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Glossary of Accounting Terms

Instructions: Enter a search word or term and click go or click on a letter or number below. Click italicized words in definitions to pop up a definition of the italicized word.

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Walkthroughs
The most effective means for an auditor to confirm his understanding how internal control over financial reporting is designed and operates to evaluate and test its effectiveness. It includes making inquiries of and observing the personnel who actually perform the controls; reviewing documents that are used in, and that result from, the application of the controls; and comparing supporting documentation to the accounting records. In a walkthrough, the auditor traces a transaction from origination through the company's information systems to the point where it is reflected in the company's financial reports.

Walkthroughs provide the auditor with evidence to:

  1. Confirm the auditor's understanding of the process flow of transactions.
  2. Confirm the auditor's understanding of the design of controls identified for all five components of internal control over financial reporting, including those related to the prevention or detection of fraud.
  3. Confirm that the auditor's understanding of the process is complete by determining whether all points in the process at which misstatements related to each relevant financial statement assertion that could occur have been identified.
  4. Evaluate the effectiveness of the design of controls.
  5. Confirm whether controls have been placed in operation.

Warrant
Option to purchase additional securities from the issuer.

Wash Sale
Sale of securities in which seller has acquired substantially identical securities within a period beginning 30 days before and ending 30 days after the date of the sale.

Withholding
Amount withheld or deducted from employee salaries by the employer and paid by the employer, for the employee, to the proper authority.

Work in Progress
Inventory account consisting of partially completed goods awaiting completion and transfer to finished inventory.

Working Capital
Excess of current assets over current liabilities.

Working Papers
(1) Records kept by the auditor of the procedures applied, the tests performed, the information obtained, and the pertinent conclusions reached in the course of the audit. (2) Any records developed by a Certified Public Accountant (CPA) during an audit.

Wrap-Around Mortgage
Second mortgage which conveniently expands the total amount of borrowing by the mortgagor without disturbing the original mortgage.

* Definitions courtesy of the New York State Society of CPAs

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