Vocabulary for Accounting

and Finance

Lesson 7
 Tax
A compulsory contribution to state revenue,
levied by the government on workers' income
and business profits, or added to the cost of
some goods, services, and transactions.
 Tax Avoidance
the use of legal methods to minimize the amount of
income tax owed by an individual or a business. This
is generally accomplished by claiming as many
deductions and credits as is allowable.
 Tax Evasion
An illegal activity in which a person or entity
deliberately avoids paying a true tax liability. Those
caught evading taxes are generally subject to
criminal charges and substantial penalties
 Tax Exemption
The right to exclude all or some income from
taxation by federal or states governments. Most
taxpayers are entitled to various exemptions to reduce
their taxable income, and certain individuals and
organizations are completely exempt from paying
taxes.
Tax accounting
Methods of accounting which focus
on tax instead of the appearance of
public financial statements
 Tax Exile
A person with a high income or considerable
wealth who chooses to live in a country or
area with low rates of tax.
 Amortization
an accounting technique used to periodically lower
the book value of a loan or intangible asset over a set
period of time. In relation to a loan, amortization
focuses on spreading out loan payments over time.
 Tax Bracket
Tax brackets are the divisions at which tax rates
change in a progressive tax system. Essentially,
tax brackets are the cut-off values for taxable
income, income past a certain point is taxed at
a higher rate.
Debt Consolidation
The act of taking out a new loan to pay off
other liabilities and consumer debts, generally
unsecured ones. Multiple debts are combined
into a single, larger piece of debt, usually with
more favorable payoff terms.
 Debt Finance
When a company borrows money to be paid back at a
future date with interest it is known as debt financing. It
could be in the form of a secured as well as an
unsecured loan. A firm takes up a loan to either finance
a working capital or an acquisition.
Invoice Finance
Invoice financing is a form of short term
borrowing which is extended by the bank or a
lender to its customers based on unpaid
invoices.
Thank You!