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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Calendar Quarter

One of four quarters of a calendar year: January through March, April through June, July through September, or October through December.

Calendar Year

Period for which a business begins on January 1 and ends on December 31.

Call Option

The right to buy a stated number of shares of stock at a predetermined price (the strike price) before a specified date.

Canceled Checks

Checks paid by the bank and deducted from the depositor's account.


Money supplied by investors, banks, or owners of a business. Refers to the dollar value of assets contributed to the business.

Capital Asset

Everything an individual owns and uses for personal purposes, pleasure, or investment.

Capital Gain Distributions

Amounts paid to an individual or credited to their account by regulated investment companies and real estate investment trusts (REITs). These amounts are also known as capital gain dividends.

Capital Stock

The account that represents the total amount of investment in the corporation by its stockholders (owners).


To recover a cost over a period of years through deductions for depreciation, amortization, or depletion, and adding the cost to the basis of the property to which it relates.

Capitalized Interest

The unpaid interest on a loan that the lender adds to the outstanding principal balance of the loan.

Cash Discount

The amount a customer can deduct from the amount owed for purchased merchandise if payment is made within a certain time.

Cash Payments Journal

A special journal used to record all transactions in which cash is paid out or decreased.

Cash Receipt

The cash received by a business.

Cash Receipts Journal

A special journal used to record all transactions in which cash is received.

Cash Sale

A transaction in which the business receives full payment for the merchandise sold at the time of the sale.

Cash Settlement Option

Any option that, upon exercise, is settled by paying the owner of the option cash or other property and not the actual property underlying the option.

Cash Wages

Wages paid by cash, checks, money orders, or equivalent means. Cash wages do not include the value of food, lodging, clothing, or other such non-cash items given to an employee.


The damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

Certified Public Accountant

A public accountant who has passed the licensing exam on accounting theory, practice, auditing, and business law. (CPA)

Change Fund

An amount of money, consisting of varying denominations of bills and coins, that is used to make change in cash transactions.

Charge Customer

A customer to whom a sale on account is made.

Charitable Contribution

A donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting anything of equal value.

Chart Of Accounts

A list of all the accounts and their assigned account numbers, used in journalizing transactions.


A legal written permission that gives a corporation certain rights and privileges and spells out the rules under which the corporation is to operate.


A written order from a depositor telling the bank to pay a stated amount of cash to the person or business named on the check.

Check Stub

A source document that lists the same information that appears on a check and shows the balance in the checking account before and after each check is written.

Checking Account

Allows a person or business to deposit cash in a bank and to write checks against the account balance.


A natural child, stepchild, adopted child, or an eligible foster child.

Child Support

A payment that is specifically designated as child support or treated as specifically designated as child support under a divorce or separation instrument.

Chronically Ill Individual

An individual who has been certified by a licensed health care practitioner within the previous 12 months as one of the following: (1)an individual who is unable, for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual due to loss of functional capacity (activities of daily living are eating, toileting, transferring, bathing, dressing, and continence), or (2) an individual who requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

Church Employee

An employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer Social Security and Medicare taxes.

Civil Service Annuity

Annuity benefits that are paid primarily under the Civil Service Retirement System or the Federal Employees Retirement System.

Class Life

The number of years that establishes the property class and the recovery period for most types of property for the General Depreciation System and the Alternative Depreciation System under the Modified Accelerated Cost Recovery System.

Closely Held Corporation

A corporation that, at any time during the last half of the tax year, has more than 50% in value of its outstanding stock directly or indirectly owned by five or fewer people. This type of corporation is generally not a personal service corporation.

Closing Entries

Journal entries made to close, or reduce to zero, the balances in the temporary capital accounts and to transfer the net income or net loss for the period to the capital account.


Individuals living together in an intimate relationship when not legally married.

Collapsed Loans

Two or more loans made to the same borrower that are treated by both the lender and the borrower as one loan.


Any work of art, rug, antique, metal (such as gold, silver, and platinum bullion), gem, stamp, coin, or alcoholic beverage that is sought by a collector.


An amount paid to an employee based on a percentage of the employee's sales.

Common Stock

A type of share in the ownership of a company that usually provides the right to vote on decisions relating to the company's management. Shareholders are entitled to receive distributions of the company's profit in the form of dividends.

Common-Law Employee

An individual who performs services for an employer in return for compensation. An employee is subject to the control of the employer regarding what work is done and how, when, and where it is done.

Common-Law Marriage

A marriage in which a man and woman are considered to be married even without a license or a formal ceremony. Only certain states recognize common-law marriages.

Community Income

Income earned while married and domiciled in a community property state that is allocated to both spouses, regardless of which spouse actually earned it.

Community Property

The holdings and resources owned in common by a married couple.


The accounting principle that allows the financial information from one period to be compared to that of another period; also, the comparison of financial information of two or more businesses.


Money or other benefits given or received as payment for work or service. Compensation can include wages, salaries, bonuses, prizes, and tips an employee receives.

Compound Entry

A journal entry with two or more debits or two or more credits.

Computerized Accounting System

A system in which financial information is recorded by entering it into a computer.


The process by which private property owned by a taxpayer is legally taken for public use without their consent.

Conduit IRA

An IRA account used as a holding account for eligible rollover distributions from an employer plan that can be rolled over to a new employer plan later.

Consent to Assessment

A written agreement between a taxpayer and the IRS that extends the statutory period of limitations

Conservatism Principle

Accounting guideline requiring that accountants choose the safer, or more conservative, method when there is a choice of procedures.

Consistency Principle

The consistent use of an inventory costing method helps owners and creditors compare financial reports from one period to another.

Contra Account

An account whose balance is a decrease to another account.

Controlling Account

An account that acts as a control on the accuracy of the accounts in a related subsidiary ledger; its balance must equal the total of all the account balances in the subsidiary ledger.


Business organization that is recognized by law to have a life of its own.

Correcting Entry

An entry made to correct an error in a journal entry discovered after posting.

Cost Of Merchandise (COM)

The actual cost to the business of the merchandise sold to customers.


An agreement to pay for a purchase at a later time; an entry to the right side of a T account. credit cards Cards containing a customer's name and account number presented when buying merchandise on account.

Credit Memorandum

A form that lists the details of a sales return or sales allowance.

Credit Terms

Terms that set out the time allowed for payment for a sale on account.


A person or business that has a claim to the assets of a business; a person or business to which money is owed.

Current Assets

Assets that are either used up or converted to cash during the normal operating cycle of the business, usually one year.

Current Liabilities

Debts of the business that must be paid within the next accounting period.

Current Ratio

The relationship between current assets and current liabilities; calculated by dividing the dollar amount of current assets by the dollar amount of current liabilities.

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