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

Accounting Terms-P-Q

partnership
A business with two or more owners, who share in the profits as well as the liability for debts.

payroll taxes
Taxes on a payroll, including social security taxes and employment insurance taxes.

pension fund
A fund set up by a corporation to provide for its employees in retirement. Typically, employees contribute a portion of their paychecks to the fund. The fund is used to make investments as part of the company’s pension plan.

pension plan
A plan by which a company provides for its employees in retirement. Employees—sometimes with matching contributions from employers—contribute to a pension fund, which is used to make investments as part of the plan. Managers of pension plans must follow strict investment guidelines.

personal property
Items and things, as opposed to real property, such as buildings and land. By definition, personal property is not “immovable”; in other words, it can be moved. A baseball card is personal property; a baseball field is real property.

pledge
Placing property or collateral with a lender in order to secure a loan. For example, a watch left with a pawnbroker in return for a loan is a pledge.

point
In stock prices, a point equals one dollar; in bond prices, a point equals ten dollars.

Ponzi scheme
To swindle by paying early investors with money from later investors, not with earned income. Eventually, the incoming investment money cannot keep up with payments to investors, and the whole deal collapses. Named for Charles A. Ponzi, a well-known swindler.

portfolio
The term for the total assets and investments held by an individual, company, or institution. For reporting and tracking purposes, a portfolio can be divided into smaller portfolios, such as the loan portfolio, land portfolio, and so on.

preferred stock
The dividend-paying stock in a corporation that gives its holders advantages over holders of common stock. Preferred stockholders are paid before common stockholders. If the corporation goes bankrupt, preferred stockholders are paid from the assets of the corporation before common stockholders but after any creditors.

premium
The sum above the face value of a bond when the bond is purchased at an above-par price. In insurance, the amount you pay for insurance coverage.

present value
The current-day equivalent of some future amount, or future value. In converting future values to present values, one adjusts for compound interest and for inflation.

private placement
Selling the entire issue of a security to one group of investors.

probate
When a court examines a will to determine if it is valid. During probate, the court also assigns an executor to the will.

profit-sharing plan
A plan by which employees share in the profits of a company, either by receiving bonuses or having their profit shares put in a trust. Profit-sharing plans encourage employees to be more productive and more loyal to their companies.

promissory note
A written promise to pay a sum of money at a future date to a specific person or to the bearer of the written promise. Also known as an IOU.

proprietorship, sole
When a business is owned by one person. Sole proprietorship is one of three types of business organizations; the other two are a partnership and a corporation.

quorum
The minimum number of people who must be present at a corporate meeting to conduct business.

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