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| Term | Meaning |
|---|---|
| IASC | International Accounting Standards Committee (IASC) – An independent private sector body, formed in 1973, with the objective of harmonizing the accounting principles used in businesses and other organizations for financial reporting around the world. Its members are 143 professional accounting bodies in 104 countries. |
| IMA | Institute of Management Accountants (IMA) – A professional organization made up primarily of management accountants. |
| Improvement | Expenditure directed to a particular asset to improve its performance or useful life. |
| Imputed interest | If no interest or an unrealistic amount of interest is charged in a sale involving certain kinds of deferred payments, then the transaction will be treated as if the realistic rate of interest had been used. The difference between the realistic interest and the interest actually used is referred to as imputed interest. |
| In Arrears | Not paid at the time originally agreed to and overdue. |
| Income | Inflow of revenue during a period of time. |
| Income from Operation | Gross margin with operating expenses subtracted. |
| Income statement | Summary of the effect of revenues and expenses over a period of time. |
| Income summary | A temporary account used during the closing process that holds a summary of all revenues and expenses before the net income or loss is transferred to the capital account. |
| Income tax basis | (1) For tax purposes, the concept of basis determines the proper amount of gain to report when an asset is sold. Basis is generally the cost paid for an asset plus the amounts paid to improve the asset, less deductions taken against the asset, such as depreciation and amortization. (2) For accounting purposes, a consistent basis of accounting that uses income tax accounting rules while generally accepted accounting principles (GAAP) does not. |
| Incorporation | Process by which a company receives a state charter allowing it to operate as a corporation. |
| Incremental cash flow | Net of cash outflows and inflows attributable to a corporate investment project. |
| Indenture | Formal agreement, also called a deed of trust, between an issuer of bonds and the bondholder covering certain considerations such as form of the bond, for example. |
| Independence Standard Board (ISB) | This is the private sector standard-setting body governing the independence of auditors from their public company clients. It came about from discussions between the AICPA, other accounting representatives, and the SEC. |
| Independent broker | New York Stock Exchange member who executes orders for other floor brokers who have more volume than they can handle, or for firms whose exchange members are not on the floor. |
| Index | Statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. |
| Indirect cost | Any cost that cannot be conveniently and economically traced to a specific department; a manufacturing cost that is not easily traced to a specific product and must be assigned using an allocation method. |
| Indirect labour costs | Labour costs for production-related activities that cannot be connected with or conveniently and economically traced to a specific end product. |
| Indirect manufacturing costs | Various production-related costs that cannot be practically or conveniently traced to an end product. |
| Indirect materials | Minor materials and other production supplies that cannot be conveniently and economically traced to specific products. |
| Indirect method | The procedure for converting the income statement from an accrual to a cash basis. |
| Individual Retirement Account (IRA) | A personal savings plan that allows an individual to make cash contributions per year dependent on the individual’s adjusted gross income and participation in an employer’s retirement plan. Under a traditional IRA, these earnings are not taxable until the time of withdrawal from the plan. |
| Inflation | Rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on the market. |
| Inflation rate | Rate of change in prices. |
| Inheritance | As distinguished from a bequest or devise, an inheritance is property acquired through laws of descent and distribution from a person who dies without leaving a will. The value of property inherited is excluded from a taxpayer’s gross income, but if the property inherited produces income, it is included in gross income. A taxpayer’s basis in inherited property is the fair market value at the time of death. |
| Initial Public Offering (IPO) | When a private company goes public for the first time. |
| Inquiry | A procedure that consists of seeking information, both financial and non-financial, of knowledgeable persons throughout the company. It is used extensively throughout the audit and often is complementary to performing other procedures. Inquiries may range from formal written inquiries to informal oral inquiries. |
| Inside Information | Corporate affairs that have not yet been made public. |
| Insolvency | Inability to pay debts when due. |
| Insolvent | When an entity’s liabilities exceed its assets. |
| Instalment method | Tax accounting method of reporting gain on the sale of an asset exchanged for a receivable. In general, the gain is reported as the note is paid off. |
| Institute of Management Accountants (IMA) | A professional organization made up primarily of management accountants. |
| Instrument | A legal document used for a specific purpose, such as paying for goods received. |
