Passive Investment Income
Passive investment income refers to the earnings derived from investments in which the individual or entity does not actively participate. This includes royalties, rents, dividends, interest, annuities, and gains from the sale of stocks and securities.
Passive Investor
A passive investor is an individual or entity that invests money but does not actively manage the business or property in which they invest. They typically seek long-term investment returns with minimal day-to-day involvement.
Passport
A passport is an official document issued by a country to its citizens, permitting international travel and serving as identification.
Password
A password is a secret character string required to log onto a computer system, thus preventing unauthorized persons from obtaining access. Computer users often password-protect their files for added security.
Past Due
The term 'past due' refers to an obligation or invoice that has not been paid or performed by its specified due date but has not yet reached a state of default.
Past Service Benefit
A private pension plan credit given to an employee’s past service with an employer prior to the establishment of a pension plan. Usually, a lower percentage of compensation is credited for benefits for past service than for future service benefits.
Past Service Credit
Past service credit refers to the recognition of service time an employee has accrued prior to being a member of a pension plan, which is used to determine pension benefits.
Past Service Liability
Past Service Liability refers to the obligations to fund an employee's benefits in a pension plan for their prior service before entering into the pension plan. It is a crucial element in pension planning and impacts the financing of future benefits.
Past-Due Loan
A banking loan on which the interest is more than 90 days overdue. After this grace period has elapsed, the borrower becomes liable for late charges.
Patch
A patch is a small alteration to a computer program, primarily installed as a correction. Though patches are mainly used to fix bugs or plug security vulnerabilities, they can also add functionalities to enhance an aging program's competitiveness.
Patent
A patent is a legal grant of exclusive rights provided by a government authority to an inventor or their assignee for a new and useful invention. The patent grants the holder the right to exclude others from making, using, or selling the invention for a certain period of time.
Patent Appeals Court
The Patent Appeals Court is a specialized judicial body responsible for adjudicating appeals of decisions made by patent offices, primarily related to patent grants, denials, and disputes.
Patent Infringement
Patent infringement is the act of trespassing upon the rights secured by a patent. It is determined by whether the device in question performs substantially the same work in substantially the same way and accomplishes the same result as the patented device.
Patent Medicine
Patent medicine refers to commercial products marketed as cures or treatments that are easily obtainable without a doctor's prescription, often with proprietary labels.
Patent Monopoly
A patent monopoly is a government-granted exclusive right to inventors and producers of innovative goods. It serves to encourage research and innovation by ensuring the producer will benefit financially from their successful new products.
Patent of Invention
A Patent of Invention is a grant of rights provided by a government to an inventor, giving them the exclusive right to exclude others from making, using, selling, and importing the invention for a specified period, typically 20 years from the filing date of the patent application. This right creates a legal monopoly, enabling the patent holder to control the usage of the invention and potentially monetize it through licenses or sales.
Patent Pending
The term 'Patent Pending' indicates that a patent application has been filed with the U.S. Patent Office and is currently under review. This status signifies that a patent search is being conducted to determine if the invention is new and patentable according to the law.
Patent Warfare
Patent warfare refers to the practice of utilizing multiple patents with varied expiration dates covering different aspects of the same invention, intending to block competition post the original patent's expiration.
Paternalism
Paternalism in management refers to a leadership style where managers assume ultimate responsibility for employee welfare, making decisions regarding benefits, job assignments, and promotions. It is sometimes criticized for implying an inferior status for employees.
Path
A hierarchical description of where a computer directory (folder) or file is located on your computer or on a network.
Pathfinder Prospectus
A Pathfinder Prospectus is an outline document designed to test market reaction to the initial public offering (IPO) or flotation of a new company.
Patriot Bond
A Patriot Bond is a special designation given to the Series EE Savings Bond following the terrorist attacks on the World Trade Center on September 11, 2001.
Patron
In the realm of business and economics, a patron is an individual who patronizes a business, typically known as a customer. In taxation contexts, it specifically refers to one who does business with a cooperative but is not necessarily a member.
Pattern Bargaining
Pattern bargaining is a negotiation strategy where individual employee unions and employers reach agreement on the basis of a collective bargaining settlement developed elsewhere. This can occur on a national or regional basis and can be initiated by either a union or an industry.
Pauper
A pauper is an individual who is destitute and dependent on others for support. Often, paupers lack the means to support themselves primarily due to poverty, disability, or lack of employment.
