Earned Income - Wages, salaries, professional fees,
and other amounts received as compensation for services
Earnings Per Share (EPS) - Measure of performance
calculated by dividing the net earnings of a company by
the average number of shares outstanding during a
Effective Tax Rate - Total income taxes expressed
as a percentage of NET INCOME before taxes.
EITF - See EMERGING ISSUES TASK FORCE.
Emerging Issues Task Force (EITF) - Assists the
FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and provides
guidance on early identification of emerging issues
affecting financial reporting and problems in
implementing authoritative pronouncements.
Employee Benefit Plan - Compensation arrangement,
generally in writing, used by employers in addition to
salary or wages. Some plans such as group term life
insurance, medical insurance and qualified retirement
plans are treated favorably under the tax law. Most
common qualified retirement plans are: (1) defined
benefit plans - a promise to pay participants specified
benefits that are determinable and based on such factors
as age, years of service, and compensation; or (2)
defined contribution plans - provide an individual
account for each participant and benefits based on items
such as amounts contributed to the account by the
employer and employee and investment experience. This
type includes PROFIT-SHARING PLANS, EMPLOYEE STOCK
OWNERSHIP PLANS and 401(k) PLANS.
Employee Stock Ownership Plan (ESOP) - Stock
bonus plan of an employer that acquires SECURITIES
issued by the plan sponsor.
Encumbrance - (1) MORTGAGE or other lien on the
entity's ASSETS; (2) Anticipated EXPENDITURE; (3)
Uncompleted or undelivered portion of a purchase
Equity - Residual INTEREST in the ASSETS of an
entity that remains after deducting its LIABILITIES.
Also, the amount of a business' total assets less total
liabilities. Also, the third section of a BALANCE SHEET,
the other two being assets and liabilities.
Equity Account - ACCOUNT in the EQUITY section of
the BALANCE SHEET. Includes CAPITAL STOCK, ADDITIONAL
PAID IN CAPITAL and RETAINED EARNINGS.
Equity Method of Accounting - Investors cost
basis is adjusted up or down (in proportion to the % of
stock ownership) as the investee's retained earnings
fluctuation; used for long-term investments in equity
securities of affiliate where holder can exert
significant influence; 20% ownership or greater is
arbitrarily presumed to have significant influence over
Equity Securities - CAPITAL STOCK and other
SECURITIES that represent ownership shares, or the legal
rights to purchase or acquire CAPITAL STOCK.
Error - Act that departs from what should be
done; imprudent deviation, unintentional mistake or
Escrow - Money or property put into the custody
of a third party for delivery to a GRANTEE, only after
fulfillment of specified conditions.
ESOP - See EMPLOYEE STOCK OWNERSHIP PLAN.
Estate Tax - Tax on the value of a DECENDENT'S
taxable estate, typically defined as the decedent's
ASSETS less LIABILITIES and certain expenses which may
include funeral and administrative expenses.
Estimated Tax - Amount of tax LIABILITY a
taxpayer may expect to pay for the current tax period.
Usually paid through quarterly installments.
Evidential Matter - Underlying ACCOUNTING data
and other corroborating information that support the
Exchanges - Transfer of money, property or
services in exchange for any combination of these items.
Excise Tax - Tax or duty on the manufacture,
sale, or consumption of commodities.
Excluded Income - See EXCLUSIONS.
Exclusions - Income item which is excluded from a
taxpayer's gross income by the INTERNAL REVENUE CODE or
an administrative action. Common exclusions include
gifts, inheritances, and death proceeds paid under a
life insurance contract. Also known as excluded income.
Executor - Person appointed by a will to manage a
Exempt Organization - Organization which is
generally exempt from paying federal income tax. Exempt
organizations include religious organizations,
charitable organizations, social clubs, and others.
Exemption - Amount of a taxpayer's income that is
not subject to tax. All individuals, TRUSTS, and estates
qualify for an exemption unless they are claimed as a
dependent on another individual's tax return. Exemptions
also are granted to taxpayers for their dependents.
Expectation Gap - The difference in perception
between the public and the CPA as a result of accounting
and audit service.
Expenditure - Payment, either in cash, by
assuming a LIABILITY, or by surrendering ASSET.
Exposure Draft - Document issued by the AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA),
FINANCIAL ACCOUNTING STANDARDS BOARD (FASB),
GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) or other
standards setting authorities to invite public comment
before a final pronouncement is issued.
Extension - Time granted by a taxing authority,
such as the INTERNAL REVENUE SERVICE (IRS), a state or
city, which allows the taxpayer to file tax returns
later than the original due date.
External Reporting - Reporting to stockholders
and the public, as opposed to internal reporting for
Extinguishment of Debt - To get rid of the
liability by payment; to bring to an end.
Extraordinary Items - Events and transactions
distinguished by their unusual nature and by the
infrequency of their occurrence. Extraordinary items are
reported separately, less applicable income taxes, in
the entity's statement of income or operations.