The spending capability that is not mandated by law or required automatically within the system, allowing individuals or organizations to allocate their funds according to their choices and preferences.
A Discretionary Trust is a type of trust where the shares of each beneficiary are not fixed by the settlor but can be varied at the discretion of the trustees or another appointed person.
A discretionary trust is a type of trust agreement that grants the trustee the authority to administer the trust's assets and income based on their own judgment, as long as they act with prudence and common sense.
The Discriminant Function System (DIF) is an IRS technique using mathematical formulas programmed into computers to identify and select tax returns for examination. This secret system permits the IRS to rank the selected returns according to the greatest potential for tax error by weighing significant return characteristics.
Discrimination involves applying special treatment (generally unfavorable) to an individual solely on the basis of the person's ethnicity, age, religion, or sex.
In the USA, a Discussion Memorandum is a preliminary document published by the Financial Accounting Standards Board (FASB) before issuing a Statement of Financial Accounting Standards (SFAS). It specifies the topic under consideration, describes the alternative accounting treatments, and explains the perceived advantages and disadvantages of each treatment.
Diseconomies refer to costs resulting from an economic process that are not borne by those directly involved in the process, often leading to negative externalities. Pollution is a common example where the polluters do not bear the resultant costs.
A market condition characterized by significant shifts in demand or supply, resulting in market prices that have not adjusted sufficiently to clear the market. Disequilibrium features excess demand or supply and arises from changing factors affecting demand and supply.
Disguised unemployment refers to individuals who want full-time employment but do not have it and are not actively seeking work, thus are not reflected in official unemployment statistics. It also pertains to individuals who are on payroll but do not contribute to productivity.
Dishonor refers to the refusal, whether rightly or wrongly, to make payment on a negotiable instrument when such an instrument is duly presented for payment.
A comprehensive overview of the accounting term 'dishonour,' referring to the failure to pay a cheque, accept or pay a bill of exchange, or honour any other financial obligation.
Disinflation refers to a decrease in the rate of inflation – a slowdown in the rate at which prices are increasing across the economy. Unlike deflation, disinflation is characterized by a reduction in the inflation rate over time, without causing a drop in economic output or employment.
Disintermediation refers to the removal of intermediaries from financial transactions. This process, driven by technology, deregulation, and globalization, reduces costs but may increase credit risk.
Disinvestment refers to the process of reducing investment in a particular activity, asset, company, or location. Often used in the context of government policies and corporate strategy, it involves selling off or liquidating assets to reallocate resources more effectively.
Disjoint events, also known as mutually exclusive events, are pairs of events in a probability space that cannot occur at the same time.
A computer memory device consisting of a platter with a magnetically encoded surface that retrieves data by being spun past read heads. Disks can be internal (hard disks) or removable. A common example is the Compact Disc (CD).
Device that enables a computer to read and write data on disks, serving as a core component for data storage and retrieval.
A Disk Operating System (DOS) is a computer operating system that utilizes a disk storage device such as a floppy disk, hard disk drive, or optical disc as a memory. DOS is used for performing functions such as file management, program loading, and running software applications.
DOS (Disk Operating System) is an operating system primarily used in the early days of personal computing to manage disk storage and file systems. It is known for its command-line interface and was widely used before the advent of graphical user interfaces.
Permanent termination of employment with an organization; being fired from a job.
A dispatcher in the transportation industry is an organizer responsible for maintaining the route schedule and informing workers of their schedules and tasks. They play a crucial role in ensuring efficient operations and communication within transportation services.
Disposable income is the amount of money that individuals have available for spending and saving after personal taxes have been accounted for.
Disposal value, also known as residual value or salvage value, is the estimated amount that an owner expects to obtain from the sale of an asset at the end of its useful life.
A Disposals Account is used in accounting to record the removal of a fixed asset from the ledger, capturing its original cost, accumulated depreciation, and the amount received upon disposal.
Dispossess refers to the act of ousting, ejecting, or excluding another party from the possession of lands or premises. This can occur through legal processes or wrongful actions.