Pawn
A person or organization at the mercy of another's will, often used in strategic games or business situations.
Pay
Pay can refer to the compensation given to personnel for services performed or the act of exchanging money for goods or services.
Pay and File System
The pay and file system was a former procedure for paying corporation tax in the UK, introduced for accounting periods ending after 30 September 1993. It required companies to file a detailed return within twelve months of the end of the accounting period.
Pay As You Go (PAYG)
PAYG is a payment model where users pay for goods or services as they use them, rather than making an outright purchase. This flexible approach bases charges on actual consumption or usage.
Pay for Performance
Pay for Performance is a salary scheme where employees accept a lower base pay in exchange for bonuses based on meeting production or other organizational goals.
Pay Period
A pay period is the time duration during which an employee's earnings are calculated to ensure accurate and timely payments. This duration can vary from a week, half a month, to an entire month.
Pay-as-you-earn (PAYE)
Pay-as-you-earn (PAYE) is the UK scheme for collecting income tax and National Insurance contributions. It places the responsibility on employers to collect these taxes from employees as payments are made.
Pay-As-You-Earn (PAYE)
The Pay-As-You-Earn (PAYE) system is a method of paying income tax and national insurance contributions to the revenue authorities based on an employee’s regular earnings.
Pay-As-You-Go Pension System
A pay-as-you-go pension system, also known as an unfunded pension system, finances state retirement benefits through contributions from current workers rather than investing contributions for future benefits.
Payable
A payable is an amount that is owed by a company to its suppliers or creditors, typically from the purchase of supplies or inventory (accounts payable), but it can also include amounts owed for other purposes such as bank loans (bank loans payable).
Payable to Bearer
Understanding the concept of 'Payable to Bearer' in the realm of bills of exchange and how it differs from 'Payable to Order'. This term is essential for those involved in financial transactions using negotiable instruments.
Payable to Order
A term describing a bill of exchange in which the payee is named and on which there are no restrictions or endorsements, thus allowing it to be paid to the endorsee.
Payables
Payables refer to accounts, rates, and mortgages owed by a business or person, often encompassing current liabilities rather than all types of debt.
Payback Period
In capital budgeting, the payback period estimates the time required to recover the initial investment from cash inflows generated by the project. The major limitation of this method is that it does not consider cash flows after the payback period and, thus, it's not a reliable measure of the overall profitability of an investment.
Payback Period Method
The Payback Period Method is a capital budgeting technique that calculates the time required for projected cash inflows to equal initial investment expenditure, often used to gauge project risk.
Paycheck
A paycheck is a check used to pay an employee's wages, containing net wages after deductions for federal and state income taxes, Social Security, union dues, and other benefit adjustments.
Payday
Payday refers to the specific day set by employers on which employees receive their wages or salaries, typically in the form of paychecks or direct deposits into their bank accounts.
Payday Loan
A payday loan is a short-term loan based on a promise by the borrower to repay the loan from his or her next paycheck. These loans generally are made at a very high rate of interest and require minimal creditworthiness.
Payee
A payee is an individual or entity to whom a debt is payable or to whose order a bill, note, or check is made payable, thus playing a crucial role in financial transactions.
Payee Statement
A payee statement is a required tax information statement that indicates the amount paid to a payee, including various types of income and withholding details.
Payer
A payer is an individual or entity that is responsible for the payment of a bill, fees, or other financial obligations. The role of the payer is critical in transactional and service delivery contexts within various economic sectors.
Paying Agent
A Paying Agent is typically a bank or another financial institution that is contracted under a paying agency agreement to manage the payment of interest and principal sums due on a bearer security.
Payload
Payload refers to the cargo or freight that produces revenue or income, typically measured by weight. It encompasses merchandise transported by carriers for profit, including returned merchandise that does not result in additional trips.
Payment
Payment refers to the satisfaction of a claim or debt usually through the delivery of money in fulfillment of an obligation.
Payment Date
A Payment Date is the specific date on which a declared stock dividend, bond interest payment, or a bill payment is due.
Payment in Advance
Payment in advance, also known as prepayment, is a transaction in which a payment for goods or services is made before the actual delivery. It is often used to mitigate credit risk or secure services and goods ahead of time.
