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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Early Distribution

An amount distributed from the individual's pension, annuity, or traditional IRA account before they reach age 59 1/2.

Earned Income

Income received for services, such as wages, salaries, tips, net earnings from self-employment, and professional fees, and any other income received as pay for work actually performed. Earned income also includes taxable scholarship and fellowship grants.

Earned Income Credit (EIC)

A refundable credit for certain individuals who work and have earned income under a certain amount based on their filing status and the number of qualifying children, if any.


A legal right to use someone else's land for a particular purpose, such as for utilities, for a right-of-way, or for recreational purposes. Ownership is not transferred.

Education Savings Bond Program

A program that allows a taxpayer who paid qualified higher educational expenses during the year to exclude from income all or part of the interest they receive during the same year from redeeming Series EE savings bonds and Series I savings bonds issued after 1989.

Elective Deferral

The voluntary contribution an employer deducts from an employee's pay that is not subject to tax. Also called deferred compensation or pre-tax contributions.

Electronic Badge Readers

Employee is issued an identification badge with a magnetic strip that contains employee information. When the employee inserts the identification badge into the badge reader, the magnetic strip is scanned and information is transferred directly to the computer.

Electronic Federal Tax Payment System (EFTPS)

Larger businesses deposit income tax payments by electronic funds transfer.

Electronic Funds Transfer System (EFTS)

Allows banks to transfer funds among accounts quickly and accurately without the exchange of checks.

Eligible Educational Institution

Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. These institutions include nearly all accredited, public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.

Eligible Foster Child

An individual who is placed by an authorized placement agency, or by judgment, decree, or other order of any competent jurisdiction.


An individual who is hired to work for a person, an organization, or a company in return for compensation and who is subject to the will and control of the employer regarding what work is done and how and when to do it.

Employee's Earnings Record

An individual payroll record prepared for each employee; includes data on earnings, deductions, net pay, and accumulated earnings.


The individual, organization, or company for which an employee works.

Employer Identification Number (EIN)

A nine-digit number assigned by the IRS to an employer for tax filing and reporting purposes.

Ending Inventory

The merchandise a business has on hand at the end of a fiscal period.


An authorized signature written or stamped on the back of a check representing receipt and deposit or payment of check.

Entertainment Expenses

Expenses incurred while participating in an activity that provides entertainment, amusement, or recreation


A person who transforms ideas for products or services into real-world businesses.


The total financial claims to the assets, or property, of a business.

Erroneous Item

Any deduction, credit, or expense item that is incorrectly stated on a tax return and any income item that is not properly reported on a tax return.


Placing an amount in the care of a third party to make a payment in the future.

Estimated Tax

Estimated tax is the method used to prepay tax on income that is not subject to withholding.

Ex-Dividend Date

The date that determines whether the buyer or the seller of stock receives the next dividend distribution a company pays. This date is usually two business days before the date of record.

Excess Accumulation

The difference between the minimum amount required to be distributed from a qualified retirement plan and the amount that was actually distributed.


To barter, swap, part with, give, or transfer property for other property or services.

Excise Tax

Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline. Excise taxes are often included in the price of the product. There are also excise taxes on activities, such as on wagering or on highway usage by trucks.

Exemption Amount

An amount that a taxpayer can claim for themselves, their spouse, and their eligible dependents.


The cost of the goods or services that are used to operate a business; expenses decrease owner's equity.


Additional time granted by the IRS for a taxpayer to file their federal income tax return.

External Controls

The measures and procedures provided outside the business to protect cash and other assets.

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