Category: Dictionary

Zero-Coupon Convertible Security:​ ZERO-COUPON BOND convertible into the COMMON STOCKof the issuing COMPANY when the stock reaches a predetermined price.

Zero-Coupon Bond:​ BOND on which the holder receives only one payment at maturity which includes both PRINCIPAL and INTERESTfrom issuance to maturity.

Yield to Call:​ YIELD on a BOND assuming the bond will be redeemed by the ISSUER at the first call date specified in the INDENTURE agreement.

Yield Curve:​ Graph showing the TERM structure of interest rates by plotting the yields of all bonds of the same quality with maturities ranging from the shortest to the longest available.

Yield:​ Return on an INVESTMENT an investor receives from DIVIDENDS or INTEREST expressed as a percentage of the cost of the SECURITY.

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

Worksheet:​ A type of working paper used as a preliminary step in the preparation of FINANCIAL STATEMENTS.

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.

Working Interest:​ Direct participation with UNLIMITED LIABILITY, as distinguished from passive LIMITED PARTNERSHIP shares.

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

Without Recourse:​ Obligated to bear losses from uncollectible accounts.

Withholding Allowance:​ Each taxpayer is allowed to claim a withholding allowance, which exempts a certain amount of wages from being subject to WITHHOLDING. The allowance is designed to prevent too much taxes being withheld from a taxpayers wages and a person can compute this by completing form W-4 and submitting it to their employer.

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

With Recourse:​ Able to collect losses on uncollectible accounts from the seller.

Wholesaler:​ Middleman or distributor who sells mainly to retailers, jobbers, other merchants, and industrial, commercial, and institutional users as distinguished from consumers.

Wholesale:​ The sale of goods in large quantities, especially to a person or COMPANY that plans to sell them at retail.

Weighted-Average-Cost Method:​ An AVERAGE-COST METHOD procedure for determining the cost of ENDING INVENTORY under the PERIODIC INVENTORY SYSTEM

Wash Sale:​ A wash sale occurs if stock or securities are sold at a LOSS and the seller acquires substantially identical stock or SECURITIES 30 days before or after the sale. Stock or securities for this purpose includes contracts or operations to acquire or sell stock or securities. Losses incurred in a wash sale cannot be deducted. It does not matter if the total 60 day period begins in one tax year and ends in another. However, the disallowed loss is not permanently lost. Instead, the basis in the newly acquired stock or securities is the same basis as of the stock or securities sold, adjusted by the difference in price of the stock or securities.

Warrant:​ Option to purchase additional SECURITIES from the issuer.

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.

Wage:​ Payment for services of employees at an hourly rate.

Volume:​ Total number of stock shares, bonds, or COMMODITIES futures contracts traded in a particular period.

Volatility:​ Characteristic of a SECURITY, commodity, or MARKET to rise or fall sharply in price within a SHORT-TERM period.

Volatile:​ Tending to rapid and extreme fluctuations.

Voidable:​ CONTRACT that can be annulled by either party after it is signed because FRAUD, incompetence, or another illegality exists or because a right of rescission applies.

Vesting:​ Point at which certain benefits available to an employee are no longer contingent on the employee continuing to work for the employer.

vVertical Analysis:​ A technique for analyzing FINANCIAL STATEMENTS that uses percentages to show the relationships of each stated item to the total, which is 100 percent of the figure in a single statement.

Venture Capital:​ Venture Capital

Vendor:​ Supplier of goods or services of a commercial nature; may be a manufacturer, importer, or wholesale distributor.

Variance:​ Deviation or difference between an estimated value and the actual value.

Variable Rate Loan:​ Loan whose interest rate changes over its life in relation to the level of an index.

Variable Manufacturing Costs:​ Costs that increase or decrease in direct proportion to the number of units produced.

Variable Costs:​ Total costs that change in direct proportion to changes in productive output or any other measure of volume.

Variable Annuity:​ Life insurance ANNUITY CONTRACT whose VALUE fluctuates with that of an underlying securities PORTFOLIO or other INDEXof performance.

Value-Added Tax (VAT):​ Consumption TAX levied on the VALUE added to a product at each stage of its manufacturing cycle as well as at the time of purchase by the ultimate consumer

Value:​ How much money something is worth.