Payment in Due Course
Payment in due course refers to the payment of a negotiable instrument, such as a check or promissory note, made when it is due or later, to its rightful holder, conducted in good faith and without notice of any defects in the holder's title.
Payment in Kind
Payment for goods and services made in the form of other goods and services rather than cash. It differs from barter, as the payer receives the same goods and services in return.
Payment Method
A payment method refers to the means of payment employed by a customer when making a purchase or settling an invoice. Common payment methods include cash, check, money order, or credit card.
Payment on Account
A payment on account is an advance payment or part payment towards an outstanding balance or debt, typically not linked to any specific invoice. It is often used in ongoing business relationships where frequent transactions occur.
Payoff (Amount)
The payoff amount refers to the remaining balance of a loan that a borrower must pay to completely satisfy the debt, including any applicable prepayment penalty.
Payola
Payola refers to the secret or private payment made to individuals or organizations in exchange for the promotion of a product or service. The term originated in the 1950s within the record industry.
Payout
Return on investment equal to the original marketing expenditure; also known as payback. When a company recovers its investment plus the expected built-in return from launching or reintroducing a new product or service, it has realized a profit from its original capital outlay. A company's payout represents the minimum amount of dollar sales that must be generated to offset the cost of an advertising program.
Payout Ratio
The payout ratio represents the percentage of a firm's profits that is distributed to shareholders in the form of dividends. This metric provides insight into how much money a company returns to its shareholders compared to how much it retains for reinvestment and other corporate purposes.
PayPal
A secure online system that enables account holders to pay for goods or services and arrange money transfers over the Internet. It operates in 203 currencies worldwide.
Payroll
Payroll is the aggregate periodic amount a business pays its workers and a list of employees along with their compensation.
Payroll Deduction
A payroll deduction refers to the reduction of the amounts paid to a worker from their gross earnings to cover various costs, such as taxes, savings, pension contributions, union dues, and insurance premiums. The paycheck reflects the gross pay minus these deductions.
Payroll Period
The payroll period is the interval of time for which an employer ordinarily pays wages to employees. The amount of withholding varies depending on the payroll period.
Payroll Savings Plan
An arrangement between employer and employee whereby a specified amount of money is deducted from the employee's pay and invested for the employee in stocks, bonds, or other investments.
Payroll Taxes
Payroll taxes are taxes levied on wages and salaries. They include federal and state income tax, Social Security (FICA), and unemployment insurance.
Payroll Withholding
Payroll withholding is the process by which employers deduct a portion of an employee's earnings to pay for taxes and other mandatory deductions. This system ensures that the employees' tax obligations are met throughout the year.
PBGC Guaranteed Benefits
PBGC Guaranteed Benefits refer to the portion of pension benefits that are guaranteed by the Pension Benefit Guaranty Corporation (PBGC) in the event that the pension plan sponsor defaults.
PC-Compatible
A PC-compatible computer is capable of running software that is intended for the IBM PC. Virtually all microcomputers currently available, including some made by Apple Computer, are PC-compatible.
PC, P.C.
PC or P.C. stands for Personal Computer, typically referring to a general-purpose computer for individual use. It also stands for Professional Corporation, a legal business entity formed by certain professionals who provide licensed services in various fields.
PDF
PDF, or Portable Document Format, is a versatile file format developed by Adobe Systems to present documents, including text formatting and images, independent of software, hardware, or operating systems. It is widely used for creating, sharing, and printing documents securely and accurately across different platforms.
Peak
A peak represents the highest point of the business cycle in a particular phase of economic activity, typically characterized by maximum output, employment, and consumer spending.
Peak Period
In transportation, 'Peak Period' refers to the specific time intervals during which the transportation system experiences the highest demand and utilization, often linked to morning and evening rush hours.
Pecking Order
Pecking Order refers to a hierarchy or rank order within an organization, originally derived from the behavior of chickens where dominance is established through a series of physical interactions.
Peculation
Peculation is the fraudulent misappropriation of money or goods entrusted to one's care, often involving public funds or resources. This act is closely related to embezzlement, but typically refers to the misuse of funds by public officials.
Pecuniary
Relating to or consisting of money; that which can be valued or assessed in monetary terms. A pecuniary loss is a financial loss, or one that can be quantified in terms of money.
Pecuniary Bequest
A pecuniary bequest is a specific sum of money given to an heir as stated in a decedent's will.
