. Finished Goods Inventory Manufacture item that are completed and ready for sale. Finished Goods Inventory That percentage of items in recorded in the Inventory which are completed in there manufactured state and are available and ready for sale. Finished Goods Inventory See inventory: finished goods (FG).
116 Firm A business partnership, especially when it is unincorporated.
117 Firm Commitment A binding agreement for the exchange of a specified quantity of resources at a specified price on a specified future date or dates.
118 First In First Out (FIFO) Method Inventory costing method that assumes that the cost of the earliest goods purchased is the first to be recognized as cost of goods sold.
119 First in, First out (FIFO) A cost flow assumption where the first (oldest) costs are assumed to flow out first. This means the latest (recent) costs remain on hand. First In, First Out (FIFO) Accounting method of valuing inventory under which the costs of the first goods acquired are the first costs charged to expense. Commonly known as FIFO. First in, First out (FIFO) Method of inventory valuation that assumes merchandise is sold in the order of its receipt. The first-price in is the first-price out. Hence cost of sales is based on older dollars. Ending inventory is reflected at the most recent prices. First-in, First-out (FIFO) inventory costing method assumes that the costs of earliest inventories acquired are the first to be recognized as the cost of goods sold.
120 First in, Still here (FISH) A parody of FIFO used to describe a very slow-moving item in inventory.
121 Fiscal Used in relation to government accounting and means Belongs to the public (government) treasury or is pertaining to the area public finance.
122 Fiscal Drag The tendency of automatic fiscal stabilisers to reduce the recovery of an economy from recession.
123 Fiscal Period A period of time into which the fiscal year is then divided. In Hong Kong the fiscal year is 1st of April to 31st of March.
124 Fiscal Policy The use of the government's tax and spending policies in an effort to influence the behaviour of such macro variables as GDP and total employment.
125 Fiscal Quarter Any of the individual four different financial accounting quarters that exist as a part of the fiscal year.
126 Fiscal Stance How deflationary or re-flationary the budget is.
127 Fiscal Year (Financial Year) The term used for a business's accounting year. The period is usually twelve months which can begin during any month of the calendar year (e.g.. 1st April 2001 to 31st March 2002). Fiscal Year An accounting period that is one year in length. Fiscal Year An accounting year that ends on a date other than December 31. For example, a school district might have a fiscal year of July 1, 2010 through June 30, 2011. A retailer might have a fiscal year consisting of the 52 or 53 weeks ending on the Saturday nearest to the last day of February. Fiscal Year Period of 12 consecutive months chosen by an entity as its accounting period which may or may not be a calendar year. Fixed asset - Any tangible asset with a life of more than one year used in an entity's operations.
128 FISH See first-in, still here (FISH).
129 Fisher Effect The one-for-one adjustment of the nominal interest rate to the inflation rate.
130 Five-Year Plans Economic plans set up by the central government in a country that plots the future course of its economic development.
131 Fixed Annuity Investment contract sold by an insurance company that guarantees fixed payments, either for life or for a specified period, to an annuitant.
132 Fixed Asset Turnover A measure of the management's ability to be able to generate revenue flow from the firms investments in its fixed assets.
133 Fixed Assets A term used when referring to property, plant, and equipment. Fixed assets other than land are depreciated. Fixed Assets Assets that are generally not converted to cash within one year. Examples are equipment and vehicles. Fixed Assets Tangible long term assets used in the continuing operation of a business that are unlikely to change for a long time. Fixed Assets These consist of assets which are likely to be kept by the business for more than one year. Most fixed assets, apart from land, depreciate over time so the value of these will fall on the balance sheet from one year to the next.
134 Fixed Assets (net) Plant, property, and equipment, net of the accumulated depreciation or the depletion of the asset.
135 Fixed Budget A budget that does not get adjusted for any changes in the level of sales or service.
136 Fixed Costs Costs that do not vary with the number of units produced. For example, depreciation. In the long run all costs are variable and some costs have both a fixed and variable component. Fixed Costs Costs that remain constant within a defined range of activity, volume, or time period. Fixed Costs remain the same as the level of activity (cost driver) changes. Fixed Costs The costs that do not vary with output. Fixed costs include such things as rent on a building and the price of machinery. These costs are fixed for a certain period of time; in the long run they are variable. Fixed Costs See also fixed expenses.
