Glossary terms starting with I

Imputed Income

Imputed income is the value of non-cash compensation or benefits that must be included in taxable income, such as employer-paid life insurance over $50,000 or personal use of company vehicles.

Indirect Costs

Indirect costs are expenses that support the business as a whole instead of a single project or client, such as rent, management salaries, insurance, and general software.

Indirect Labor Cost

Indirect labor cost is pay for people whose time is not charged to client projects, such as administrative staff, management, and the non-billable part of billable staff's time.

Indirect Method

The indirect method presents operating cash flows by starting with net income and adjusting for items that affected net income but not cash.

Inside Basis

Inside basis is the partnership's tax basis in the assets it owns.

Installment Agreement

An installment agreement is a formal arrangement with the IRS to pay tax debt over time through monthly payments rather than in a lump sum.

Intellectual Property Assignment

An intellectual property assignment is a contract provision that transfers ownership of work product created during a consulting engagement to a specified party, typically the client.

Intercompany Transaction

An intercompany transaction is a financial transaction between two or more entities under common ownership that requires special accounting treatment to prevent double-counting or inappropriate profit recognition for professional service firms with multiple entities (e.

Interest Coverage Ratio

The interest coverage ratio measures a firm's ability to pay interest expenses from operating earnings by dividing operating income (or EBIT) by interest expense.

Interest Expense

Interest expense is the cost a business incurs for borrowed money.

Interest Income

Interest income is money earned on bank accounts, loans you have made, or other interest-bearing instruments.

Interim Financial Statements

Interim financial statements are financial reports prepared for periods shorter than a full fiscal year, typically monthly or quarterly, providing more frequent visibility into financial performance.

Internal Control

Internal control is a process designed to provide reasonable assurance regarding the reliability of financial reporting, the effectiveness of operations, and compliance with regulations.

Internal Rate of Return

Internal rate of return (IRR) is the discount rate that makes the net present value of an investment's cash flows equal to zero, representing the investment's effective yield.

Investing Activities

Investing activities are cash flows related to acquiring and disposing of long-term assets.

Invoice Aging

Invoice aging categorizes outstanding accounts receivable by how long invoices have been unpaid, typically in buckets of current (0-30 days), 31-60 days, 61-90 days, and 90+ days.

Invoice Factoring

Invoice factoring is a financing arrangement in which a business sells its accounts receivable to a third party (a factor) at a discount, receiving immediate cash rather than waiting for client payment.

Invoice Financing

Invoice financing is a funding method where a business borrows against unpaid invoices.

Invoice Processing Time

Invoice processing time measures the time from receipt of a vendor invoice to its recording in the accounting system and scheduling for payment.

Invoice Submission Standards

Invoice submission standards define required elements, formats, and procedures for submitting invoices to clients, ensuring invoices meet client requirements and can be processed without delay.

IOLTA

IOLTA stands for Interest on Lawyers' Trust Accounts.

IRS Notice

An IRS notice is a formal communication from the Internal Revenue Service regarding your federal tax account.

Itemized Deductions

Itemized deductions are specific eligible expenses a taxpayer lists on Schedule A of Form 1040 to reduce taxable income, instead of taking the standard deduction.