Accountant's Glossary

Accountant's Glossary

Here at PSVS we are in the trenches every day helping you navigate your way through the various complexities of your accounting-related activities. It is easy to forget that not everyone knows all the accounting-specific terminology we use daily.

We have created this fairly comprehensive glossary to supplement your knowledge and understanding and hopefully answer some of your questions.

Of course, if you have any additional questions send us an email or give us a call: (650) 578-1200.

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Necessary Expense

A helpful and appropriate expense for a field of trade, business, or profession; it does not have to be indispensable to be considered necessary.

Net Capital Gain

The amount by which the net long-term capital gain for the year exceeds the net short-term capital loss.

Net Income

The amount of revenue that remains after expenses for the period are subtracted.

Net Loss

The amount by which total expenses exceed total revenue.

Net Operating Loss (NOL)

The amount by which allowable deductions exceed gross income.

Net Operating Loss (NOL) Year

The year in which an NOL occurred.

Net Pay

The amount left after total deductions are subtracted from gross earnings.

Net Purchases

The total cost of all merchandise purchased during a fiscal period, less any purchases discounts, returns, or allowances.

Net Sales

The amount of sales for the period less any sales discounts, returns, or allowances.

Net Unrealized Appreciation (NUA)

The increase in the value of securities while held in trust.


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An individual who receives income in their name that actually belongs to someone else.

Non-Accountable Plan

A payment or distribution from a retirement plan that does not recur on a regular basis. A reimbursement or allowance arrangement under which an employer reimburses an employee or provides the employee an expense allowance regardless of whether the employee meets any of the requirements of an accountable plan.

Noncustodial Parent

The parent who has custody of a child for the shorter part of the year or who does not have custody at all.

Noninterest-bearing Note Payable

A note from which the interest is deducted at the time the note is made; a promissory note that has no stated rate of interest on its face.

Nonpassive Income

Income from earnings or wages, active business participation, dividends, interest, or capital gains.

Nonperiodic Payment or Distribution

A one-time, lump-sum payment.

Nonqualified Plan

A plan that does not meet the IRS requirements for qualified retirement plans.

Nonrecaptured Section 1231 Losses

The net section 1231 losses for the previous five years that have not been applied against a net section 1231 gain by treating the gain as ordinary income.

Nonrecourse Debt

A debt for which the debtor is not personally liable.

Nonrecourse Financing

Financing for which the taxpayer is not personally liable.

Nonrefundable Credit

A credit that cannot be more than the tax liability on the taxpayer's tax return.

Nonresidential Real Property

Most real property (real estate) other than residential rental property.

Nontaxable Exchange

An exchange in which any gain is not taxed and any loss cannot be deducted.

Normal Balance

The increase side of an account: assets, debit side; liabilities and capital, credit side. The word normal used here means usual.

Not-for-Profit Activity

An activity that has not produced a profit in at least three of the last five tax years, including the current year.

Not-for-profit Organization

An organization that does not operate for the purpose of making a profit.

Note Payable

A promissory note issued to a creditor.

Note Receivable

A promissory note that a business accepts from a customer or other person who owes the business money.

NSF Check

A check returned to the depositor by the bank because there are not sufficient funds in the drawer's checking account to cover the check.

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