137 Fixed Exchange Rate An exchange rate that is maintained within a small range around its publicly stated par value by the intervention of a country's central bank in foreign market operations.
138 Fixed Expenses Expenses which do not change in response to reasonable changes in sales or other activity. Fixed Expenses The expenses of a firm that remain constant regardless of changes in output or sales volume.
139 Fixed Factor An input that cannot be increased in supply within a given time period.
140 Fixed Income Used to refer to types of investment that give or yield a regular or fixed amount. Fixed income can also be used to apply to people's income which does not change in each period of time e.g. pensions which give a fixed income or fixed income investment bonds.
141 Fixed Investment Purchases, made by business, of capital goods, such as machinery and office equipment.
142 Fixed Manufacturing Overhead Applied The fixed manufacturing costs (e.g., property tax, rent, and depreciation on factory) that have been assigned to (aborbed by) the products manufactured via a predetermined rate. Ideally, by the end of the accounting year the amount applied will equal the amount actually incurred.
143 Fixed Manufacturing Overhead Budget Variance A variance arising in a standard costing system that indicates the difference between the actual amount of fixed manufacturing overhead incurred and the budgeted amount of fixed manufacturing overhead.
144 Fixed Manufacturing Overhead Incurred The actual cost incurred for manufacturing costs that does not change as production volume changes. Examples include the property tax, rent, and depreciation of the factory building and equipment, and the salaries of the manufacturing management.
145 Fixed Manufacturing Overhead Volume Variance A variance arising in a standard costing system that indicates the difference between the standard amount of fixed manufacturing overhead for the good units produced (standard hours times standard rate) and the budgeted amount of fixed manufacturing overhead.
146 Fixed Overhead Expenses like rent, utilities, loan payments, etc., that do not change when sales volume increases or decreases. Variable overheads are those expenses which vary or change directly with output.
147 Fixed Overhead Budget Variance Also referred to as the fixed overhead spending variance. The difference between the actual fixed overhead incurred and the amount of fixed overhead that had been budgeted.
148 Fixed Overhead Spending Variance Also referred to as the fixed overhead budget variance. The difference between the actual fixed overhead incurred and the amount of fixed overhead that had been budgeted.
149 Fixed Price 1.the price that serves as a standard for the valuation of certain inventory accounts (i.e., raw materials, work in progress, and finished goods) in standard costing. OR 2. the price that must be charged under a contract regardless of production costs. Or 3. an economic concept utilized by governmental units establishing a fixed price for a price floor (below which the price is not legally allowed to fall) and price ceilings (above which the price is not legally allowed to rise) on certain regulated goods and services. Or 4. the price at which investment bankers agree to sell the issue to the investing public in a public offering of new security issues.
150 Fixed Price In a public offering of new securities, price at which investment bankers in the underwriting syndicate agree to sell the issue to the public.
151 Fixed Price Contract A contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which in some cases is subject to cost escalation clauses. A contract which provides for a firm price.
152 Fixed Production Overheads Those indirect costs of production that remains relatively constant regardless of the volume of production, such as depreciation and maintenance of factory buildings and equipment, and the cost of factory management and administration.
153 Fixed Rate Loan A loan in which the interest rate does not change over the life of the loan.
154 Fixture Attachment to real property that is not intended to be moved and would create damage to the property if it were moved.
155 Fixtures & Fittings This is a class of fixed asset which includes office furniture, filing cabinets, display cases, warehouse shelving and the like.
156 Flash Earnings A news release issued by a company that shows its latest quarterly results.
157 Flat (rate of) Interest Is when interest is charged on the full amount of the original loan as opposed to the declining balance of the loan.
158 Flat Rate A per unit price that remains constant regardless of the volume purchased.
159 Flat Tax One in which the income tax rate is the same for all income levels. It is a proportional tax. A pure flat tax would eliminate all deductions, exemptions, and loopholes, and tax all income at the same low tax rate.
160 Flexible Budget A budget that flexes with volume. Under a flexible budget the budgeted amount of manufacturing overhead will increase if the company produces more units than planned. The flexible budget will decrease if the company actually produces fewer units than planned.