Dispossess Proceedings, also known as eviction, are a legal process used by landlords to remove tenants and regain possession of property.
A disproportionate distribution occurs when some shareholders receive cash or other property while others see an increase in their proportionate interests in the assets or earnings and profits of the corporation. This typically leads to an unequal allocation of the corporation's resources among its shareholders.
The term 'disproportionate expense and undue delay' refers to circumstances in traditional UK accounting practices where an individual subsidiary undertaking might be excluded from consolidated financial statements due to excessive cost and time requirements to obtain the necessary information.
Dissaving, or negative saving, occurs when consumer spending exceeds disposable income, often financed through accumulated savings or loans.
In traditional UK accounting practice, 'Dissimilar Activities' served as a reason for excluding a subsidiary undertaking from the consolidated financial statements of a group. It applied to situations where the activities of one undertaking differed significantly from others in the group, potentially compromising the obligation to present a true and fair view. However, current standards under both the Financial Reporting Standard (FRS) applicable in the UK and Ireland and International Accounting Standards (IAS 27) no longer allow exclusions on these grounds.
Dissolution marks the formal conclusion of a business entity, such as the cessation of a partnership or the liquidation of a company, executed through various legal mechanisms to terminate business operations.
Distraint refers to the legal right of a landlord to seize a tenant's personal property to satisfy payment of overdue rent. It is a remedy available to landlords when tenants fail to fulfill their rental payment obligations.
Distress involves the seizure of goods as a security for the performance of an obligation, often seen in landlord-tenant relationships and situations where goods are unlawfully on another's land.
A distress sale occurs when assets, such as property, stocks, bonds, mutual funds, or futures positions, are sold urgently, often at a loss, due to immediate financial pressure.
Distress termination is a type of plan termination that occurs when a company is in severe financial distress, such as bankruptcy, and cannot afford to continue its pension plan.
Distressed property refers to real estate that is under foreclosure or impending foreclosure due to insufficient income production. Such properties often require unique strategies for recovery, including potential workouts.
Distributable profits (or distributable reserves) are the profits of a company that are legally available for distribution as dividends to its shareholders. This includes a company's accumulated realized profits after deducting all realized losses.
Distribution refers to various processes including the payment of dividends, the final settlement of a company's assets upon winding up, allocation of a person's property, and the channeling of goods to consumers.
A distribution allowance is a price reduction offered by a manufacturer to a distributor, retail chain, or wholesaler to cover the cost of distributing the merchandise, often used during new product introductions.
A warehouse facility specializing in the collection and shipment of merchandise, ensuring efficient movement and storage of goods within a supply chain.
A distribution centre is a specialized warehouse typically operated by manufacturers to handle the bulk receipt and dispatch of goods to retailers.
The network of firms essential for distributing goods or services from producers to consumers. This setup primarily includes wholesalers and retailers.
Analyzing direct and indirect costs associated with marketing a product or service in a specific area.
A distribution in kind refers to the transfer of property other than money from an organization to an individual, often in a corporate context where non-cash assets, like automobiles, are distributed to shareholders.
Distribution overhead, also known as distribution cost or distribution expense, refers to the costs incurred in delivering a product to the customers. These costs are a key component of cost classification in businesses.
A distribution strategy is management's plan for moving products to intermediaries and ultimately to final customers. It involves decision-making regarding the channels of distribution, the logistics and transportation of goods, and the mechanisms for inventory management.
A distribution to owners represents the transfer of assets from a business to its shareholders or owners, often observed as dividends in the USA.
Distributive share refers to the allocation of income, gain, loss, deduction, or credit to a partner in a partnership, typically determined by the partnership agreement.
A distributor is an intermediary or one of a chain of intermediaries that specializes in transferring a manufacturer's goods or services to consumers, often aiding in the efficient management of supply chains.
A district court is a type of court that hears civil actions against the United States for the recovery of any tax alleged to have been erroneously or illegally assessed or collected by the IRS.
