Accounting Dictionary

ng stock. Warrants are issued by corporations and often used as a "sweetener" bundled with another class of security to enhance the marketability of the latter. Warrants are like call options, but with much longer time spans -- sometimes years. In addition, warrants are offered by corporations whereas exchange traded call options are not issued by firms.
WARRANTY is a guarantee given to a buyer from a seller that the goods or services purchased will perform as promised, or a refund will be given, repair will be done at no charge, or an exchange made.
WEIGHTED AVERAGE is one in which different data in the data set are given different "weights." Varying subjective assumptions are derived for determining the level of importance for each data category. For example, many teachers will use a "weighted average" when calculating a student's grade in a course. A teacher might determine the final grade for the course by calculating that the test average is 60% of the grade, quiz average is 30% of the grade, and a single project is 10% of the grade.
WEIGHTED AVERAGE COST OF CAPITAL (WACC) is an average representing the expected return on all of a company's securities. Each source of capital, such as stocks, bonds, and other debt, is weighted in the calculation according to its prominence in the company's capital structure.
WHITE PAPER 1. in a technological industry, is an informational brief offering an overview of a technology, product, issue, standard, policy, or solution - its importance, use and implementation, and business benefits. White Papers have emerged as the standard way of communicating more in-depth information to business decision-makers in terms of problems solved and markets addressed; or, 2. a White Paper can be an official government report of an investigation into a public event that received a great deal of publicity and notoriety; it indicates the official government position on a particular public issue.
WHOLLY OWNED SUBSIDIARY is an entity whose parent owns virtually 100% of its common stock.
WINDFALL PROFIT/GAIN is profit that occurs suddenly as a result of an event not controlled by the company or person realizing the gain from the event. For example, a hurricane may bring extraordinary revenue to a roofing contractor as a result of the natural disaster.
WINDOW DRESSING is the act or an instance of making something appear deceptively attractive or favorable. Usually using something, e.g. inflated sales projections, to create a deceptively favorable or attractive impression.
WINDOW OF ENTERPRISE depicts the overall structure of accounting.
WIDGET is a device that is very useful for a particular job. Often used within a name of a fictitious company.
WIP is an acronym for Work in Process/Progress. Usually refers to inventory that has value added from labor or additional processing. When considered for inventory value, the value of the raw material plus the value added component is accounted for in determining the value of that inventory at that point in the process.
WITHHOLDING TAX usually refers to those taxes that are withheld from an employee’s compensation to account for that individuals tax liability on his/her compensation.
WITNESS is an individual who testifies at a trial on what he has seen, heard, or otherwise observed.
WORK CENTER, normally, is an individual production area or sub-process of an overall manufacturing process.
WORKER’S COMPENSATION is, usually, a state or privately managed insurance fund in the United States that reimburses employees for injuries suffered on the job.
WORKING CAPITAL STATEMENT (WCS) is part of the financial statements' "Statements of Cash Flows or Changes in Financial Position." The WCS normally includes sections covering: Sources of Working Capital, Uses of Working Capital, and Working Capital Changes.
WORKING CAPITAL TURNOVER (WCT) shows how efficiently Working Capital (WC) is employed, i.e., it measures how efficiently the business is using its available assets. WCT measures the amount of Net Revenue generated per monetary unit of Working Capital. It varies widely by industry; therefore it is best to compare WCT to industry averages.
WORKING CAPITAL (WC) (the difference between current assets and current liabilities) measures the margin of protection for current creditors. It reflects the ability to finance current operations.
WORK IN PROCESS is parts and subassemblies in the process of becoming completed finished goods.
WORK IN PROGRESS a piece of work that is not yet finished.
WORK SHEET is a document or schedule in which an accountant or auditor gathers information to substantiate an opinion concerning an account balance or 'test of transaction.'
WORLD TRADE ORGANIZATION (WTO) is the international trade body formed by the agreement of member nations. The WTO is an evolution of the GATT process designed to resolve trade disputes and work for the lowering of tariff and non-tariff trade barriers.
WRAP ACCOUNT at its most basic is an alternative form of commission arrangement between a securities firm and its client. Wrap accounts generally charge the client an annual fee based on assets in the account in lieu of a per transaction commission structure. In other words, the firm "wraps" together all the costs and charges them off as a "management fee”. Firms often add further features to wrap accounts such as investment management, custodial services, and enhanced reporting.
