Tax & Accounting Glossary

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1099 -

An IRS form used to report income received outside of wages, such as contract work or freelance earnings, for individuals who are not traditional employees.

Accrual -

An accounting method that records income and expenses when they are earned or incurred, regardless of when the related cash transactions occur.

Amortization -

The systematic allocation of the cost of intangible assets, like patents or trademarks, over their estimated useful life.

Audit -

An in-depth examination of a company’s financial records, transactions, and systems by an independent auditor to verify accuracy, compliance with regulations, and financial health.

Audited Financials -

Financial statements reviewed and verified by an independent auditor for accuracy, compliance, and transparency.

Balance Sheet -

A financial statement presenting a snapshot of a company’s assets, liabilities, and shareholders’ equity, offering insight into its financial position at a given time.

Bookkeeping -

The systematic recording, organizing, and classifying of financial transactions, forming the foundation for accurate financial statements and decision-making.

Capital Expenditure -

Money spent on acquiring or improving long-term assets, such as buildings or equipment, which benefit the company for an extended period.

Capital Gains -

The profit realized from the sale of assets, such as stocks, real estate, or other investments, and is subject to specific tax rates.

Cash Flow -

The movement of money into and out of a business over a specific period, indicating its ability to generate and manage cash.


A Certified Public Accountant is a licensed professional who provides accounting, tax, audit, and financial advisory services to individuals, businesses, and organizations.

Deduction -

An allowable expense or reduction in taxable income, which results in a lower tax liability for individuals and businesses.

Dependent -

An individual, typically a child or relative, who relies on another taxpayer for financial support and may qualify for certain tax benefits.

Depreciation -

A method used in accounting to allocate the cost of tangible assets over their useful life, reflecting their gradual wear and tear or obsolescence.


Earnings Before Interest, Taxes, Depreciation, and Amortization represents a company’s operating profitability before considering non-operating expenses.


First-In, First-Out is an inventory valuation method that assumes the first items purchased or produced are the first to be sold or used.

Financial Statement -

A formal record summarizing a company’s financial activities, including balance sheet, income statement, cash flow statement, and statement of changes in equity.


Generally Accepted Accounting Principles are a set of standard accounting rules and guidelines that provide a consistent framework for financial reporting, ensuring transparency and comparability.


The Internal Revenue Service is the federal agency in the United States responsible for enforcing tax laws, collecting taxes, and administering tax-related programs.

Payroll -

The process of managing employee compensation, including wages, salaries, bonuses, and taxes withheld, ensuring compliance with labor laws and tax regulations.

Payroll Tax -

Taxes withheld from employee wages, including income tax, Social Security tax, Medicare tax, and unemployment taxes.


Return on Assets measures a company’s efficiency in generating profit from its total assets.

Tax Deductible -

Expenses that can be subtracted from taxable income, reducing the amount of tax owed, potentially resulting in lower overall tax liability.

Tax Return -

A document filed with tax authorities that reports a taxpayer’s income, deductions, and tax liability for a specific period, enabling the calculation of taxes owed or refunds due.

Taxable Income -

The portion of an individual’s or company’s income subject to taxation after accounting for allowable deductions and exemptions.


Tax Deducted at Source is a system used in some countries to collect income tax at the time of payment, ensuring timely revenue collection for the government.

W-2 -

A Wage and Tax Statement issued by employers to employees, reporting their annual wages and taxes withheld for income tax purposes.

Withholding -

The process of deducting income taxes and other obligations from employee paychecks, which are then remitted to the tax authorities on their behalf.