The District Director serves as the chief operating officer of one of the Internal Revenue Service (IRS) districts and reports to the appropriate regional commissioner.
Diversification refers to the strategy of spreading investments or business activities across different fields or products to minimize risks and enhance growth.
A diversified company operates in multiple industries or markets, offering a range of products and services either through manufacturing them directly or acquiring/merging with other organizations.
The practice of spreading investments or a series of business operations across different sectors, asset classes, or geographies to mitigate risks and maximize returns.
Divestiture involves the loss or voluntary surrender of a right, title, or interest. It can also be a legal remedy where the court orders the offending party to rid itself of assets, often used in the enforcement of antitrust laws.
Divestment is the process of selling off assets, subsidiaries, or business segments to realize value or streamline operations. It serves as the opposite of investment.
A dividend is the distribution of a portion of a company's earnings to its shareholders, typically articulated as an amount per share. Its yield is a popular metric for investors.
In life insurance, a dividend addition refers to the increase in the face value of the policy, which is purchased using the dividends earned on that policy.
Dividend cover, or dividend coverage ratio, is a financial metric indicating how many times a company can pay dividends to its ordinary shareholders out of its net profits after tax in the same period. It measures the sustainability of dividend payments.
A tax concept that posits income earned by corporations is taxed at the corporate level and should not be subject to taxation again when distributed as dividends to stockholders, thereby avoiding double taxation of the same income.
The Dividend Growth Model (DGM) is a fundamental method used to estimate the cost of equity by using dividends currently paid along with their projected growth rate.
A dividend in specie refers to a type of dividend that is paid out in forms other than cash. Typically, this can include the distribution of assets, shares, property, or any other physical items that represent the value payable to shareholders.
The Dividend Payout Ratio is a financial metric that shows the percentage of earnings a company pays to its shareholders in the form of cash dividends. It helps assess a company's maturity and capital allocation strategy.
A company's predetermined approach on managing the distribution of profits to its shareholders versus retaining earnings for reinvestment in the business.
A Dividend Reinvestment Plan (DRP) is an option offered by companies that allows shareholders to automatically reinvest their cash dividends by purchasing additional shares or fractional shares of the company's stock.
The Dividend Requirement refers to the amount of annual earnings that a company needs to allocate in order to pay dividends on its preferred stock.
A method of buying and selling stocks around their ex-dividend dates to collect the dividend and potentially make a small profit on the trade.
A comprehensive guide to understanding the Dividend Tax in the UK, which was introduced in April 2016 to replace the previous tax credit system.
The choice by a major shareholder to forgo receiving dividend payments from a company, typically made when the company is facing financial constraints.
A dividend warrant is a cheque issued by a company to its shareholders that provides details of dividends paid, including tax deducted and the net amount payable.
A key metric used by investors to evaluate the income generated by an investment relative to its share price, providing insights into the return on investment from dividends.
Dividends in arrears are dividends that have been declared but remain unpaid by the due date. These unpaid dividends must be disclosed in the notes to the financial statements to inform investors and stakeholders.
Dividends Payable are dividends that have been declared by a company but not yet paid. They appear as an appropriation in the profit and loss account and as a current liability in the balance sheet.
An adjustment from taxable income in computing both the accumulated earnings tax and the personal holding company tax. The amount of the adjustment includes regular dividends, dividends paid during a 12-month grace period, consent dividends, and deficiency dividends (for the personal holding company tax only).
A tax deduction allowed to a corporation owning shares in another corporation for the dividends it receives. The deduction is often 70%, but in some cases, it may be as high as 100% depending on the level of ownership the dividend-receiving company has in the dividend-paying entity.
A part of an organization, usually an investment center or profit center which, although ultimately responsible to head office, enjoys a degree of autonomy in terms of decisions.
Division of labor refers to the separation of the workforce into distinct categories of labor and assigning specific tasks required to produce a product to different workers. This concept is integral to increasing efficiency and productivity in various industries.
