particular time.
GAAS (generally accepted auditing standards): Auditing standards developed by the AICPA.
generally accepted accounting principles (GAAP): Authoritative guidelines that define accounting practice at a
particular time.
generally accepted auditing standards (GAAS): Auditing standards developed by the AICPA.
general expense: Expenses that have to do with the overall operation of a business and that generally do not vary with
the sales volume. Examples: building rent, utilities, insurance, property tax, and office supplies.
general journal: A journal for recording transactions that are infrequent or unusual, such as depreciation and
adjustments to accounts. Contrasted with frequent entries, such as sales, that are entered in a sales journal.
general ledger: The result of recording the summary of financial information from journals (books of original entry). The
individual account balances from which financial statements are prepared. Examples of general ledger accounts: cash in
bank, furniture and equipment, bank loan, and owner's equity. Figures on financial statements can be traced to a ledger
account and from there to a journal and finally to the original documents.
general obligation bond: A municipal bond that is backed by the full faith and credit of the issuing authority, rather
than by the revenue from a specific project.
general-purpose financial statements: The financial reports intended for use by a variety of external groups; they
include the balance sheet, the income statement, and the statement of cash flows.
generation skipping transfer tax (GST): This is the third tax in the "transfer" of assets. The gift tax and estate tax
form the other two. The GST is intended to keep people from cutting gift and estate taxes by transferring assets to
people who are two generations or more younger than they are (in other words, skipping a generation or more). The rules
are very complex.
gift: A transfer of money or property from one person to another without payment or exchange of other property. For
income tax purposes, a gift to qualified charities creates a tax deduction. A gift to an individual is not tax-deductible by the
one who makes it (donor), and a gift is not taxable income to the person who receives it (donee). Gifts to individuals
above the annual exclusion limit may be subject to gift tax, which is a form of transfer tax.
gift-splitting: To treat a gift made by one spouse as though it was made by both spouses. The object is to increase the
amount that can be given to a third party without creating a gift tax.
gift tax (exclusion): Gifts to individuals may be subject to gift tax. However, the tax law allows for an exclusion of
$11,000 (indexed annually for inflation) per year for gifts from one person to another person. This means that a married
couple could each give a child $11,000. And, if the child is married, they could each give the child's spouse $11,000 for a
total annual gift to the couple of $44,000. In addition to the annual exclusion there is a once-in-a-lifetime exclusion for
making even larger gifts.
Ginnie Mae (GNMA): Government National Mortgage Association. GNMA packages mortgages for resale to investors.
The securities are backed by the U.S. government which makes them among the safest of investments.
going concern: The idea that an accounting entity will have a continuing existence for the foreseeable future.
going-concern value: The value of a business and its assets in an ongoing operation as opposed to the book value of
the individual assets themselves. The value of a going business versus the value of one in liquidation.
goodwill: An intangible asset that exists when a business is valued at more than the fair market value of its net assets,
usually due to strategic location, reputation, good customer relations, or similar factors; equal to the excess of the
purchase price over the fair market value of the net assets purchased.
gross income: The taxable portion of a taxpayer's gross receipts.
gross margin: The excess of net sales revenue over the cost of goods sold.
gross margin method: A procedure for estimating the amount of ending inventory; the historical relationship of cost of
goods sold to sales revenue is used in computing ending inventory.
gross profit: Sales less the cost of the items sold. For example: if you purchase an item for $60 and sell it for $100, your
gross profit is $40 (40% gross profit).
gross sales: Total recorded sales before deducting any sales discounts or sales returns and allowances.
gross tax liability: The amount of tax computed by multiplying the tax base (taxable income) by the appropriate tax rates.
guarantor: The one who agrees to perform (pay the debt) when the one who made the commitment (borrowed the
money) fails to do so. A guarantor is often required by financial lenders when the borrower does not have adequate
collateral or has a poor or unknown credit history.