161 Flexible Budget (Variable Budget) A budget based on different volumes of activity. It is an extremely useful tool for the comparison the actual cost incurred to the cost that are allowed for a given activity level. It is dynamic by its nature rather than static. By using the cost volume formula (or flexible budget formula), a series of budgets can be developed easily for various levels of activity. Flexible budgeting is a way of distinguishing between the fixed and variable expenses, thus allowing for a more flexible budget that is able to be automatically adjusted (via changes in variable cost totals) to the particular level of activity which is actually achieved. Thus variances between actual costs and budgeted costs are adjusted for volume ups and downs before differences due to price and quantity factors are computed. The primary use of the flexible budget is for accurate measure of performance by comparing actual costs for a given output with the budgeted costs for the same level of output.
162 Flexible Exchange Rate An exchange rate that is left free to be determined by the forces of demand and supply on the free market, with no intervention by the monetary authorities.
163 Flexible Firm A firm that has the flexibility to respond to changing market conditions by changing the composition of its workforce.
164 Flexible Spending Account (FSA) An employee benefit that allows money to be deducted from your paycheck on a pre-tax basis, to pay for qualifying health care and dependent care expenses. A health care FSA can save you substantial sums on a wide range of medical, dental, and vision expenses that are not covered by your firms insurance plan. A dependent care FSA can be used to pay for childcare and eldercare costs. Contributions to your FSA accounts are exempt from federal and in some cases state income taxes. The tax exemption in effect produces savings of as much as 40% or more. You typically can contribute a maximum of $3,000 annually to a health care FSA and $5,000 annually to a dependent care FSA. The catch is that you forfeit any money left in your account at the end of the year, so you must carefully budget your expenses for the year.
165 Flexible Workforce A workforce that can respond (in quantity and type) to changes in demand a business may face.
166 Flexitime (Flexi-Time) Scheduling concept that allows for non-traditional work hours to be employed on a systematic basis. Hours can be arranged for different times or periods of time to accommodate such aspects as efficiency, traffic, motherhood, disabilities, continuous operations, etc.
167 Float 1. the amount of funds represented by checks that have been issued but not yet collected. Or 2. to issue new securities, usually through an underwriter. Or 3. time between the deposit of checks in a bank and payment.
168 Float The time between when a check is written and when the check clears the bank account on which it is drawn.
169 Floatation Cost - Cost of issuing new securities in the market.
170 Floating Exchange Rate When the government does not intervene in the foreign exchange markets, but simply allows the exchange rate to be freely determined by demand and supply.
171 Floor A term used in the lower of cost or market (LCM) that serves as a constraint for the market value. In the LCM for inventory, the floor is the net realizable value (NRV) minus the normal profit. This means that if the replacement cost of an inventory item is less than this amount, this amount becomes the market amount that will be compared with the item's cost for valuing inventory under LCM. Floor Term used when discussing inventories. Inventory cannot be valued lower than the "floor" which is the net realizable value of the inventory less an allowance for a normal profit margin.
172 Flotation Cost Cost of issuing new stocks or bonds.
173 Flow Activities that occur over time. For example, income is a flow that occurs per week, per month, or per year. Consumption is also a flow, as is production.
174 Flow of Funds This is a report which shows how a balance sheet has changed from one period to the next.
175 Flow Production Very large scale production of a standardised product, where each operation on a unit is performed continuously one after the other, usually on a production line. Also called mass production because of the large quantity of a standardised product that is produced.
176 Flow-Through Contributions See pass-through contributions.
177 Flow-Through Entity An entity where the income, losses, and certain other items of income and deduction are passed through to the owners. For example, partnerships, trusts, and S corporations.
178 Flowchart Method of representing in schematic form the flow of data in a system. The flowchart shows the points of input and output, the logic or sequence of the various processing steps in the system, and the relationship of one element of the system to the other parts of the system or to other information systems. Flowchart A schematic representation of a sequence of operations in an accounting system or computer program. Also called a flow diagram or flow sheet.
179 FOB Indicates the point at which title to goods passes. FOB Free on Board. See FOB destination and FOB shipping point.
180 FOB (Free on Board) Destination Freight terms indicating that ownership of the good passes to the buyer when the public carrier accepts the goods from the seller. Freight terms including that the seller places goods free on board to the buyer place of business and the seller pays the freight costs.
