# Accounting and finance glossary - part 2 ## Q Qualified Opinion - A report issued by an accountant when the information presented is not sound in their professional opinion, rather than an Unqualified Opinion Quality of Earnings - The earnings that can be attributed to higher sales or lower costs instead of accounting anomalies ## R Raw Materials - Materials bought to be processed into Finished Goods Refinancing Agreement - A company's arrangement to replace existing financing with other funding instead of defaulting Realization Principle - A principle of GAAP where revenue can only be recognized when the goods or services that created that revenues have been delivered Rebate - A partial refund for overpaying or services that were cancelled before they ended Receipt - A record of payment, usually written or printed Replacement Cost - The cost of replacing an asset or liability Required Minimum Distribution - A individual's legal requirement to take a specific fraction of their retirement money sometime after age 70. Reserve Account - An account set up to retain earnings, usually to make balance sheets clearer or to reserve money against future purchases or liabilities Retained Earnings - Net income that a company keeps rather than distributed to shareholders as Dividends Return on Investment (ROI) - A very popular profitability ratio, most frequently calculated by dividing the gain from the investment by the cost of the investment Revenue - The money a business receives for its commercial activities Risk - aka Volatility, the possibility of financial loss, used in investing to determine the most marketable return Rounding Error - An error that rounds a number upward or downward, a natural product of [computer-based math](math-cs.md) ## S Sales - The total income from selling goods or services Secured Loan - A loan where the borrower pledges an asset in exchange for a loan that the lender then uses as collateral Securities - A broad term referring to any outstanding obligations by companies, typically refers to stocks or bonds Securities and Exchange Commission (SEC) - A governing board alongside the Federal Trade Commission that oversees trade in the USA Segment Reporting - Where divisions of a business are separated for individual reporting Share - aka Stock, an evenly divided part of a company Share Repurchase - aka Stock Buyback, where a corporation buys back is shares from its stockholders Shareholder - aka Stockholders, the owner of shares in a company Short Position - A specific option where an investor purchases sends a short order to a broker, the broker sells the asset with a loan to the investor, and the investor pays it back later and keeps or pays the price difference Simple Interest - Interest applied to the original principal of a loan Sinking Fund - Money set aside over time to repay a debt or replace a wasting asset Speculation - Analysis that makes predictions about an entity's future performance for the purpose of making investment decisions Stakeholder - Vague term for any entity who may have any interest in an organization Statement of Cash Flows - A common financial statement that shows how changes in the Balance Sheet affects the movement of cash, categorized as Operating, Investing and Financing Activities Stock-For-Stock Merger - A merger where all of a subsidiary company's shares are directly exchanged for all of a parent company's shares, effectively conjoining the companies' equity. Stock Exchange - aka Stock Market, an organization that sets legal standards for buying and selling publicly traded Shares Stockbroker - A person or organization who buys and sells securities Strike Price - The price an option has to arrive at to have any legitimate value Subordinated Debt - The amount of Unsecured Debt a company owes if the company is liquidated Subsidiary Company - A company owned by a Parent Company Subtotal - Smaller items grouped together to create a Total Sunk Costs - Money that cannot be recovered from being spent Suspense Account - A temporary account where funds are deposited before being sent to the correct place ## T Tangible Assets - Physical assets, such as buildings, vehicles, and machinery Tax - A mandatory contribution to a government, typically measured by the government through financial transactions Tax Haven - Jurisdictions that give special tax incentives to foreign investors and depositors Taxation - The act of taxing people and businesses Total - the "bottom line", usually represented by a line above and two lines below Total Cost of Ownership (TCO) - the complete cost of an asset, which include renewal fees and other mandatory expenses Trade - An investing transaction, typically trading cash with an asset Transposition - An error where the digits of a number are swapped ## U Undeposited Funds Account - aka Cash-in-Hand Account, an account that shows the money that a company has received but not banked or spent Unlisted Company - A Limited Liability Company not listed on a Stock Exchange Unqualified Opinion - A report issued by an accountant when the information presented is sound in their professional opinion, rather than a Qualified Opinion Unsecured Creditor - A creditor who doesn't have a claim against a particular Asset, meaning they will only get whatever is left if a company is liquidated Unsecured Loan - A debt without any collateral attached to it ## V Valuation - A process that determines the worth of a company's assets Variance - The difference between the estimated cost and the actual cost Vest - A window of time before an investment can be redeemed ## W Wages - An expense made to employees for their services Withholding - The amount of money withheld from salaries and paid by the employer to the correct authority Working Capital - The excess of Current Assets minus Current Liabilities Work-in-Progress (WIP) - Partially completed goods or services that will be recorded as an asset upon completion Write-down - A non-cash partial-value expensed reduction of an asset Write-off - The non-cash total-value expensed reduction of an asset ## Y Yield to Call (YTC) - The chances of a bond being called before its maturity ## Z Zero-Based Account (ZBA) - A bank account which is always kept as close to zero as possible Zero-Based Budget (ZBB) - Financial forecasting where every dollar is allocated to a specific purpose to make the starting and ending balances zero