| Insurance | System whereby individuals and companies that are concerned about potential hazards pay premiums to an insurance company, which reimburses them in the event of loss. |
| Insured account | Account at a bank, savings and loan association, credit union, or brokerage firm that belongs to a federal or private insurance organization. |
| Intangible asset | Asset having no physical existence such as trademarks and patents. |
| Interest | Payment for the use or forbearance of money. |
| Interest coverage ratio | A way of measuring the degree of protection that a creditor has from a debtor’s default on interest payments. |
| Interest rate | An amount of money charged for borrowing money or paid for the use of somebody else’s money. |
| Interim dividend | Dividend declared and paid before annual earnings have been determined, generally quarterly. |
| Interim financial statements | Financial statements that report the operations of an entity for less than one year. |
| Internal audit | Audit performed within an entity by its staff rather than an independent certified public accountant. |
| Internal control | Process designed to provide reasonable assurance regarding the achievement of various management objectives, such as the reliability of financial reports. |
| Internal control over financial reporting | A process designed by, or under the supervision of the company’s principal executive and principal financial officers or persons performing similar functions and affected by the company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures. |
| Internal Rate of Return (IRR) | Method that determines the discount rate at which the present value of the future cash flows will exactly equal the investment outlay. |
| Internal Revenue Code | Collection of tax rules of the federal government. Also referred to as title 26 of the United States Code. |
| Internal Revenue Service (IRS) | Federal agency that administers the Internal Revenue Code. The IRS is part of the United States Treasury Department. |
| International Accounting Standards Committee (IASC) | An independent private sector body, formed in 1973, with the objective of harmonizing the accounting principles used in businesses and other organizations for financial reporting around the world. Its members are 143 professional accounting bodies in 104 countries. |
| International Mutual Fund | Mutual fund that invests in securities markets throughout the world so that if one market is in a slump, money can still be made in others. |
| Intrinsic Value | Valuation determined by applying data inputs to a valuation theory or model. |
| Inventory | Tangible property held for sale, or materials used in a production process to make a product. |
| Inventory Financing | Circumstance where loans in excess of accounts receivable are made against inventory in anticipation of future sales. Sometimes used as a synonym for over-advances in factoring. |
| Inventory Turnover | A ratio used to indicate the number of times a company’s average inventory is sold during an accounting period. |
| Invest | To put money into something such as property, stocks, or a business, in order to earn interest or make a profit. |
| Investing | The practice of putting money into something, such as property, in order to earn interest or make a profit. |
| Investment | Expenditure used to purchase goods or services that could produce a return to the investor. |
| Investment Banker | Firm, acting as underwriter or agent, that serves as an intermediary between an issuer of securities and the investing public. |
| Investment Income | Income from securities and other non-business investments; such as dividends, interest, etc. |
| Investment Tax Credit | This is a component of the general business credit and consists of the following: 1. The energy credit; 2. The rehabilitation credit; and 3. The reforestation credit. |
| Invoice | Bill prepared by a seller of goods or services and submitted to the purchaser. |
| Involuntary Conversions | This is a conversion of property where it is in whole or part destroyed, stolen, seized, requisitioned or condemned (or where there is a threat or imminence of requisition or condemnation). |
| IPO | Initial Public Offering (IPO) – When a private company goes public for the first time. |
| IRA | Individual Retirement Account (IRA) – A personal savings plan that allows an individual to make cash contributions per year dependent on the individual’s adjusted gross income and participation in an employer’s retirement plan. Under a traditional IRA, these earnings are not taxable until the time of withdrawal from the plan. |
| IRS | Internal Revenue Service (IRS) – Federal agency that administers the Internal Revenue Code. The IRS is part of the United States Treasury Department. |
| ISB | Independence Standard Board (ISB) – This is the private sector standard-setting body governing the independence of auditors from their public company clients. It came about from discussions between the AICPA, other accounting representatives, and the SEC. |
| Issue | Stock or bonds sold by a corporation or a government entity at a particular time. |
| Issued and Outstanding | Shares of a CORPORATION, authorized in the corporate charter, which have been issued and are outstanding. |
| Issuer | This term means an issuer, the securities of which are registered under section 12 of the Securities Exchange Act of 1934, or that is required to file reports under section 15(d) of that act, or that files or has filed a registration statement with the SEC that has not yet become effective under the Securities Act of 1933 and that it has not withdrawn. |