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Finance Notes

Finance Notes

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Published by aparajitadutta

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Published by: aparajitadutta on Aug 25, 2011
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AccountingMethod :The method used by a business or individual to keep its records. Most individualsand small businesses use the cash method, although businesses that maintaininventory are required to use the accrual method.AccrualMethod :The form of business accounting in which you report income in the year youearned it and you report expenses in the year you incur them, rather than reportingincome and expenses when you receive payment or when you pay the expenses. If you own a business that maintains an inventory, you are required to use the accrualmethod for purchases and sales.Aid :To help or furnish with help, support, or relieAmortization:Deductible expense allowed as a means of spreading the cost of an intangible assetover a period of years. For instance, if you pay points to take out a home equityloan and the loan proceeds are not used for home improvements, you cannot deductall the points in the year paid. Instead, you divide the cost of the points by thelength of the loan and deduct only the amount that applies to the current year.Bond :A type of debt owed by federal and municipal governments and corporations. If you invest in bonds, you will usually receive interest on it.Capital Asset:An item that you own for investment or personal purposes, such as stocks, bonds,or stamp collections. The sale of a capital asset produces a capital gain or a capitalloss. Assets you use in your business and inventory are not capital assets.CapitalGain :Profit on the sale of a capital asset. Capital gains receive more favorable taxtreatment than ordinary gains. Depending on your tax bracket and on how long youheld a capital asset, you may pay about one-third to one-half less tax on a capitalgain than you would have paid on the same amount of ordinary income.CapitalLoss :Loss from the sale of a capital asset.
CarryForward :Using deductions or credits that cannot be taken in the current year to reduce your tax liability in a later year or years.Deductions :Expenses allowed by the Income Tax Ordiance 2001 that reduce your taxableincome.Depreciation:A deduction you are allowed for the wearing away and expensing over time of assets, such as office equipment, vehicles, buildings, and furniture. For assets thathave an expected useful life of more than one year, you spread the cost of the assetover its estimated useful life rather than deducting the entire cost in the year you place the asset in service. For tax purposes, tax law specifies the depreciation termfor specific types of assets.Direct Tax :A tax that you pay directly, as opposed to indirect taxes, such as tariffs and business taxes. Direct taxes include income and property taxes.Dividends :Distributions from a company to its stockholders. The distributions may beordinary dividends or capital gain distributions.Exemption :A deduction from taxable income for you, your spouse, and your qualifyingdependents.Fair MarketValue :The price an item would sell for, assuming the buyer and a seller both havereasonable knowledge and are not under undue pressure. To determine fair marketvalue, it is common to compare other similar properties sold near the same time asyour property.Fine :A sum of money, which, by judgment of a competent jurisdiction, is required to beof money, which, by judgment of a competent jurisdiction, is required to be paidfor the punishment of an offenceFiscal Year :A 12-months year starting from 01 July and ending on a date 30 June.
FringeBenefit :Employee compensation other than your wages, tips, and salaries, such as healthinsurance, life insurance, and pension plans.Gain or Loss:The difference between your basis in an asset (usually your cost) and the value of  property you receive when you sell or otherwise dispose of the asset.Grant :To transfer real property from a title holder (grantor) or holders to another (grantee) with or without paymentGrossIncome :Your total income before adjustments, deductions, or exemptions.GrossReceipts :The total sales for your business during the year before deductions for returneditems, allowances, and discounts.Income Tax :The main source of revenue for the federal government and many states. The tax is based on your earned and unearned income. You are allowed certain deductions,allowances, and credits to reduce your tax, based on laws made by Income TaxOrdinance.IndirectTax :A tax you do not pay directly, but which is passed on to you by an increase in your expenses. For instance, you do not pay a tariff directly. But when you buyimported merchandise, the price includes any tariff taxes paid.IntangibleAsset : Nonphysical resources or rights to other assets. Patents, goodwill, permits, andcomputer programs are examples of intangible assets.InterestExpense :The amount you pay for borrowing money. When you pay back a loan or other debt, the additional amount you pay back is interest expense. Interest is calculatedas a percentage of the amount of your loan for each period of time. Points paid for a mortgage are a form of prepaid interest.Interest Earnings on investments such as savings accounts, certificates of deposit, and

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