Best of Boards, 2nd Edition

Glossary

accrual accounting. A basis of accounting in which revenue is recognized when earned and expense is recognized when incurred. Distinct from cash accounting.

accumulated depreciation or accumulated amortization. Depreciation is an accounting method by which the cost of a long-lived tangible asset (a fixed asset, typically one with a useful life of more than one year) is spread over its useful life. Each year, a portion of its cost is charged to depreciation expense on the income statement and credited to accumulated depreciation on the balance sheet. Accumulated depreciation reduces the net remaining cost of the asset on the balance sheet, and this process continues until the reported net value has been reduced to a minimum amount, known as salvage value. Various methods are used to calculate the portion of cost that is charged to expense in each year, and some tangible assets are not depreciated (notably land). Nonprofits most often use straight line depreciation, in which the asset is depreciated at a uniform rate over its useful life. Accumulated amortization functions similarly for intangible assets.

AGI. adjusted gross income. An intermediate subtotal in the calculation of an individual's taxable income, in which total income is reduced by certain statutory (Internal Revenue Code) deductions. Used as the basis for calculating a number of limitations, including the limitation on the deduction for charitable contributions.

AICPA. American Institute of Certified Public ...