181 FOB (Free on Board) Shipping Point Freight term indicating that ownership of the goods remains with the seller until the goods reach the buyer.
182 FOB Destination A shipping term that means that the seller bears transportation costs to the place of delivery. FOB Destination implies terms of sale under which title of goods passes to the buyer at the point of destination. FOB Destination Terms indicating that the seller will incur the delivery expense to get the goods to the destination. With terms of FOB destination the title to the goods usually passes from the buyer to the seller at the destination. This means that goods in transit should be reported as inventory by the seller, since technically the sale does not occur until the goods reach the destination.
183 FOB Shipping Point A shipping term that means that the buyer bears transportation costs from the point of origin. FOB Shipping Point Freight terms including that the seller places goods free on the board the carrier and the buyer pays the freight costs. FOB Shipping Point implies terms of sale under which title of goods passes to the buyer at the point of shipment. FOB shipping point is sometimes called FOB origin. FOB Shipping Point Terms indicating that the buyer must pay to get the goods delivered. (The buyer will record freight-in and the seller will not have any delivery expense.) With terms of FOB shipping point the title to the goods usually passes to the buyer at the shipping point. This means that goods in transit should be reported as a purchase and as inventory by the buyer. The seller should report a sale and an increase in accounts receivable.
184 Folio 1. a manuscript or book that consists of sheets of paper that have been folded in the middle to make four pages. Or 2. a sheet of any printed or written material . Or 3. a system of giving pages numbers. Or 4. with reference to investments, refers to an unstructured mixed basket of various common stocks that may or may not represent a particular stock index, a specific sector or specific theme, or an managed portfolio, that may be modified by the investor or their advisor to meet the differing tax and expenditure needs of its beneficial owner.
185 Foot a column is to add a column of numbers. To test footing is to add the column again to check accuracy. Foot A word that means to add a column of numbers as in "Foot the amounts listed in column A."
186 Footing Summary of the debits (left side of any account) and credits (right side of any account) to obtain a new balance.
187 Footnote (Accounting) Explanatory data that follows the financial statements and is integrally related to them. Footnotes help the user understand financial statement figures and any other matters essential in gauging a company's financial position.
188 Footnotes See notes to financial statements.
189 For-Profit Organization A sole proprietorship, partnership, or corporation organized for the purpose of earning profits and enhancing the financial position of the owners.
190 Forecast Prospective financial statements that are an entity's expected financial position, results of operations, and cash flows. Forecast 1. projection of future financial position and operating results of an organisation. Or 2. projection or estimate of future sales, revenue, earnings, or costs.
191 Forecasted Balance Sheet A balance sheet that projects the financial position of a business for a future period.
192 Forecasted Income Statement An income statement that projects the net income of a business for a future period.
193 Forecasting of Cash Flow Projecting the cash receipts and the cash payments for a future period.
194 Foreclosure Seizure of collateral by a creditor when default under a loan agreement occurs.
195 Foreign Aid Refers to gifts or soft loans (below the market rate) made to developing countries from official sources.
196 Foreign Corporation A corporation which is not organized under the laws of ones territories or states. Taxing of foreign corporations depends on whether the corporation has Nexus or effectively connected income in that state.
197 Foreign Currency A currency other than the reporting currency of an enterprise.
198 Foreign Currency Transaction A transaction which is denominated in or requires settlement in a foreign currency. Foreign Currency Transaction One that requires settlement in a currency other than the entity's domestic currency. Foreign Currency Translation Restating foreign currency in equivalent dollars; unrealized gains or losses are postponed and carried in Stockholder's Equity until the foreign operation is substantially liquidated.
199 Foreign Entity A foreign operation, the activities of which are not an integral part of those of the reporting enterprise.
200 Foreign Exchange Actual foreign currencies or various claims on them, such as bank balances or promises to pay, that are traded on the foreign exchange market. Foreign Exchange Instruments employed in making payments between countries.
201 Foreign Exchange Market The market for buying and selling foreign currencies.
202 Foreign Exchange Rate The price of foreign currency in terms of domestic currency, or vice versa.
203 Foreign Operation A subsidiary, associate, joint venture or branch of the reporting enterprise, the activities of which are based or conducted in a country other than the country of the reporting enterprise.
