Glossary

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  • Corporation
    A group of people acting jointly for business and tax purposes who are able to incur debt and realize profit without immediate legal or taxable liabilities. A corporate entity allows its owners to attract outside capital by selling shares of ownership, protects the owners from liability beyond(...)
  • Correction
    A reverse movement in the price of a stock, bond, commodity, or index that brings it more in line with its underlying fundamental value.
  • Cosigner
    An individual who signs a loan or credit card agreement along with the principal applicant and assumes responsibility for the outstanding balance if the applicant defaults.
  • Covenant not to Compete
    A clause in a contract that obligates one party to refrain from performing professional or business activities similar to those of the other party.
  • Coverdell Education Savings Account (Coverdell ESA)
    A federal program that allows parents to accumulate tax-free savings for a child's college education, formerly called the Education IRA.
  • Credit (1)
    Legal obligation to make repayment at a later date for goods, services or money obtained through the extension of credit, or a promise to pay in the future. The cost of credit is usually referred to as a finance charge, interest or time-price differential
  • Credit (2)
    Entry recording an increase to a liability or owner's equity or revenue, or a reduction to an asset or expense. Credits are recorded in the right hand column of an account or a two-column book. Opposite of debit.
  • Credit Bureau
    Clearinghouse of consumer credit information used by businesses to determine the credit
  • Credit History
    A record of how a party has paid past debts.
  • Credit Line
    A revolving agreement that allows a person to borrow any amount up to a preapproved limit for purchases or cash advances. When the outstanding balance is paid off, credit again becomes available to fund new purchases or cash advances.
  • Credit Note
    Issued by a seller to a purchaser to record the reduction of a bill because of an allowance, return or cancellation. Opposite of an invoice.
  • Credit Rating
    A formal assessment of an individual's or a corporation's ability to handle credit, based on the history of borrowing and repayment, as well as the availability of assets and the extent of liabilities.
  • Credits
    If you have a store credit, you can use the credit to purchase merchandise free of charge. If you have a tax credit, your taxes are reduced by the amount of your credit. You can get tax credits for purposes such as child care expenses and the earned income credit for low-income taxpayers.
  • Cumulative Voting
    Cumulative voting allows shareholders to aggregate their votes in favor of fewer candidates than there are slots available. This method of voting is intended to create adequate representation for minority shareholders.
  • Current Asset
    Unrestricted cash, or any other asset that is expected to be converted into cash or consumed in the production of income within a year.
  • Current Liability
    Liability expected to be liquidated in a year.
  • Debit
    An entry recording an increase to an asset or expense or a reduction to a liability, revenue or owner's equity. Debits are recorded in the left-hand column of an account or a two-column book. Opposite of credit.
  • Debit Card
    A card issued by a bank that can be used to withdraw cash from an automated teller machine or to make purchases at merchant locations. Debit cards deduct funds from the checking or savings account linked to the card when they are used.
  • Debt
    A legal obligation to deliver a product, service or amount of money.
  • Debt-to-Equity Ratio
    The ratio that indicates a company's ability to repay outstanding creditors. This also indicates the degree of leveraged money to improve the rate of return for shareholders.
  • Decreasing Term Insurance
    A term insurance policy with a death benefit that decreases over time. This type of insurance is often used in conjunction with a mortgage or other amortized debt to guarantee payment if the holder dies before it is paid off.
  • Deed
    A document that identifies legal ownership of real estate.
  • Deferred Annuity
    An annuity that pays an income or lump sum at a future date.
  • Deficit
    A negative amount of retained earnings caused by cumulative losses and dividend distributions exceeding cumulative net income.
  • Defined Benefit Plan
    An employer funded and controlled retirement plan that pays a predetermined benefit based on an employee's years of service and salary or wages.