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ENTITY BOUNDARY
is that which is legally
included within or excluded from a defined entity.
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ENTITY CONCEPT
is the concept that
financial accounting and reporting relates only to the activities of a
specific business entity and not to the activities of the owners of that
entity.
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ENTITY THEORY
is where a legal entity
is regarded as having a separate existence from the owners. The financial
statements are prepared from the perspective of the entity, not its owners.
See PROPRIETARY THEORY.
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ENTREPRENEUR
is the person who assumes the financial
risk of the initiation, operation and management of a given business or
undertaking. He/She is primarily a financial and/or professional risk
taker almost to the extreme.
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EOM
is End of Month.
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EOY
is End Of Year.
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EOZ
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EPS
see EARNINGS PER SHARE.
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EPU
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EQUILIBRIUM POINT
is one of the fundamental
concepts in economics describing the market price of a good or service
as being determined by the quantity of both supply and demand for it.
In 1890, the English economist Alfred Marshall published his famous work,
Principles of Economics. Marshall's graph displays two lines that cross
as an "X" with the declining line representing customer demand
and the ascending line supply. The intersection of the two lines denotes
an EQUILIBRIUM POINT toward which the market price will move to equalize
the supply quantity to exactly match the demand quantity. Any higher
price above this equilibrium creates a surplus where sellers would inevitably
lower their price to sell more of the product. A lower price creates
a shortage where sellers would increase price to earn more profit.
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EQUIPMENT
is generally determined
by the meeting of three tests: a. Has an acquisition cost that is equal
to or more than the cost hurdle for classifying capitalized assets. Includes:
Invoice amount, sales tax, freight costs, installation costs, costs for
the initial complement of supplies needed to place the asset into service,
accessory and auxiliary apparatus necessary to make it usable for the
purpose for which it was acquired; less trade or trade in discounts and/or
educational allowances Excludes: Federal Excise tax, duty, insurance,
maintenance and warranty costs; and, b. Has a useful life of two or more
years If the item will not have a useful life of more than two years
it is considered expendable material, even if it costs more than the
level for determining a capital asset; and, c. Is a stand alone item.
The item is not permanently attached to or integrated into a building
or structure.
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EQUIPMENT LOAN
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EQUITY
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EQUITY ACCOUNTING
is the practice of
showing in a company's accounts the share of undistributed profits of
another company in which it holds equity ownership (usually below 50%).
The share of profit shown is usually equal to its share of the equity
in the other company. The profit may not actually be paid over, but the
equity holding company has a right to this share of the undistributed
profit.
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EQUITY CAPITAL
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EQUITY FINANCING
is a method of an
entity obtaining funds by issuing either common or preferred stock, or
both. Receipts can be through cash, services, or property. It is in the
entities best interest to issue shares when the market price for the stock
is at its highest.
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EQUITY FUND
is a mutual fund whose
portfolio consists primarily of common stocks.
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EQUITY FUNDING
see EQUITY CAPITAL.
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EQUITY HOLDING
is a holding of the
nominal share capital in a company where the shareholding entitles the
shareholder to a right to votes, to profits available for distribution
to shareholders and to assets available for distribution on a winding
up of that company. A holding of shares held as trading stock for the
purpose of a trade does not constitute a participating holding.
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EQUITY INSTRUMENT
covers any share
(or part thereof) in the equity share capital of a company (or a comparable
member’s interest in a close corporation). The term also includes
share options and any other financial instrument convertible into a share
(such as a convertible debenture).
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EQUITY METHOD
is a method of accounting for investments
in associated companies.
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EQUITY OFFERING
see EQUITY CAPITAL.
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EQUITY SHARE
is
a. a share or class of shares whether or not the share carries voting
rights, b. any warrants, options or rights entitling their holders to
purchase or acquire the shares referred to under (a), or c. other prescribed
securities. An equity share is a perpetual liability because it signifies
an owner's legal demand upon the assets of the entity in which the equity
share if held. See also COMMON STOCK.
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EQUITY SHARE CAPITAL
is capital raised
by an entity through the sale of common shares.
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EQUITY-TO-ASSET RATIO
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EQUIVALENT UNIT OF PRODUCTION (EPU)
is based on the idea that if 100 units are all 40% complete, then 40 whole
units could have been completed.
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ERISA
, in the U.S., refers to the Employee
Retirement Income Security Act of 1974. ERISA is a major U.S. law which
guarantees certain categories of employees a pension after some period
at their employer; there had been more ambiguity before about what rules
an employer could put on which employees could get a pension.
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ERP
can mean either Enterprise Resource
Planning or Early Retirement Program. See ENTERPRISE RESOURCE PLANNING.
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ERROR OF COMISSION
is an error that
occurs as a result of an action taken. In accounting, the error occurs
when one or both of the double entries are made in the correct class of
account but the wrong account within that class.
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ERROR OF OMISSION
is an error which
occurs as a result of an action not taken. In accounting, the error occurs
when both the entries required for a transaction are completely omitted
from the books.
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