net income by the number of shares of common stock outstanding during the period.
EDP (electronic data processing): A term referring to the use of computers in recording, classifying, manipulating, and
summarizing data.
effective-interest amortization: A method of systematically writing off a bond premium or discount that takes into
consideration the time value of money and results in an equal rate of amortization for each period.
effective tax rate: A tax rate that reflects the percentage of the actual tax liability to the accounting income generated
by the company, that is, net tax liability/financial (book) income before taxes.
effective (yield or market) rate of interest: The actual interest rate earned or paid on a bond investment.
electronic data processing (EDP): A term referring to the use of computers in recording, classifying, manipulating,
and summarizing data.
end of month (EOM): A common phrase for end-of-period accounting activities.
enrolled agent (EA): Certain tax preparers can represent their clients before the IRS. Tax preparers who are not
attorneys or CPAs must have the enrolled agent (EA) designation to represent other taxpayers. To become an enrolled
agent one must either take a tax examination given by the IRS or have a certain number of years experience working for
the IRS. PBS has two enrolled agents on staff!
entity: An organizational unit (a person, partnership, or corporation) for which accounting records are kept and about
which accounting reports are prepared.
EOM: An abbreviation for "end of month." A common phrase for end-of-period accounting activities.
ergonomics: The matching of a person to the workings of a machine in order to make for more efficient and safer
working conditions.
errors and omissions insurance: E & O insurance is often part of a professional liability insurance policy. It is
purchased by those professionals who offer services or who handle money or property for others. This insurance covers
damages caused by mistakes (errors) made by the professional or damages caused by something the professional failed
to do (omissions).
escrow: Money held in trust, often for the payment of taxes and insurance on property that is subject to a mortgage.
estate tax: A tax imposed on an estate over a certain size. Proper planning can reduce the impact of estate taxes.
estimated tax payment: Quarterly tax payments made in lieu of having taxes withheld at the income source. Federal
estimated taxes for individuals are paid with Form 1040-ES and are due on April 15, June 15, September 15 of the tax
year involved and on January 15 of the following year.
equity financing: Acquiring funds in the form of investments by owners (proprietor, partner, or stockholder).
equity method or accounting for investments in stocks: Method used to account for an investments in the stock of
another company when significant influence can be imposed (presumed to exist when 20 to 50 percent of the outstanding
voting stock is owned).
equity securities: Shares of ownership in a corporation that can change significantly in value and that provide for a
return to investors in the form of dividends.
exchange gain or loss: The gain or loss incurred when the exchange rates are different on the purchase and payment
dates or on the sale and receipt of payment dates.
exchange rate: The value of one currency in terms of another.
exchange, tax-deferred (tax-free): Often referred to as a tax-free exchange, a tax-deferred exchange is permitted
when qualified business and/or investment property is exchanged for other qualified business and/or investment property.
The taxpayer must not have access to any of the funds. If you sell property and then purchase a replacement property,
you will be subject to tax on any gain in the sale. If a proper exchange takes place, any potential income tax is deferred
until the newly acquired property is later disposed of.
exclusions: Gross receipts that are not subject to tax and are not included in gross income, such as interest on state
and local government bonds.
ex-dividend: When stock is sold ex-dividend, the seller has the right to a dividend that has been declared but is payable
at a later date.
expenses: Costs incurred in the normal course of business to generate revenues.
external auditors: Independent CPAs who are retained by organizations to perform audits of financial statements.
external audits: Audits conducted by CPAs who are independent of the client company.
extraordinary items: Non-operating gains and losses that are unusual in nature, infrequent in occurrence, and material
in amount.
executor/executrix: A person or company named in a will to ensure that all the assets and debts are accounted for and
that all property is distributed as specified in the will. Also called a personal representative.
