| accounting period |
the period covered by an income statement (e.g., month, year); also known as the business cycle |
| accrual |
the recognition of assets, expenses, liabilities, or revenues after the cash value has been determined but before it has been transferred |
| ACH credit |
a transaction in which a tax-payer instructs its financial institution to originate a federal tax deposit through the ACH system to the appropriate Treasury account; also known as EFTPS through a financial institution. An ACH transaction initiated by the taxpayer resulting in a payment of taxes; funds are "given" from the account |
| ACH debit |
a transaction in which an employer's Financial Agent, after receivign instructions from the employer, instructs the employer's financial institution to withdraw funds from the employer's account for a federal tax deposit and to route the deposit to the appropriate Treasury account through the ACH system; also known as EFTPS-Direct. An ACH transaction initiated by the Tax Agent (e.g., IRS) resulting in a payment of taxes; funds are "taken" from the account |
| adoption assistance |
Financial benefit provided by an employer to an employee to help with the child adoption process. Within certain limitations, it is excluded from federal income tax withholding, though not from social security and Medicare. |
| Advance Earned Income Credit |
Earned income credit that is partially paid in advance by the employer during the year. This is done through a reduction in income tax withholding during each pay period |
| aggregate method |
method of withholding federal income tax from supplemental wages in which the supplemental wage payment is combined with the regular wages paid during the most recent payroll period; after calculating withholding on the total amount using the wage-bracket or percentage method, the amount already withheld from the last wage payment is subtracted to reach the amount that must be withheld from the supplemental wage payment |
| Archer medial savings account |
An arrangement through which an employer or an employee (but not both) can put tax-deferred contributions into an account for the payment of health care deductibles under a high deductible health insurance plan |
| asset |
resource acquired by a business that is consumed by the business |
| Automated Clearing House (ACH) |
A Federal Reserve Bank acting on behalf of an association of financial institutions that operates a facility (system) that serves as a clearinghouse for direct deposit or other electronic payment transactions; entries are received and transmitted by the ACH under the rules of the association. Funds moved from bank A to bank B must go through the ACH. |
| balance sheet |
A financial statement that presents a business' financial position in terms of its assets, liabilities, and owner's equity as of a certain date (generally the end of the company's fiscal year, but may be issued monthly or quarterly as well) |
| batch |
a sample or group of items (data) being processed |
| batch control |
control that is designed to ensure a batch of data has been entered successfully |
| biweekly |
once every two weeks; type of payroll period that can be used in the percentage of wage-bracket method of withholding |
| cafeteria plan |
A plan that offers flexible benefits under Internal Revenue Code (IRC) §125. Employees choose their benefits from a "menu" of cash and benefits, some of which can be paid for with pretax deductions from wages. |
| cash or deferred arrangement (CODA) |
An arrangement under a retirement plan that allows employees to either receive cash or have the employer contribute an equivalent amount to the plan. |
| chart of accounts |
lists each account by a name and an identification number; the numbering scheme is designed to identify the type of account. |
| commission |
percentage of sales, collections, etc., paid to an employee |
| common law test |
a test that measures the control and direction that an employer has authority to exercise over a worker; where the employer has the right to direct the worker as to how, where, and when the work will be completed, in addition to controllinf the result of the work, the worker is a common law employee |
| compensation |
All cash and noncash remuneration given to an employee for services performed for the employer |
| compound surname |
last name with more than one part, such as Smith-Johnson or Rodrigues de Perez |
| constructive receipt |
occurs when wages are made available to an employee, not when the wages were earned |
| deduction |
An amount subtracted from an employee's gross pay to reach net pay, or an amount allowed to taxpayers as an offset against income |
| deferred compensation |
In general, the deferral of a wage payment to a future date. Usually describes a portion of wages set aside by an employer for an employee and put into a retirement plan on a pretax basis |
| defined benefit plan |
A retirement plan that uses a formula (generally based on an employee's salary and length of service) to calculate an employee's retirement benefits and is not funded by employee contributions to the plan |
| defined contribution plan |
A retirement plan with benefits determined by the amount in an employee's account at the time of retirement. The account may be funded by contributions from both the employer and the employee |
| dependent care assistance program |
An employer plan providing dependent care services or reimbursement for such services |
| direct deposit |
the electronic transfer of an employee's net pay directly into financial institution accounts designated by the employee, thus avoiding the need for a paycheck |
| discretionary bonus |
bonus paid for services performed; in order to be considered discretionary, the bonus cannot be paid because of a promise made in advance, a contract, or another agreement. |
| disposable earnings |
that part of an employee's earnings remaining after deductions required by law (e.g., taxes); it is used to determine that amount of an employee's pay that is subject to a garnishment, attachment, or child support withholding order |
| Earned Income Credit |
tax credit that is availale to low-income employees; it may be taken when the employee files his or her individual tax return |
| Electronic Federal Tax Payment System (EFTPS) |
allows employers to make federal tax deposits electronically through the ACH network
|
| electronic funds transfer (EFT) |
the transfer of money electronically from an account in one financial institution to an account in another financial institution |
| electronic tax application (ETA) |
a "same-day settlement" procedure ender which tax deposits are initiated and settled on the same day |
| employee |
an individual who performs services for another individual or an organization in return for compensation |
| employer identification number (EIN) |
the employer's acount number with the Internal Revenue Service; it consists of nine digits and is always in the following format: 00-0000000 |
| equity |
represents the owner's investment in a company, i.e. the company's net worth |
| excise tax |
tax imposed on a specific transaction |
| exempt (Form W-4) |
if an employee claims exempt on his or her Form W-4, the employer does not have to withhold federal income tax from the employee's wages |
| exempt employees |
while this term can refer to anyone not covered as an employee under the Fair Labor Standards Act, it generally means those employees who are exempt from the minimum wage, overtime pay, and certain recordkeeping requirements of the Federal Wage-Hour Law |
| expense account |
shows costs for goods and services consumed by the company during the accounting period |