Accountant's Glossary

Accountant's Glossary

Here at PSVS we are in the trenches every day helping you navigate your way through the various complexities of your accounting-related activities. It is easy to forget that not everyone knows all the accounting-specific terminology we use daily.

We have created this fairly comprehensive glossary to supplement your knowledge and understanding and hopefully answer some of your questions.

Of course, if you have any additional questions send us an email or give us a call: (650) 578-1200.

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Paid-in Capital In Excess Of Par

The account that represents the amount of cash received by a corporation over the stock's par value.

Par Value

The dollar amount assigned to each share of stock when the corporation's charter is approved; used to determine the amount credited to the capital stock account.


An individual who shares ownership of an unincorporated trade or business with one or more persons.


An unincorporated organization with two or more parties who join together to carry on a trade or business, with each party contributing money, property, labor, or skills and expecting to share in the profits and losses of the business.

Partnership Agreement

A written document that sets out the terms under which the partnership will operate.

Partnership Liquidation

Ending a partnership involves winding up the affairs of the partnership business.

Passive Activity

A trade or business activity in which a taxpayer did not materially participate and any rental activity (except a rental activity for those who qualify as real estate professionals).

Passive Income

Income from a trade or business activity in which a taxpayer did not materially participate and income from all real estate activities, regardless of their participation (except rental activities for those who qualify as real estate professionals).


The exclusive right granted to an owner or inventor to manufacture, use, or sell an invention for a limited period of time.

Pay Period

The amount of time over which an employee is paid.


The person or business to whom a check is written or a note is payable.


A list of the employees and the payments due to each employee for a specific pay period.

Payroll Register

A form that summarizes information about employees' earnings for each pay period.

Payroll Tax Expense

Account where the employer's payroll taxes are recorded.


A series of regular definitely determinable payments made to the individual after they retire from work.

Per Diem

Daily or per day.

Per Diem Payments

Payments made on a periodic basis without regard to actual expenses incurred.

Percentage Of Net Sales Method

A method of estimating uncollectible debts expense in which a business assumes that a certain percentage of each year's net sales will be uncollectible.

Period of Limitations

The period of time after which a taxpayer can bring no legal action against the IRS regarding their tax return or vice versa.

Periodic Inventory System

An inventory system in which the number of items on hand is determined by a physical count.

Periodic Payment or Distribution

A payment or distribution from a retirement plan that recurs on a regular basis, such as monthly or yearly.

Permanent Accounts

Accounts that are continuous from one accounting period to the next; balances are carried forward to the next period (for example, assets, liabilities, and owner's capital accounts).

Permanently and Totally Disabled

A condition that indicates an individual cannot engage in any substantial gainful activity because of a physical or mental condition. A physician must certify that the condition has lasted or can be expected to last continually for at least 12 months or that the condition can be expected to result in death.

Perpetual Inventory System

An inventory system in which a constant, up-to-date record of the amount of merchandise on hand is maintained.

Personal Representative

A court-appointed executor or administrator of an estate or anyone who is in charge of a deceased individual's property.

Personal Service Activity

An activity that involves the performance of personal services in the fields of health (including veterinary services), law, engineering, architecture, accounting, actuarial science, performing arts, consulting, or any other trade or business in which capital is not a material income-producing factor.

Personal Service Corporation

A corporation for which the main work is the performance of personal service activities and for which these activities are substantially performed by employees who are also owners of the corporation.


A set of unique qualities that makes us different from all other people.

Petty Cash Disbursement

A payment made from the petty cash fund.

Petty Cash Fund

Cash kept on hand for making small, incidental cash payments.

Petty Cash Register

A record of all disbursements made from the petty cash fund.

Petty Cash Requisition

A form requesting money to replenish the petty cash fund.

Petty Cash Voucher

A form that provides proof of payment from the petty cash fund.

Petty Cashier

The person responsible for maintaining the petty cash fund and for making petty cash disbursements.


