Bellevue & Seattle, WA Tax, Accounting, QuickBooks, Business Consulting: Stephen L. Nelson, CPA

Accounting Terms-I

income statement
A report describing a corporation’s activities, its profit, and its losses over a fixed period.

indemnity
An obligation to pay all costs of damage, pain, or suffering.

indenture
A document that states the terms under which a bond is issued. The indenture declares the maturity date, the interest, and other information.

index
A numerical measurement that compares past and present economic activity. The Dow Jones Industrial Average is an index of stock performance. The Consumer Price Index measures the price of consumer goods.

individual retirement account (IRA)
A retirement account to which individuals can deposit $3,000 (or more) annually out of earnings. IRAs provide two significant income tax benefits: IRA contributions may reduce an individual’s taxable income, and IRA earnings are not taxed. Withdrawals from an IRA can be made after age 591/2 at which time the withdrawals are taxed as normal income.

individual retirement account rollover
Rule allowing holders of individual retirement accounts (IRAs) to pass on the accumulated savings in one IRA to another IRA, provided that they do so within the first 60 days of closing the first IRA.

inheritance tax
Tax that heirs must pay in order to receive property from an estate. Not all states have inheritance taxes.

insolvency
Being unable to pay debts.

intangible assets
The assets of a company that aren’t property but are assets nonetheless. For example, an established clientele is an intangible asset.

interest
Amount of money paid to borrow capital. Typically, the interest is expressed as a percentage of the principal that was borrowed.

interest rate
The price of borrowing money. The interest rate is usually expressed as a percentage of the total principal borrowed, although sometimes the rate of interest on a loan is tied to an index of some kind.

interest rate cap
A fixed limit on the amount that a borrower must pay in interest on a loan.

internal rate of return (IRR)
The profit that an investment earns expressed as a percentage. Typically, IRRs are stated as annual profit percentages. On an investment that pays interest and for which there is no change in value, such as a bank savings account, the interest rate is the IRR.

inter vivos trust
Latin for between the living. An inter vivos trust gives one person’s property to another person.

inventory
In a business, a list of a stock on hand, with the value of each item and the total value of all items by category.

involuntary bankruptcy
A petition by creditors asking a bankruptcy court to declare a firm bankrupt, the firm having failed to pay its debts and meet its financial obligations. Also called a creditor’s opinion.

irrevocable trust
A trust that cannot be revoked without the approval of the beneficiary. An irrevocable trust cannot be changed in any way without the beneficiary’s approval.

Related Topics: