Glossary terms starting with A

Abatement Request

An abatement request is a formal appeal to the IRS or state tax authority asking them to reduce or eliminate a penalty.

Above-the-Line Deduction

Above-the-line deductions reduce your gross income to arrive at adjusted gross income, regardless of whether you itemize.

Absorption Rate

Absorption rate measures the extent to which overhead costs are recovered through billable work, typically expressed as a percentage of the planned overhead allocation actually absorbed by projects.

Accelerated Billing

Accelerated billing is the practice of invoicing clients earlier in the project or service cycle than standard billing schedules would dictate, often based on milestone completion, prepayment arrangements, or client agreement.

Account Cleanup

Account cleanup is the process of correcting errors, resolving discrepancies, and organizing messy accounts in your accounting system.

Account Management

Account management is the ongoing process of nurturing and growing client relationships after initial engagement, focusing on client satisfaction, retention, and opportunities for expansion.

Account Reconciliation Schedule

An account reconciliation schedule documents which balance sheet accounts require reconciliation, how frequently each should be reconciled, who is responsible, and when reconciliations are due.

Accountable Plan

An accountable plan is a written employer policy for reimbursing business expenses so that reimbursements are not treated as taxable wages.

Accounting

Accounting is the systematic process of recording, classifying, summarizing, and reporting financial transactions to provide accurate information for decision-making, compliance, and stakeholder communication.

Accounting Cycle

The accounting cycle is the complete sequence of steps used to identify, record, classify, summarize, and report financial transactions, from analyzing source documents through closing entries and financial statement preparation.

Accounting Methods

Accounting methods define when revenue and expenses are recognized in financial records: the cash basis recognizes transactions when cash changes hands, and the accrual basis recognizes them when earned or incurred, regardless of when cash is received or paid.

Accounting Period

An accounting period is the time span covered by financial statements, typically monthly, quarterly, or annually, providing consistent intervals for measuring and comparing financial performance.

Accounts payable (AP)

Accounts Payable (AP) represents money your business owes to vendors, suppliers, and service providers for goods or services received but not yet paid.

Accounts Payable Aging

Accounts payable aging is a report listing outstanding vendor invoices organized by how long they have been outstanding, typically in 30-day buckets (current, 31-60 days, 61-90 days, over 90 days).

Accounts Payable Turnover

Accounts payable turnover is a financial ratio measuring how quickly a company pays its suppliers, calculated by dividing total purchases or cost of goods sold by average accounts payable.

Accounts receivable (AR)

Accounts Receivable (AR) represents money owed to your business by clients for services delivered or products sold but not yet paid.

Accounts Receivable Aging

Accounts receivable aging categorizes outstanding client invoices by how long they've been unpaid, typically in buckets: current (0-30 days), 31-60 days, 61-90 days, and 90+ days.

Accounts Receivable Financing

Accounts receivable financing is a type of asset-based lending where a business borrows against its outstanding invoices, using receivables as collateral for a line of credit or loan.

Accounts Receivable Management

Accounts receivable management encompasses all policies, processes, and activities related to managing client receivables from credit evaluation through collection, aiming to optimize cash flow while maintaining client relationships.

Accounts Receivable Turnover

Accounts receivable turnover measures how efficiently a firm collects payment from clients, calculated by dividing annual revenue by average accounts receivable balance.

Accrual accounting

Accrual accounting records revenue when earned and expenses when incurred, regardless of when cash changes hands.

Accrual Basis Conversion

Accrual basis conversion is the process of transitioning financial records from cash basis accounting (recording transactions when cash changes hands) to accrual basis (recording when revenue is earned or expenses incurred).

Accrued Expenses

Accrued expenses are costs a business has incurred but not yet paid or been billed for, such as wages earned before payday or services received before the invoice arrives.

Accrued Liability

An accrued liability is an obligation for costs a firm has incurred but not yet paid or been billed for.

Accrued Liability Management

Accrued liability management is the systematic process of identifying, recording, and tracking expenses incurred but not yet paid or invoiced, ensuring liabilities are recognized in the period they occur.

Accrued Revenue

Accrued revenue is income that has been earned through service delivery but not yet billed or collected, and is recorded as an asset on the balance sheet until invoiced.

Accrued Wages

Accrued wages are pay that employees have earned but have not yet been paid at the end of a period.

Accumulated Depreciation

Accumulated depreciation is the total depreciation expense recorded against an asset since acquisition, representing the portion of the asset's cost that has been expensed over its useful life.

ACH Block

An ACH block is a fraud prevention service that restricts unauthorized electronic debits from your bank account.

ACH Payment

An ACH payment is an electronic transfer between U.

ACH Transfer

An ACH transfer moves money electronically between bank accounts through the Automated Clearing House network.

Activity Based Costing

Activity-based costing (ABC) is a method that assigns overhead costs to specific activities that drive them, then allocates those costs to products or services based on consumption.

Additional Insured

An additional insured is a person or entity added to your liability insurance policy who gains protection under your coverage.

Adjusted Trial Balance

An adjusted trial balance is a listing of all general ledger accounts and balances after adjusting entries have been recorded, serving as the basis for preparing financial statements.

Adjusting entries

Adjusting entries are journal entries made at the end of an accounting period to record revenues and expenses in the correct periods, ensuring that the financial statements follow accrual accounting principles.