204 Foreign Tax Credit A U.S. taxpayer that pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determinable us dollar amount. This is usually done on the annual individual tax return and there is s specific form provided for this.
205 Forensic Accountants Forensic accountants often assist in professional negligence claims where they are assessing and commenting on the work of other professionals. Forensic accountants may be involved in recovering proceeds of crime and in relation to confiscation proceedings concerning actual or assumed proceeds of crime or money laundering. In the United Kingdom, relevant legislation is contained in the Proceeds of Crime Act 2002. In India there is a separate breed of forensic accountants called Certified Forensic Accounting Professionals. Some forensic accountants are also Certified Forensic Accounting Professionals, Certified Fraud Examiners, Certified Public Accountants, Chartered Accountants or ACCAs.
206 Forensic Accounting A science (i.e., a department of systemized knowledge) dealing with the application of accounting facts gathered through auditing methods and procedures to resolve legal problems. Forensic accounting is much different from traditional auditing. Forensic accounting is a specialty requiring the integration of investigative, accounting, and auditing skills.
207 Forensic Audit An examination of evidence regarding an assertion to determine its correspondence to established criteria carried out in a manner suitable to the court. An example would be a Forensic Audit of sales records to determine the quantum of rent owing under a lease agreement, which is the subject of litigation.
208 Forensic Investigation The utilization of specialized investigative skills in carrying out an inquiry conducted in such a manner that the outcome will have application to a court of law. A Forensic Investigation may be grounded in accounting, medicine, engineering or some other discipline.
209 Foreseeable What may be reasonably anticipated.
210 Forex Foreign exchange market.
211 Forgivable Loans Loans which the lender undertakes to waive payment of under certain prescribed conditions.
212 Form 10-K The annual report to the Securities and Exchange Commission (SEC), a U.S. government agency. The Form 10-K must be filed by corporations whose stock is publicly-traded on a U.S. stock exchange. The report contains the corporation's financial statements (including footnotes) and a significant amount of other financial and nonfinancial information.
213 Form 10Q SEC filing which is the quarterly report due 45 days after each of the first three quarter.ends of each fiscal year.
214 Form 8K SEC filing which is a filing that must be made on the occurrence of an event that is deemed to be of significant importance to SECURITY holders.
215 Form 990 Form 990 is the Internal Revenue Service (IRS) form entitled Return of Organization Exempt from Income Tax. This federal form must be filed annually by tax exempt organizations. However, some organizations such as churches are exempt from filing, and small organizations are allowed to file Form 990-EZ. The information provided on Form 990 is public information and is available from the website guidestar.org.
216 Formal Groups Groups specifically set up by a carry out tasks. They have certain formal rules of behaviour.
217 Formal Organisation The relationships between the employees and the organisational structure determined by business as shown on the organisation chart.
218 Formula A standard and systematic procedure or process for solving a class/variety of different mathematical problems.
219 Forward Exchange Market Where contracts are made today for the price at which currency will be exchanged at some specified future date.
220 Forward Supply Contract A contract for future supply of definite quantities of goods or services over a fixed period.
221 Forward Vertical Integration Merging with a firm involved in the next stage of production.
222 Fractional Reserve System A banking system in which commercial banks are required to keep only a fraction of their deposits in cash or on deposit with the central bank.
223 Framework of Bangladesh Accounting Standards Framework for the preparation and presentation of financial statements in compliance with Bangladesh accounting standards.
224 Franchise An agreement where a business (the franchisor) sells rights to other businesses (the franchisees) allowing them to sell products or use the company name. Franchise Contractual arrangements under which the franchisor grants the franchisee that right it sell certain product, provide specific service, or use certain trade mark, usually within a degenerate geographical area. Franchise Legal arrangement whereby the owner of a trade name, franchisor, contracts with a party that wants to use the name on a non-exclusive basis to sell goods or services, franchisee. Frequently, the franchise agreement grants strict supervisory powers to the franchisor over the franchisee which, nevertheless, is an independent business.
225 Franchise Tax State tax which is imposed on a state-chartered corporation for the right to do business under its corporate name.