The gradual reduction in the amount allowed as a deduction, a credit, or an expense.

Physical Inventory

An actual count of all the merchandise on hand and available for sale.

Placed in Service

Ready and available for a specific use whether in a trade or business, the production of income, a tax-exempt activity, or a personal activity.

Placed-in-Service Date

The date property is ready and available for a specific use.

Plant Assets

Long-lived assets that are used in the production or sale of other assets or services over several accounting periods.

Point-of-sale Terminal

Electronic cash register.


Mortgage interest fees paid to reduce the initial interest rate on a loan. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points.


A person who owns the proceeds of an insurance contract. The policyholder may also be the insured.

Portfolio Income

Interest, dividends, annuities, and royalties not derived in the ordinary course of a trade or business; a gain or loss from the disposition of property that produces these types of income or that is held for investment.

Post-closing Trial Balance

Prepared to verify that total debits equal total credits after the closing entries are posted.


The process of transferring information from the general journal to individual general ledger accounts, the fourth step in the accounting cycle.

Pre-Tax Contribution

The voluntary contribution an employer deducts from an employee's pay that is not subject to income tax. Also known as deferred compensation or elective deferral.

Preferred Stock

A type of share in the ownership of a company that usually does not provide voting rights, but the preferred stock shareholders' claim to dividends comes before shareholders owning common stock.


The amount paid for insurance.

Presidentially Declared Disaster Area

An area declared by the President of the United States to be eligible for federal assistance under the Disaster Relief and Emergency Assistance Act.


The amount of money being borrowed on a promissory note.

Prior-Year Unallowed Losses

Losses not allowed in prior years due to basis limitations, at-risk limitations, or passive activity loss limitations that are carried forward to the current tax year.

Private Activity Bond

A tax-exempt bond issued by a state or locality to finance the private development of public projects for the benefit of the general public.


The amount of cash actually received by a borrower on a non-interest-bearing note payable.

Processing Stamp

A stamp placed on a creditor's invoice that outlines the steps to be followed in processing the invoice for payment.


The amount of revenue earned above the expenses incurred to operate the business.

Profitability Ratio

Ratios used to evaluate the earnings performance of a business during the accounting period (for example, return on common stockholders' equity).

Progressive Deterioration

Damage resulting from a steadily ongoing operation or a normal process, rather than from a sudden event.

Promissory Note

A written promise to pay a certain amount of money at a specific future time.


Items of value that are owned or controlled by a business; economic resources of a business.

Property Class

A category for property under the Modified Accelerated Cost Recovery System (MACRS) that generally determines the depreciation method, recovery period, and convention.

Property Rights

Creditors' and owners' financial claims to the assets of a business.

Proving Cash

The process of determining whether the amounts of cash recorded in the accounting records of a business and in its checkbook agree.

Proving The Ledger

Adding all debit balances and all credit balances of ledger accounts and then comparing the two totals to see whether they are equal.


A document that transfers a stockholder's voting rights to someone else.

Public Accounting

Accounting services that range from tax preparation to merger and acquisition consultation; a variety of accounting services offered to businesses.

Publicly Held Corporation

A corporation whose stock is widely held, has a large market, and is usually traded on a stock exchange.

Publicly Traded Partnership

A partnership in which the partnership's interests are traded on an established securities market or are readily tradable on a secondary market (or its substantial equivalent).

Purchase Order

A written offer to a supplier to buy certain items.

Purchase Requisition

A written request that a certain item or items be ordered.

Purchases Account

The account used to record the cost of merchandise purchased during a fiscal period.

Purchases Allowances

A price reduction given when a business keeps unsatisfactory merchandise it has bought.

Purchases Discount

Term used by the buyer to refer to a cash discount offered for early payment.

Purchases Journal

A special journal used to record all transactions in which items are bought on account.

Purchases Returns

The return to the supplier for full credit of merchandise bought on account.

Put Option

A contract granting the owner of a security the right to sell the security at a predetermined price during a specified period of time.

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