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 period.

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 commitment.

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 the investee.

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 omission.

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 FINANCIAL STATEMENTS.

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 DECENDENT'S estate.

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 management's benefit.

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.