226 Franchising Where a firm is given the license to operate a given part of an industry for a specified length of time.
227 Franchisor One who own the franchise rights i.e. the seller of the franchises.
228 Fraud A deliberate deception to secure unfair or unlawful gain. False representation intended to deceive relied on by another to that person's injury. Fraud includes fraudulent financial reporting undertaken to render financial statements misleading, sometimes called management fraud, and misappropriation of assets, sometimes called defalcations. Fraud Willful misrepresentation by one person of a fact inflicting damage on another person. Fraud 1. falsification of a tax retur by an individual. Examples of tax fraud are intentionally not reporting taxable income or overstating expenses. Tax fraud is a criminal act. Or 2. deliberate action by individual or entity to cheat another, causing damage. There is typically a misrepresentation to deceive, or purposeful withholding of material data needed for a proper decision. An example of fraud is when a bookkeeping falsifies records in order to steal money.
229 Fraud Auditing The objective of a fraud audit is for the auditor to assess the likelihood that fraud will be detected or prevented in a corporate or regulatory environment. Typically this assessment is made by reviewing existing controls to prevent and detect fraudulent transactions. Recommendations to implement procedures to detect or prevent fraud may also be made. Fraud audits are usually conducted on a proactive basis, and should not be confused with fraud investigations which are conducted after the fact, and possibly by forensic accountants. The fraud auditor is obligated to its employer or client.
230 Free and Clear In real estate the term is used to indicate that the investment analysis has ignored any debt on the property. (Debt can distort the analysis by increasing the return if the interest rate is lower than the rate of return on property and vice versa if the interest rate is higher.)
231 Free Cash Flow Cash provided by operating activities adjusted for capital expenditures and dividends paid. Free Cash Flow Free cash flow is the cash flow available to equity and debt holders, or, in other terms, the normal cash flow of the organization less necessary capital expenditures. Normal cash flow is a less conservative measure of the organization's cash flow because it doesn't take into account the capital expenditures necessary to maintain the health of the business. Free Cash Flow The amount of cash that remains after deducting the funds a company must commit to continue operating at its planned level; net cash flows from operating activities, minus dividends, minus net capital expenditures. Free Cash Flow The cash flow from operating activities minus the amount of capital expenditures. Other variations are also used.
232 Free Cash Flow Per Share The amount of free cash flow divided by the weighted average number of common shares of stock outstanding during the year.
233 Free Enterprise A system in which private business firms are able to obtain resources. to organize those resources and to sell the finished product in they choose.
234 Free Good A product for which the quantity supplied exceeds the quantity demanded at a price of zero; therefore, a good that does not command a positive price in a market economy. A free good has no opportunity cost.
235 Free On Board (FOB) Indicates the point at which title to goods passes. Free on Board See FOB destination and FOB shipping point.
236 Free Rider Someone who consumes a good, service without paying for it.
237 Free Trade The absence of any form of government intervention in international trade, which implies that imports and exports must not be subject to special taxes or restrictions levied merely because of their status as "imports" or "exports.
238 Free Trade Agreement An agreement that is between different countries that is aimed at achieving, over an specified length of time, in the elimination or reduction of protectionist measures and policies for goods and services flowing or exchanged between the different countries who are signatories to the agreement i.e. NAFTA (North American Free Trade Area) between the US, Canada and Mexico.
239 Free Trade Area An agreement among two or more countries to abolish tariffs on all or most of the trade among themselves while each remains free to set its own tariffs against other countries. Free trade areas can result in trade creation and trade diversion.
240 Free Trade Zone (FTZ) An area, often a port of entry, designated by the country for duty-free entry of goods.
241 Free-Market Economy An economy where all economic decisions are taken by individual households and firms and with no government intervention.
242 Free-Rider Problem The tendency for the scale of provision of a public good to be too small – to be allocatively inefficient - if it is privately provided. The free-rider problem means that people are often unwilling to pay for things if they can make use of things other people have bought. This problem can lead to people not purchasing things which would be to the benefit of themselves and other members of society to have.
243 Freehold 1. an interest in a piece of property that is both unconditional and also represents the most broad ownership interest recognised under the law. Or 2. an interest in a piece of land the period or duration that is restricted to the life/lives of a particular individual holding it.
