Glossary

Fair Value Measurement is the process of determining the price at which an asset could be sold, or a liability transferred, in an orderly transaction between market participants at the measurement date. Under U.S. GAAP (ASC 820), fair value is defined as an “exit price,”

An Exposure Draft is a formal document issued by a standard-setting body, most notably the Financial Accounting Standards Board (FASB), to propose a new accounting standard or changes to an existing one. It is distributed publicly to gather feedback before any new rule becomes authoritative.

The Expense Recognition Principle is a fundamental rule in accrual accounting that requires companies to record expenses in the same accounting period as the revenues they are related to. The principle ensures that financial statements reflect actual business activity by matching the cost of goods

An Escrow Account is a financial tool used to hold money or assets by a neutral third party during a transaction until all agreed conditions between the buyer and seller have been met. This ensures protection for both parties, assuring that obligations will be fulfilled

An Equity Carve-Out (also called a partial spin-out) is a type of corporate restructuring in which a parent company sells a minority stake (typically less than 50%) of one of its subsidiaries to outside investors through an initial public offering (IPO). The subsidiary becomes a

Enterprise Risk Management (ERM) is a strategic methodology used by organizations to identify, assess, and manage risks across the entire firm. Rather than treating risks as isolated incidents within individual departments, ERM offers a holistic approach that integrates risk management throughout the organization. The goal

Electronic Fund Transfer (EFT) refers to the digital transfer of money between bank accounts or between an account and another financial institution, without the use of paper-based instruments such as checks or cash. EFT facilitates transactions using electronic systems, such as ATMs, debit cards, and

The Effective Interest Method is a technique used for amortizing bond premiums and discounts, providing a more accurate representation of the actual interest rate that applies to the bond during each accounting period.  Unlike the straight-line method, which amortizes the bond’s premium or discount equally

Economic Value Added (EVA) is a financial metric used to assess a company’s ability to generate profit beyond its cost of capital. Essentially, it measures a company’s true economic profit by subtracting its Weighted Average Cost of Capital (WACC) from its Net Operating Profit After