Valuation Allowance:​ Method of lowering or raising an object’s CURRENT VALUE by adjusting its acquisition cost to reflect its market value by use of a CONTRA ACCOUNT.

Valuation:​ The process of determining the PRESENT VALUE of a BOND based on the current MARKET INTEREST RATE.

Use of Professional Skepticism when Evaluating the Results of Testing:​ The AUDITOR must conduct the audit of internal control over financial reporting and the audit of the financial statements with professional skepticism, which is an attitude that includes a questioning mind and a critical assessment of audit evidence.

Unsecured Bond:​ A BOND issued on the general CREDIT of a COMPANY.

Unrestricted Funds:​ Resources of a not-for-profit entity that have no restrictions as to use or purpose.

Unrealized Profit (or Loss):​ PROFIT or LOSS that has not become actual.

Unrealized Loss or Gain on Long-Term Investments:​ A BALANCE sheet ACCOUNT for entering increases or decreases in the value of long-term investments.

Unlimited Liability:​ The responsibility of all the partners in a COMPANY for its DEBT.

Unit:​ Any division of quantity accepted as a standard of measurement or of exchange.

Unissued Stock:​ Shares of a corporation’s stock authorized in its charter but not issued.

Uniform Capitalization Rules:​ These are a set of rules intended to be a single comprehensive set of rules to govern the capitalization, or inclusion in INVENTORY of direct and indirect cost of producing, acquiring and holding property. Under the rules, taxpayers are required to capitalize the direct costs and an allocable portion of the indirect costs attributable to real and tangible personal property produced or acquired for resale. The obvious effect of the uniform capitalization rules is that taxpayers may not take current deductions for these costs but instead must be recovered through DEPRECIATION or AMORTIZATION.

Uniform Accountancy Act (UAA):​ The proposal for a new regulatory framework for the public accounting profession which was developed jointly by the AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) and the NATIONAL ASSOCIATION of STATE BOARDS of ACCOUNTANCY (NASBA). The new framework is intended to enhance interstate reciprocity and practice across state lines by CPAs, meet the future needs of the profession, respond to the marketplace and protect the public that the profession serves.

Unequal Cash Flows:​ Cash flow from an ASSET that may vary from one year to the next.

Unearned Discount:​ ACCOUNT on the books of a lending institution recognizing INTEREST deducted in advance and which will be taken into INCOME as earned over the life of the LOAN.

Underwrite:​ To assume the RISK of buying a new ISSUE of securities from the issuing CORPORATION or government entity and reselling them to the public, either directly or through dealers.

Undervalued:​ SECURITY selling below its LIQUIDATION value or the MARKET VALUE analysts believe it deserves.

Underlying Security:​ SECURITY that must be delivered if a put OPTIONS or call option contract is exercised.

More about Underlying Debt:​ MUNICIPAL BOND term referring to the debt of government entities within the jurisdiction of larger government entities and for which the larger entity has partial CREDIT responsibility.

Unaudited Financial Statements:​ FINANCIAL STATEMENTS which have not undergone a detailed AUDIT examination by an independent CERTIFIED PUBLIC ACCOUNTANT (CPA).

Unamortized Premiums on Investments:​ Unexpensed portion of the amount by which the price paid for a SECURITY exceeded its PAR VALUE.

Unamortized Bond Discount:​ Difference between the FACE VALUE of a BOND and the proceeds received from the sale of the bond by the issuing COMPANY, less whatever portion has been amortized, that is, written off to EXPENSE as recorded periodically on the PROFIT and LOSS statement.

Troubled Debt Restructuring:​ Agreement between DEBTOR and CREDITOR which amends the terms of a DEBT that has little chance of being paid in accordance with its contractual terms. The agreement may involve the transfer of ASSETS in full or partial satisfaction of the debt.

Trend:​ Long-term price or trading volume movements either up, down, or sideways, which characterize a particular MARKET, commodity or SECURITY.

Treasury Note:​ Intermediate-term obligation that matures one to five years from issuance and bears INTEREST.

Treasury Instruments:​ Direct financial obligations of the United States government.