business law

Accounting

Definition

1) The procedure of recording, analyzing, summarizing and classifying the financial transactions and information of a person or business which aids in accurate administration of resources. 

2) A plaintiff's legal action to recover money owed to the plaintiff by the defendant. Also known as accounting for profits.

Illustrative caselaw

See, e.g. Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 130 S.Ct. 3138 (2010).

 

Accountant

Definition

A professional who engages in accounting, which involves preparing and auditing financial statements, bookkeeping and financial analysis. 

An accountant may also be qualified to give individuals or corporations tax advice and prepare tax returns.

 

Account stated

Definition

A statement between a creditor and a debtor that settles the total amount of debt owed to the creditor. 

There are three elements of an account stated: (1) There exists prior transactions between the parties, creating a creditor-debtor relationship; (2) An agreement, express or implied, between the parties as to the total amount due; and (3) A promise by the debtor, express or implied, to repay the amount due.

See 1 Am. Jur. 2d Accounts & Accounting section 26 (West 2007).

Accelerated depreciation

Definition

Any method of depreciation used by businesses for accounting or tax purposes that allows greater deductions in the earlier years of the life of a company asset, as opposed to the straight-line depreciation method.

Accelerated depreciation can be a useful tax incentive because it permits companies to defer payment of corporate income taxes by reducing the amount of taxable income each year.  This in turn results in increased cash flow, encouraging companies to purchase more assets.

 

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