Business / Accounting Glossary

External Auditors: Independent CPAs who are retained by organizations to perform audits of financial statements.

External Audits: Audits conducted by CPAs who are independent of the client company.

Extraordinary Items: Nonoperating gains and losses that are unusual in nature, infrequent in occurrence, and material in amount.

Factor: To sell accounts receivable at a discount before they are due.

Fair Credit And Charge Card Disclosure Act (1989): A part of the Truth in Lending Act that mandates a box on credit card applications that describes key features and costs (i.e., APR, grace period for purchases, minimum finance charge, balan . . . View Full Definition

Fair Credit Billing Act (1975): Federal law that covers credit card billing problems. It applies to all open-end credit accounts (e.g., credit cards, overdraft checking). States that consumers should send a written billing . . . View Full Definition

Fair Debt Collection Practices Act (1978): Federal law that prohibits debt collectors from engaging in unfair, deceptive, or abusive practices when collecting debts. Collectors must send a written notice telling the amount owed and n . . . View Full Definition

Fair Market Value: The current value of an asset, e.g., the amount at which an asset could be sold or purchased in an arm's-length transaction.

FIFO (First-In First-Out): An inventory cost flow whereby the first goods purchased are assumed to be the first goods sold so that the ending inventory consists of the most recently purchased goods.

Financial Accounting: The area of accounting concerned with reporting financial information to interested external parties.

Financial Accounting Standards Board (FASB): The private organization responsible for establishing the standards for financial accounting and reporting in the United States.

Financial Statements: Reports such as the balance sheet, income statement, and statement of cash flows, which summarize the financial status and results of operations of a business entity.

Financing Activities: Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing) and creditors (debt financing).

Fiscal Year: An entity's reporting year, covering a 12 month accounting period.

Fixed Assets: These consist of anything which a business owns or buys for use within the business and which still retains a value at year end. They usually consist of major items like land, buildings, equ . . . View Full Definition

Fixtures and Fittings: This is a class of fixed asset which includes office furniture, filing cabinets, display cases, warehouse shelving and the like.

Flash Earnings: A news release issued by a company that shows its latest quarterly results.

Floor: The minimum market amount at which inventory can be carried on the books: equal to net realizable value minus a normal profit.

Flow Of Funds: This is a report which shows how a balance sheet has changed from one period to the next.

FOB: An abbreviation of Free On Board. It generally forms part of an export contract where the seller pays all the costs and insurance of sending the goods to the port of shipment. After that, th . . . View Full Definition

FOB (Free-On-Board) Destination: A business term meaning that the seller of merchandise bears the shipping costs and maintains ownership until the merchandise is delivered to the buyer.

FOB (Free-On-Board) Shipping Point: A business term meaning that the buyer of merchandise bears the shipping costs and acquires ownership at the point of shipment.

Foreign Corrupt Practices Act (FCPA): Legislation requiring any company that has publicly-traded stock to maintain records that accurately and fairly represent the company's transactions: additionally, requires any publicly-trad . . . View Full Definition

Franchise: An entity that has been licensed to sell the product of a manufacturer or to offer a particular service in a given area.

Freight Collect: The buyer pays the shipping costs.

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