Glossary of Accounting Terms

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Face Value
Amount due at maturity from a bond or note.

Factoring
Selling a receivable at a discounted value to a third party for cash.

Fair Market Value
Price at which property would change hands between a buyer and a seller without any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts.

FASB
See Financial Accounting Standards Board (FASB).

Favorable Variance
Excess of actual revenue over projected revenue, or actual costs over projected costs.

Fiduciary
Person who is responsible for the administration of property owned by others. Corporate management is a fiduciary with respect to corporate assets which are beneficially owned by the stockholders and creditors. Similarly, a trustee is the fiduciary of a trust and partners owe fiduciary responsibility to each other and to their creditors.

FIFO
See First In, First Out.

Filing of Returns
Taxpayers meeting statutory requirements MUST file various returns on the prescribed forms. And they must be filed timely or they may not be considered as filed.

Financial Accounting Standards
Official promulgations, known as statements of financial accounting standards, by the Financial Accounting Standards Board (FASB) which are part of Generally Accepted Accounting Principles (GAAP) in the United States.

Financial Accounting Standards Board (FASB)
Independent, private, non-governmental authority for the establishment of accounting principles in the United States.

Financial Institution
Organization engaged in any of the many aspects of finance including commercial banks, thrift institutions, investment banks, securities brokers and dealers, credit unions, investment companies, insurance companies, and real estate investment trusts.

Financial Statements
Presentation of financial data including balance sheets, income statements and statements of cash flow, or any supporting statement that is intended to communicate an entity's financial position at a point in time and its results of operations for a period then ended.

First in, First out (FIFO)
Accounting method of valuing inventory under which the costs of the first goods acquired are the first costs charged to expense. Commonly known as FIFO.

Fiscal Year
Period of 12 consecutive months chosen by an entity as its accounting period which may or may not be a calendar year. Fixed Asset - Any tangible asset with a life of more than one year used in an entity's operations.

Fixed Assets
Those assets of a permanent nature required for the normal conduct of a business, and which will not normally be converted into cash during the ensuring fiscal period. For example, furniture, fixtures, land, and buildings are all fixed assets. However, accounts receivable and inventory are not. Sometimes called plant.

Floor
Term used when discussing inventories. Inventory cannot be valued lower than the "floor" which is the net realizable value of the inventory less an allowance for a normal profit margin.

Forecast
Prospective financial statements that are an entity's expected financial position, results of operations, and cash flows.

Foreclosure
Seizure of collateral by a creditor when default under a loan agreement occurs.

Foreign Corporation
A corporation which is not organized under the laws of ones territories or states. Taxing of foreign corporations depends on whether the corporation has Nexus or effectively connected income in that state.

Foreign Currency Translation
Restating foreign currency in equivalent dollars; unrealized gains or losses are postponed and carried in Stockholder's Equity until the foreign operation is substantially liquidated.

Foreign Tax Credit
A U.S. taxpayer that pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determinable us dollar amount. This is usually done on the annual individual tax return and there is s specific form provided for this.

Form 10-K
SEC filing which is the annual report due 90 days after the registrant's balance sheet date.

Form 10-Q
SEC filing which is the quarterly report due 45 days after each of the first three quarters of each fiscal year.

Form 8-K
SEC filing which is a filing that must be made on the occurrence of an event that is deemed to be of significant importance to security holders.

Franchise
Legal arrangement whereby the owner of a trade name, franchisor, contracts with a party that wants to use the name on a non-exclusive basis to sell goods or services, franchisee. Frequently, the franchise agreement grants strict supervisory powers to the franchisor over the franchisee which, nevertheless, is an independent business.

Fraud
Willful misrepresentation by one person of a fact inflicting damage on another person.

Fringe Benefit
An incidental benefit awarded for certain types of employment (especially if it is regarded as a right) (Example: employer supplied health insurance or two weeks paid vacation per year).

Fund Accounting
Method of accounting and presentation whereby assets and liabilities are grouped according to the purpose for which they are to be used. Generally used by government entities and not-for-profits. (See Restricted Fund and Unrestricted Fund .)

Future Contract
Transferable agreement to deliver or receive during a specific future month a standardized amount of a commodity.

* Definitions courtesy of the New York State Society of CPAs

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