Source of financing whereby an entity’s ASSETS (typically mortgage loans, lease obligations or other types of RECEIVABLES) are placed in a special purpose vehicle that issues SECURITIES collateralized by such assets. EXCHANGES and OVER-THE-COUNTER markets where securities are bought and sold subsequent to original issuance, which took place in the primary MARKET. A TAX that is levied by a state or city government on the retail sale of goods and services. Process of identifying and monitoring business risks in a manner that offers a RISK / RETURN relationship that is acceptable to an entity’s operating philosophy. DEBTOR’S legal right, to discharge all or a portion of the DEBT owed to another party by applying against the debt an amount that the other party owes to the debtor. Right granted by the Federal Consumer Credit Protection Act of 1968 to void a CONTRACT within three business days with full refund of any down payment and without penalty.

A contra-asset account used to reduce ACCOUNTS RECEIVABLE to the amount that is expected to be collected in cash. An expense that has occurred but is not recognized in the accounts. Claim against a DEBTOR for an uncollected amount, generally from a completed transaction of sales or services rendered. Nonprofit corporations need to follow organizational rules very similar to a regular C corp. They also need to follow special rules about what they do with any profits they earn.

Retained Earnings

Section 363 defines «cash collateral» as cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents, whenever acquired, in which the estate and an entity other than the estate have an interest. By law, the debtor in possession must pay a quarterly fee to the U.S. trustee for each quarter of a year until the case is converted or dismissed. The amount of the fee, which may range from $325 to $30,000, depends on the amount of the debtor’s disbursements during each quarter. In the case of individuals, chapter 11 bears some similarities to chapter 13.

• While you may convert to a different business structure in the future, there may be restrictions based on your location.
• It provides a basis for computing rates of return and evaluating the company’s capital structure.
• The use of an intermediate agent, such as a bank, to disguise the source of money received from illegal activities.
• A trial balance is a report of the balances of all general ledger accounts at a point in time.
• Total number of stock shares, bonds, or COMMODITIES futures contracts traded in a particular period.

Income from SECURITIES and other non-business investments; such as DIVIDENDS, INTEREST, etc. Firm, acting as underwriter or agent, that serves as intermediary between an issuer of SECURITIES and the investing public. A way of measuring the degree of protection that a CREDITOR has from a DEBTOR’s DEFAULT on interestpayments. A legal document used for a specific purpose, such as paying for goods received. BOND with a long-term, high-premium, COMMON STOCK conversion feature and also offering a fairly competitive interest rate. Legal arrangement involving a promise by one person to perform the obligations of a second person to a third person, in the event the second person fails to perform.

Foreign Tax Credit

This type of TRUST is required to distribute all its income currently, whether or not the TRUSTEE actually does so, and it has no provision in the trust instrument for charitable contributions. A trust may be a simple trust in one year and a complex trust in another year. In the year in which the trust distributes its corpus, it loses its classification as a simple trust. BOND INTEREST payment covering less than the conventional six-month period. The number of shares in a COMPANY that have been issued and remain in circulation. Legal interest of one person in the property of another to assure performance of a second person under a contract.

• It can also be hard to raise money because you can’t sell stock, and banks are hesitant to lend to sole proprietorships.
• Frequently, the franchise agreement grants strict supervisory powers to the franchisor over the franchisee which, nevertheless, is an independent business.
• A BALANCE sheet ACCOUNT for entering increases or decreases in the value of long-term investments.
• The 35 questions include many topics covered in a typical Accounting 101 class.
• Events and transactions distinguished by their unusual nature and by the infrequency of their occurrence.Extraordinary items are reported separately, less applicable income taxes, in the entity’s statement of income or operations.

A FINANCIAL STATEMENT for external reporting that presents only the major categories of information. Presentation of financial statement data without the ACCOUNTANT’S assurance as to conformity with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP). Percentage of the selling price of the property, paid by the seller. SECURITY whose cash flows equal the difference between the cash flows of the collateralizing ASSETS and the collateralized obligations of a securitized TRUST. Characteristics of CMO residuals vary greatly and can be extremely complex in nature. An accreditation conferred by the Institute of Management Accountants that indicates the designee has passed an examination and attained certain levels of education and experience in the practice of accounting in the private sector.

Call Price

Agreement providing that portions of lease payments may be applied toward the purchase of the property under lease. Business-owned life insurance contract typically on the lives of principal officers that normally provides for guaranteed death benefits to the company and the accumulation of a cash surrender value. When two or more persons or organizations gather CAPITAL to provide a product or service. The practice of putting money into something, such as property, in order to earn INTEREST or make a profit.

In general, large businesses and publicly traded companies favor accrual accounting. Small businesses and individuals tend to use cash basis accounting. Frequently, the debtor in possession will institute a lawsuit, known as an adversary proceeding, to recover money or property for the estate. Adversary proceedings may take the form of lien avoidance actions, actions to avoid preferences, actions to avoid fraudulent transfers, or actions to avoid post-petition transfers.

Additional information on capital gains and losses is available in Publication 550 and Publication 544, Sales and Other Dispositions of Assets. If you sell your main home, refer to Topic No. 701, Topic No. 703 and Publication 523, Selling Your Home. However, a net capital gain tax rate of 20% applies to the extent that your Why is profit a liability and losses are an asset? taxable income exceeds the thresholds set for the 15% capital gain rate. Rather than setting out separate requirements for presentation of the statement of cash flows, IAS 1.111 refers to IAS 7 Statement of Cash Flows. Using accounting software can help ensure that each journal entry you post keeps the formula in balance.

Transaction under which the LESSOR borrows funds to acquire property which is leased to a third party. The property and lease rentals are security for the LESSOR’S indebtedness. An overall operating philosophy of INVENTORY management in which all resources, including materials, personnel, and facilities, are used only as needed. Method that determines the discount rate at which the present value of the future CASH FLOWS will exactly equal investment outlay. FINANCIAL STATEMENTS that report the operations of an entity for less than one year.