The Complete Dictionary of Accounting and Bookkeeping Terms Explained Simply by Cindy Ferraino

Author:Cindy Ferraino
Language: eng
Format: epub
Tags: accounting, bookkeeping, terms, dictionary, small business
Publisher: Atlantic Publishing Group
Published: 2012-02-27T00:00:00+00:00

CHAPTER 11: “I” DEFINITIONS

Identifiable intangible asset: A valued instrument that a company holds for a greater profit return. For example, a new marketing technique for a sales promotion. Although this is something you cannot see, it adds value to the company.

Idle funds: An account that has money in it but has remained inactive.

Illusory profits: See Phantom profits.

Impairment charge: The ability to relinquish products or services that are considered to be damaged or unusable.

Impairment of long-lived assets: In order for a company to relinquish assets that it considers to be damaged or unusable, the company must make sure it is a reasonable charge as to why the asset is no longer viable.

Impairment: A loss in revenue due to economical changes.

Implicit interest rate: Refers to a loan that has not identified an interest rate. For example, a person will pay $50 per month for 6 months instead of paying $285 in cash. The interest rate was not agreed upon but the customer will pay $15 extra in interest.

Imprest amount: See Petty cash.

Imputed interest: Although payment has not been made, interest will be calculated for payment.

Imputed value: A valued instrument will be listed on a company’s financial statement based on historical cost and not at the current value of the asset.

In specie: From the Latin term meaning “in actual form,” this is an asset that will be recorded as it appears and will not be converted for liquidation if a financial crisis arises.

In the black: A slang phrase referring to a company that will have enough revenue to cover operating expenses.

In the red: A slang phrase referring to a company that is burdened by operating expenses and is unable to generate revenue.

Inactive asset: A valued instrument not being used in current business operations. For example, a plow only used when another one needs to be repaired.

Income from operations: See Operating income.

Income statement: See Profit and loss statement.

Income summary statement: See Temporary account.

Income tax depreciation: Under the guidelines of the Internal Revenue Service, depreciation expenses are an allowable deduction from the gross income tax base.

Income tax expenses: Certain activities are allowed to be deducted from the gross income tax base, like dependent care, office supplies for a self-employed writer, and upgrading a roof with solar panels.

Income taxes payable: A line item on a company’s financial statement to reflect how much taxes the company paid for the accounting period.

Income: Revenue recognized after operating expenses have been deducted.

Incoming averaging: To calculate income taxes based on prior year amounts. This method is no longer valid because of the revised tax laws in 1986.

Incremental analysis: The method of evaluating projects based on the differences of income and expenses. This determines which project will produce a larger profit.

Incremental cost: The price to manufacture one product.

Incremental internal rate of return: This combines two areas — incremental cost and cash flow. If the price of the product is $5 and then cash flow predicted is $10, the company will want to project a sales figure of $15 per item.

Incremental revenue: The amount of profit associated with how many products where manufactured for one production unit.

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