Those who make payments to others of interest, dividends, rents, royalties, etc., must, under certain circumstances,
withhold income tax from the payment. For example, if you fail to provide your bank with your taxpayer identification
number, the bank is required to withhold income tax from the interest it pays you.
bad debt: An uncollectible account receivable.
balance sheet: A better name for a balance sheet might be "a list of assets and debts." Your balance sheet shows what
you own and what you owe, the difference being your equity or net worth. A balance sheet is like a still photograph taken at
some single point in time. Balance sheets are as of a given date. An income statement on the other hand, is for a period of
time, such as a month or year. It is the moving picture to show how your balance sheet got from one point in time to
another. In business, the income statement shows how many sales were made and how many expenses were incurred to
cause your balance sheet (net worth) to go up or down a certain amount. See also financial statement.
balloon payment: A contract that usually calls for payments at regular intervals with any unpaid balance (balloon) due on
a specified date.
bank reconciliation: The process of systematically comparing the cash balance as reported by the bank with the cash
balance on the company's books and explaining any differences.
basket purchase: The purchase of two or more assets acquired together at a single price.
basis: This is often referred to as cost basis. Normally, basis is the amount you paid for an item, plus the cost of any
improvements and minus depreciation if applicable.
bear market: A bearish stock market is one in which the prices are in a downward trend. A bull market is just the opposite.
below the line: These are extraordinary expenses in a business, ones which will not normally be repeated, such as
expenses for disaster losses.
beneficiary: The person or organization who will be receiving the benefits from a trust, an inherited retirement account, or
the proceeds from a life insurance policy.
big board: A popular term used to refer to the New York Stock Exchange.
bill of sale: A written document showing the terms by which the ownership of personal property passed from one person
to another, usually showing dates, dollar amount, and the description of the property.
bi-monthly: According to Webster, bi can mean every two months or twice a month. And semi can also lead to
misunderstanding. Perhaps it is better to state what you mean by simply stating either "every two months" or "twice each
month."
blue chip: These are stocks and bonds of well-established and proven companies. The companies are well-managed
and have a long record of top performance.
board of directors: Individuals elected by the stockholders to govern a corporation.
bond: A contract between a borrower and a lender in which the borrower promises to pay a specified rate of interest for
each period the bond is outstanding and repay the principal at the maturity date.
bond carrying value: The face value of bonds minus the unamortized discount or plus the unamortized premium.
bond discount: The difference between the face value and the sales price when bonds are sold below their face value.
bond indenture: A contract between a bond issuer and a bond purchaser that specifies the terms of a bond.
bond maturity date: The date at which a bond principal or face amount becomes payable.
bond premium: The difference between the face value and the sales price when bonds are sold above their face value.
book of original entry: A book or journal in which financial transactions are recorded. The source of the data which goes
into the journals is usually from sales slips, invoices, checks, etc.
book value: The net amount shown in the accounts for an asset, liability, or owners' equity item.
book value per share: A measure of net worth; computed by dividing stockholders' equity for each class of stock by the
number of shares outstanding for that class.
breakeven point: The point at which the sales and expenses in a business are equal, creating neither a profit nor a loss.
This is a very important figure to a business manager. It assists the manager in setting prices that will make the business
competitive yet profitable.
bull market: A condition of the stock market during which stock prices are going up and are expected to continue their
upward trend. A bear market is just the opposite.
business: An organization operated with the objective of making a profit from the sale of goods or services.
business documents: Records of transactions used as the basis for recording accounting entries; includes invoices,
check stubs, receipts, and similar business papers.
business expenses: Expenses that have been paid or incurred in the course of business and that are ordinary,
necessary, and reasonable in amount.
buyer's market: A condition indicating an excess of supply over demand. This usually puts a buyer in a more favorable
negotiating position. See also seller's market.
bypass trust: A trust is used in estate tax planning to insure that the estate tax exclusion allowed to both spouses is
utilized. Assets placed in this trust will not be taxed when the second spouse dies; hence the name bypass trust. These are
also known as credit shelter trusts.