244 Freely Floating (or flexible) Exchange Rates Exchange rates that are allowed to fluctuate in open market in response to changes in supply and demand. Sometimes called free exchange rate or floating exchange rates.
245 Freely Floating Exchange Rate Where the exchange rate is determined entirely by the forces of demand and supply in the foreign exchange market with no government intervention whatsoever.
246 Freight Collect The buyer pays the shipping costs.
247 Freight In Transportation charges on merchandise purchased for resale. Freight-In The shipping cost to be paid by the buyer of merchandise purchased when the terms are FOB shipping point. Freight-in is considered to be part of the cost of the merchandise and should be included in inventory if the merchandise has not been sold. Freight-in Transportation charge the company pays when it receives goods from a supplier. It is a separate account that is added to purchases in determining the cost of goods and ending inventory.
248 Freight Out Transportation charges on merchandise sold; an operating expense. Freight-out Cost of transporting goods to a customer. It is a selling expense. When the freight is included in the selling price, it is deducted from sales. Freight-out Delivery expense to be paid by the seller when its merchandise is sold with terms of FOB destination. This is an operating expense and is not included in the cost of merchandise.
249 Frequency Distribution Schedule showing the number of times each observation in the data occurs. Data collected need to be organized in some fashion. One method of summarizing a population or sample is to organize the data in terms of their frequency.
250 Frequency Marketing , the number of different times a firm hopes to reach its target market through a specific advertising campaign.
251 Frictional (search) Unemployment Unemployment caused by the time that is taken for labour to move from one job to another.
252 Friendly Takeover A buyout of a company that has the support of the company being purchased board of directors. The shareholders may receive cash and/or shares of the acquiring firm's stock.
253 Fringe Benefits Non-monetary rewards given to employees. Fringe Benefits Compensation for employees that is in addition to salaries and wages. Examples include paid absences (vacation, sick, holiday), insurances (health, dental, vision, life), pensions, profit sharing contributions, employer matching of Social Security and Medicare taxes, unemployment taxes, worker compensation insurance, continuing education costs, etc. Generally, the cost of fringe benefits should be expensed when they are earned by the employee, not in the period in which they are paid.
254 Full Absorption Costing Method of computing costs that starts with Direct Costs (materials, direct labor, variable overhead) but adds non-variable overhead.
255 Full Cost Method Accounting method used by some extractive industries, particularly oil and gas companies, in which all exploration costs are capitalised whether the projects are successful or unsuccessful. The capitalised cost is then amortised into expense as the total reserves are produced.
256 Full Costing See absorption costing.
257 Full Costs. All costs including Direct Costs and general and administrative expenses as well as selling expenses.
258 Full Disclosure Requirement to disclose all material facts relevant to a transaction. Full Disclosure Comprehensively and understandably presenting all material facts in the footnotes to the financial statements so that financial statement users are properly informed.
259 Full Disclosure Principle An accounting guideline that requires information pertinent to an investing or lending decision to be included in the notes to financial statements or in other financial reports.
260 Full Employment Full employment is the quantity of labour employed when the labour market is in equilibrium.
261 Full-Disclosed Principle Requires that companies disclose all circumstances and events that would made a difference to financial statement users.
262 Full-Employment Level of National Income The level of national income at which there is no deficiency of demand.
263 Fully Depreciated An asset having accumulated depreciation equal to its depreciable cost (cost minus estimated salvage value). The use of an asset after it is fully depreciated will mean no depreciation expense for those accounting periods. Fully Depreciated When a fixed asset has been charged (accumulated depreciation) with the maximum total amount of depreciation that is allowed under the relevant tax law for accounting purposes.
264 Functional and Natural Matrix The description of the required reporting of expenses by some nonprofits. The expenses will be presented on lines based on the nature of the expense (salaries, fringe benefits, rent, utilities, postage, professional fees) and in columns based on the function (Program #1, Program #2, Management and General, Fundraising). The matrix format is encouraged for all nonprofits but it is required only for voluntary, health and welfare organizations.