WRITE-OFF is to decrease the value of an item, e.g., a tax write-off decreases tax liability, a vehicle involved in an accident can be declared a write-off if the cost to repair is in excess of the value of the vehicle.
WRITE-UP is the increase in value of an asset, but it is seldom used and is not allowed in GAAP (Generally Accepted Accounting Principles).
WRITE-UP SERVICE is the provisioning of all reporting requirements of bookkeeping and accounting services. The following is a non-exhaustive list of reporting services provided: 
1099s report preparation for subcontractors. Bank account reconciliation. Check coding. Fixed asset schedules. Maintenance of general ledger. Payroll deposit calculations. Payroll tax filings. Personal property tax returns. Preparation of internal financial statements.
X-INEFFICIENCY is the failure to minimize costs or maximize returns. (Sometimes referred to as X-efficiency, but carrying the same meaning.)
YANKEE BOND is a dollar bond issued by a non-U.S. borrower in the United States.
YEN is the currency of Japan. Its subdivisions are 100 sen and 1000 rin.
YIELD is the annual return on an investment, expressed as a percentage. The yield to redemption or maturity (the same thing) combines the running yield with the "pull to redemption"; thus a bond which has a 10% coupon and exactly one year of remaining life will sell at $98.2% when interest rates are at 12.0%, that 12.0% being composed of 10.2% running yield and 1.8% pull to redemption ($100.0 - 98.2%).
ZERO BASED BUDGET is where the expenses or costs of the prior year are not taken into consideration when establishing expense or budgetary levels looking forward. Each expense category starts from zero. All expenses or cost levels within the budget must be justified or re-justified as being necessary; thus “zero-base”.
ZERO COUPON BONDS are bonds priced at a large discount from face value. The bonds mature at full face value so the difference between the original issue price and the face value represents interest income. The issuer of the zero coupon bond saves on cash flow since the interest isn't paid out until the end of the bond holding period.
ZERO COUPON CONVERTIBLE DEBENTURE/SECURITY is a zero coupon bond that is convertible into the common stock of the issuing company after the common stock reaches a certain price.
Z-SCORE see ALTMAN'S "Z-SCORE"
3% RULE see THREE PERCENT RULE.
4-4-5 CALENDAR, in budgeting and accounting, is the breakdown of each month into weeks by counting the number of times Friday occurs within each month, e.g., Jan = 4 weeks, Feb = 4 weeks, Mar = 5 weeks, Apr = 4 weeks, May = 4 weeks, Jun = 5 weeks… etc. to total 52 weeks in a 12 month period. Every third month, Friday will occur 5 times. All other months, Friday will occur 4 times. In the months where Friday occurs 5 times, it is considered a 5 week month. Whereas, the 4 Friday months will be considered as 4 week months.
10-K is the audited annual report that most reporting companies file with the Securities Exchange Commission (SEC). It provides a comprehensive overview of the registrant's business. The report must be filed within 90 days after the end of the company's fiscal year.
10-Q is a report filed quarterly to the Securities Exchange Commission (SEC) by most reporting companies. It includes unaudited financial statements and provides a continuing view of the company's financial position during the year. The report must be filed for each of the first three fiscal quarters of the company's fiscal year and is due within 45 days of the close of the quarter.
13TH PERIOD in the fiscal year is the period used for fiscal year-end adjusting entries (periods 1-12 being the months in the fiscal year).
80 - 20 RULE (Pareto Principle/Law) is a general rule of thumb in business that says that 20% of the items produce 80% of the activity, while 20% of the product line produces 80% of the sales, 20 % of the customers generate 80% of the complaints, and so on. In evaluating any business situation, look for the small group which produces the major portion of the transactions you are concerned with. This rule is not exactly accurate, but it reflects a general truth, nothing is evenly distributed.
401 (K) PLAN is a retirement plan in the United States that allows qualified employees to contribute money from their paychecks into a tax-sheltered account.
940 Form is the U.S. IRS Employer's Annual Payroll Tax form.
941 Form is the U.S. IRS Employer's Federal Quarterly Payroll Tax form.