Peer-to-Peer Lending
Peer-to-peer lending, also known as P2P lending or social lending, is a growing practice in which individuals with spare funds lend money to small businesses or private borrowers through dedicated online platforms, bypassing traditional banks.
Peg
Pegging is a method used to stabilize the price of a security, commodity, or currency by intervening in the market. This term is commonly associated with maintaining exchange rate stability and supporting commodity prices, like agricultural goods, through governmental action.
Penalty
Money or other costs one will pay for breaking a law or violating part or all of the terms of a contract. Penalties are often imposed for prepaying a loan, failing to complete a contract sale, or breaking a lease; penalties are not tax deductible.
Penalty for Early Withdrawal of Savings
The charge imposed by a bank or savings institution for withdrawing funds from a time deposit before its maturity. This penalty may be deductible by individuals as an adjustment to gross income.
Penalty for Repeated Errors
Penalties for repeated errors are imposed to discourage consistent inaccuracies in tax filings or financial reports. These penalties serve as a deterrent for habitual mistakes and ensure compliance with legal standards.
Pencil Out
Pencil Out refers to the practice of estimating in approximate figures whether a proposed investment or business opportunity is expected to be profitable. It involves making quick calculations to assess the potential financial viability of the venture.
Penetration Pricing
Penetration pricing involves establishing low pricing for a product to achieve rapid market entry and discourage competitors, with the potential to raise prices later once market share is established.
Penny Shares
Penny shares are securities with very low market prices traded on a stock exchange, often appealing to small investors due to the potential for significant holdings at a low cost.
Penny Stock
Penny stocks are securities trading at a low price, generally less than $5 per share, and are issued by small companies with short or erratic revenue and earnings histories, often traded over-the-counter.
Pension Benefit Guaranty Corporation (PBGC)
The Pension Benefit Guaranty Corporation (PBGC) is a federal corporation established under the Employee Retirement Income Security Act (ERISA) to guarantee basic pension benefits in covered plans. It administers terminated plans and can place liens on corporate assets for certain unfunded pension liabilities.
Pension Equity Plan (PEP)
A Pension Equity Plan (PEP) is a type of defined-benefit pension plan design in which a participant's benefit is stated as a lump sum based on the participant's age, service, and average pay, with the average pay usually based on only the final few years of employment.
Pension Freeze
A Pension Freeze refers to the situation when a pension plan sponsor decides to eliminate future pension accruals for plan participants, although the plan itself remains in existence to pay out already accrued pensions.
Pension Fund
A fund set up by a corporation, labor union, governmental entity, or other organization to pay the pension benefits of retired workers. Pension funds invest billions of dollars annually in the stock and bond markets, playing a significant role in the financial markets. Earnings on the investment portfolios of pension funds are tax-exempt.
Pension Plan
A pension plan is a retirement savings program sponsored by an employer that provides its employees with regular income post-retirement. There are various types of pension plans, each with different rules regarding contributions, benefits, and tax treatment.
Pension Plan Liability Reserve
An obligation recognized by the employer for the future liability to make annuity payments to employees. The reserve is typically a liability when it results from charging a pension expense. However, in a revocable plan, the reserve is considered an appropriation of retained earnings regardless of whether it affects specific assets.
Pension Protection Act of 2006
Congressional pension reform legislation designed to encourage individual retirement savings and to make employer-funded plans subject to stricter regulation. Provisions also affect charitable contributions, long-term care, college savings plans, and assistance to employees in setting up 403(b) and 401(k) plans.
Pension Scheme
A pension scheme is an arrangement designed to provide a defined class of individuals, known as members, with retirement pensions and often other benefits. It may also extend benefits to dependants of deceased members.
Pensions Regulator
The UK regulatory body responsible for protecting the benefits of those in work-based pension schemes; this includes all occupational schemes and any other schemes in which payments are made through the employer.
Penthouse
A penthouse is a luxury housing unit generally located on the top floor of a high-rise building. It commands a premium rental or sales price due to its exclusive features and expansive views.
Peon
The term 'peon' refers to a person who works in a servile capacity or, in Spanish, to a laborer or servant. It is often used to describe workers performing menial tasks that require little skill or decision-making authority. The term has historically been used in various countries to denote low-status laborers.
People Intensive
A term used to describe processes or organizations that require a significant amount of human labor to complete tasks, as opposed to being easily automated. Examples include hospitals and customer service centers.

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.