265 Functional Basis See functional expense classification.
266 Functional Currency Legal tender of the primary economic environment in which a company operates.
267 Functional Distribution of Income The distribution of total national income among the major factors of production.
268 Functional Expense Classification Sorting and reporting expenses according to the type of activity for which the expense was incurred. The functional expense classifications for a nonprofit organization would be Program #1, Program #2, Management and General, Fundraising. Businesses have functions such as manufacturing, selling, and general and administrative. (Sorting and reporting expenses by the type of expense such as salaries, rent, utilities, etc. is known as natural expense classifications.)
269 Functional Flexibility Where employers can switch workers from job to job as requirements change.
270 Fund 1. in government accounting, fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with related liabilities and residual equities or balances, and changes therein. Funds are segregated for the purpose of conducting specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. Or 2. the cash, securities, or other assets designated for a specified purpose such as in a sinking fund. Or 3.can be used as a verb, to finance, using long-term debt, usually bonds.
271 Fund Accounting Used by government entities and not for profit organisations. This method of accounting groups assets and liabilities in accordance with the purpose they are intended to be used. Fund Accounting Method of accounting and presentation whereby assets and liabilities are grouped according to the purpose for which they are to be used. Generally used by government entities and not-for-profits.
272 Fund management – A professional individual or firm, that is often regulated. A fund manager performs the role as a caretaker of their client assets for a specified or variable fee.
273 Fundamental Analysis Evaluation of a company's stock based on an examination of the firm's financial statements. It is distinguished from technical analysis, which attempts to predict the market price of a company's stock based on historical price performance and overall stock market trends. It considers overall financial health, economic and political conditions, industry factors, marketing aspects, management quality, and future outlook of the company.
274 Fundamental Analysis Research of such factors as interest rates, gross national product, inflation, unemployment, and inventories as tools to predict the direction of the economy.
275 Fundamentals Factors that are “fundamental” to the operations of a firm’s business, its profitability, operating costs, technical innovations, product prices, etc.
276 Funding Where the authorities alter the balance of bills and bonds for any given level of government borrowing. Funding Contributions by an enterprise, and sometimes its employees, into an entity, or fund, that is legally separate from the reporting enterprise and from which the employee benefits are paid. Funding Refinancing a debt on or before its maturity; also called refunding and, in certain instances, pre-refunding.
277 Fundraising Expenses A subgroup of a nonprofit's supporting activities expenses. This functional expense classification is used for the fundraising activities including fundraising campaigns, mailings for funds from supporters, and other solicitations for contributions. It may also include an allocated portion of the executive director's salary and benefits plus other management and general expenses.
278 Funds Flow Statement A financial statement that reported the changes in a company's working capital. The funds flow statement has been replaced by the statement of cash flows.
279 Furniture and Fixtures Long-term assets that are reported under the classification of property, plant, and equipment on a company's balance sheet. These assets are depreciated over their useful life.
280 FUTA Federal Unemployment Tax Act. See federal unemployment tax.
281 Future Contract Transferable agreement to deliver or receive during a specific future month a standardized amount of a commodity.
282 Future Economic Benefit The potential to contribute, directly or indirectly, to the flow of cash and cash equivalents to the enterprise. The potential may be a productive one that is part of the operating activities of the enterprise. It may also take the form of convertibility into cash or cash equivalents or a capability to reduce cash outflows, such as when an alternative manufacturing process lowers the costs of production.
283 Future Price A price agreed today at which an item (e.g. commodities) will be exchanged at some set date in the future.'
284 Future Value Amount to which an investment will grow at a future time if it earns a specified interest that is compounded annually. The process of calculating future values is called compounding. Future Value The amount that an investment will be worth at a future date if it is invested at compound interest.
285 Future Value of 1 Table A table of factors that shows what the future value of $1 will grow to if invested at the rate shown in the column heading and compounded for the number of periods indicated in the row.
286 Future Value of an Annuity Due The amount that a recurring equal amount deposited at the beginning of each period will grow to under compounded interest. An annuity due is also known as an annuity in advance.
287 Future Value of an Ordinary Annuity The amount that a recurring equal amount deposited at the end of each period will grow to under compounded interest. An ordinary annuity is also known as an annuity in arrears.
288 Futures or Forward Market A market in which contracts are made to buy or sell at some future date at a price agreed today.
289 FX Account (Foreign Exchange Account) Refers a trading account in foreign currencies.