Appendix C. Glossary of Accounting and Financial Terms

ABA transit number

The number that identifies the bank against which a check is drawn. Every check has an ABA (American Bankers Association) transit number, usually located in the upper-right corner. The number — actually two numbers separated by a hyphen — identifies the bank's location and the bank's name.

ABC (activity-based costing) management

An approach to cost accounting that tries to more accurately assign overhead costs and more precisely measure the profits of a firm's products, services, and business units. Refer to Book IV, Chapter 4, for a more complete discussion.


The record of transactions in a checking, savings, securities, trust, or charge account, including the account's up-to-date balance.

account number

The number that identifies the holder of an account. All accounts must have an account number.

accountant's opinion

The results of an audit of a company's records and books.

accrual basis

An accounting method in which income gets recorded as it is earned (typically, when you prepare an invoice) and expenses are recorded as they occur (typically, when you receive an invoice).

accrued interest

Interest earned on a bond or certificate of deposit, but paid at some future date — such as when the bond or certificate of deposit is sold.

ad valorem

Latin for to the value. Sales and property taxes are calculated ad valorem, as a percentage of the property value or the thing being sold.


The insurance company representative ...

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