Divisional performance measurement is a structured approach that allows the central management of an organization to assess the performance of its individual divisions. This is essential in a divisionalized structure to ensure each division is contributing effectively to the organization's overall goals. Common methods include Return on Capital Employed (ROCE), Residual Income (RI), and the profit-to-sales ratio.
A divisive reorganization involves the transfer of all or part of a division, subsidiary, or corporate segment in a tax-free manner. It includes three main types: split-up, split-off, and spin-off.
A taxpayer who was divorced under a final decree of divorce or separate maintenance by the last day of the tax year; considered unmarried for the entire year for tax purposes.
Docking refers to the practice of reducing an employee's wage due to infractions such as lateness or absence, as per company policies.
A docking station is a device that allows a notebook computer to connect seamlessly to other equipment, including a network, desktop monitor, keyboard, and more. It often includes a charger for the notebook's battery and may have additional disk drives.
A 'document' refers to any item containing information set forth by means of letters, numbers, or other symbols. In the context of computing, it specifically refers to a word processing file.
A unique number stamped on tax returns, checks, or other documents that enables the IRS to quickly identify and access specific documents.
Documentary credit, also known as a letter of credit, is a financial instrument commonly used in international trade transactions to reduce risk. It guarantees that a buyer's payment to a seller will be received on time and for the correct amount.
A documentary draft is a written order requiring the recipient to pay the amount specified on the document, either upon presentation (sight draft) or at a fixed future date (time draft).
Documentary evidence refers to any evidence introduced at a trial in the form of documents. This includes written or printed papers, such as contracts, wills, deeds, and letters. It plays a pivotal role in the legal proceedings, supporting the factual assertions made by the parties involved.
Documentation refers to the written descriptions and instructions for computer programs, serving various purposes such as user support, development assistance, and maintenance.
US legislation that provided for comprehensive changes to the framework of financial regulation in the US following the crisis of 2007--08. Named after its sponsors, Senator Chris Dodd and Representative Barney Frank, the act introduced new capital requirements and risk limits for banks and created new government agencies to oversee consumer protection and the regulation of financial institutions and credit-rating agencies.
A 'Dog' is a term used in the Boston Consulting Group (BCG) Growth-Share Matrix to categorize products or business units with low market share in a mature industry. Typically, Dogs generate low or negative cash flow and are considered prime candidates for divestitures.
Doing business refers to carrying on, conducting, or managing a business. A corporation is considered to be doing business in a state if it performs the ordinary functions for which it was organized or engages in activities that subject it to the laws and jurisdiction of that state.
A 'Doing Business As' (DBA) is a designation used when an individual or company operates under a name different from its legal, registered name.
A Doing Business As (DBA) name, also known as an assumed name, trade name, or fictitious business name, allows individuals or entities to operate a business under a name different from their legal one.
Dollar Cost Averaging (DCA) is an investment strategy where an investor consistently buys a fixed dollar amount of an asset, such as mutual funds or securities, at regular intervals. This results in purchasing more units when prices are low, effectively lowering the average cost per share over time.
Dollar drain refers to the amount by which a foreign country's imports from the United States exceed its exports to the United States, leading to a depletion of the country's dollar reserves.
In the USA, a method of expressing the value of an inventory in monetary values rather than units. Each homogeneous group of inventory items is converted into base-year prices using appropriate price indices. The difference between opening and closing inventories is measured in monetary terms of the change during the accounting period.
The adoption by a country of the US dollar in place of its own currency, usually as a means of controlling inflation and interest-rate volatility.
A domain in networks, such as the Internet, is a group of connected computers which may contain subdomains, typically indicated by a three-letter suffix like .com, .edu, .gov, and more.
Domestic corporations are entities established under the laws of the United States, operating primarily within the country, and are subject to federal and state regulations.
A domestic corporation or partnership refers to a business entity created or organized within the United States or under the laws of the United States or any state. Such entities are subject to federal and state regulations specific to domestic businesses.