Adjusting Entry

An adjusting entry is a journal entry made at the end of an accounting period to record revenues and expenses that have occurred but are not yet reflected in the books.

Administrative Burden Ratio

Administrative burden ratio measures administrative costs as a percentage of revenue or total operating expenses, indicating the overhead burden of non-revenue-generating activities.

Advance Fee

An advance fee is a payment received before services are performed.

Advance Payment Accounting

Advance payment accounting is the proper treatment of payments received before services are delivered: record them as a liability (deferred revenue) when received and recognize revenue only when services are performed.

After-The-Fact Payroll

After-the-fact payroll is payroll processing performed after employees have already been paid, typically to calculate proper withholdings, create payroll records, and prepare tax deposits and filings when the employer paid employees without using a payroll system.

Aged Trial Balance

An aged trial balance combines a trial balance (a listing of all account balances) with aging analysis for accounts receivable and payable, showing both the total balances and their distribution across time buckets.

Aging Bucket

An aging bucket is a time-based category for classifying receivables or payables by how long they have been outstanding.

Aging Report

An aging report categorizes outstanding amounts by how long they have been due, typically showing current, 30-, 60-, and 90+ day categories.

Aging Schedule

An aging schedule is a detailed report that categorizes accounts receivable by the length of time invoices have been outstanding, typically in 30-day increments (current, 1 to 30 days, 31 to 60 days, 61 to 90 days, and over 90 days).

Agreed-Upon Procedures (AUP)

Agreed-upon procedures are a CPA engagement where the accountant performs specific procedures requested by the client and reports factual findings without providing assurance or conclusions.

All-in Labor Cost

All-in labor cost captures the complete cost of an employee, including salary, payroll taxes, benefits, training, equipment, and allocated overhead like office space and software.

Allocation Base Selection

Allocation base selection is the process of determining the appropriate driver for allocating indirect costs to cost objects such as projects, departments, or clients.

Allowance for Doubtful Accounts

Allowance for doubtful accounts is a contra asset account that represents the estimated portion of accounts receivable that will not be collected, reducing the net AR balance to its expected realizable value.

Alternative Fee Arrangement (AFA)

An alternative fee arrangement is any billing method other than traditional hourly billing.

Amended Return

An amended return corrects errors or reports changes to a previously filed tax return.

Amortization

Amortization spreads the cost of an intangible asset, or the repayment of a loan, over a set period.

Annual Compliance Calendar

An annual compliance calendar tracks all required business filings, tax deadlines, license renewals, and regulatory submissions throughout the year.

Annual Filing

An annual filing is a required yearly report submitted to state authorities to maintain your business registration in good standing.

Annual Recurring Revenue (ARR)

Annual recurring revenue is the annualized value of recurring contracts, calculated as MRR multiplied by 12.

Annualized Revenue

Annualized revenue is the projection of current period revenue to a full-year basis, typically calculated by multiplying a shorter period's revenue by the appropriate factor (monthly by 12, quarterly by 4).

AP Automation

AP (Accounts Payable) automation uses software to streamline vendor bill processing, from receipt and coding through approval workflow and payment execution.

Apportionment

Apportionment is the method states use to divide your business income among the states where you operate, so each one taxes only its share.

Approval Workflow

An approval workflow defines the sequence of authorizations required before transactions are processed, specifying who approves what at which dollar levels.

AR Management

AR management encompasses all activities related to tracking, collecting, and optimizing accounts receivable, from invoice generation through cash collection.

Asset Register Management

Asset register management is the ongoing maintenance of a detailed listing of all fixed assets owned by the business, including acquisition date, cost, depreciation method, accumulated depreciation, and current book value.

Asset Turnover Analysis

Asset turnover analysis examines how efficiently a firm turns its assets into revenue.

Asset Turnover Ratio

The asset turnover ratio measures how much revenue a business generates for each dollar of assets it holds.

Asset Utilization Ratio

Asset utilization ratio measures how effectively a company uses its assets to generate revenue, typically calculated as revenue divided by total assets.

Asset-Based Lending

Asset-based lending is financing secured by company assets such as accounts receivable, equipment, or inventory, with borrowing capacity tied to asset values rather than just cash flow or creditworthiness.

Audit Notice

An audit notice is official IRS correspondence informing you that your tax return has been selected for examination.

Audit Preparation Checklist

An audit preparation checklist documents all tasks, documents, and reconciliations required to prepare for a financial audit, ensuring complete and organized information is ready for auditors.

Audit Trail

An audit trail is a chronological record of all transactions and changes to financial records, documenting who made each entry, when it was made, and what was changed.

Audit-Ready Books

Audit-ready books are financial records that are fully documented, properly classified, reconciled, and supported with organized materials sufficient to withstand external scrutiny from auditors, tax authorities, investors, or acquirers.

Automated Reconciliation

Automated reconciliation uses software and AI to match bank transactions with accounting records, flagging only exceptions for human review.

Automatic Categorization

Automatic categorization is a feature in accounting software that assigns expense categories to transactions based on vendor name, transaction description, or learned patterns.

Average Collection Period

Average collection period measures the typical number of days between issuing an invoice and receiving payment, calculated by dividing accounts receivable by average daily credit sales.

Average Contract Value (ACV)

Average contract value (ACV) is the typical revenue a firm earns per client contract, calculated by dividing total contract revenue by the number of contracts in a period.

Average Deal Size

Average deal size is the mean revenue value of closed engagements over a period.