Account Balance-Charge or Credit: Savings accounts may post interest earned, or credit cards may post charges based on an established policy. Five of the most popular account balance procedures which post credits or charges are: a previous balance; an adjusted balance; an average daily balance; a past due balance; and a final balance.

Accounts Reconciliation: The beginning balance plus the sum of all entries on a ledger or in a checkbook register must equal the ending balance on an account statement. Deposits, interest received, and credits are added to the beginning balance. From this total amount, automatic withdrawals, checks outstanding, checks negotiated, and account charges are subtracted. When the resulting balance equals the ending balance on the account statement, the account is reconciled.

Active Participant: A person, or his or her spouse, who participates in any of the following employer-sponsored retirement plans for any part of an applicable year: 1) a qualified pension, stock bonus, or profit sharing plan, 2) a qualified annuity plan, 3) a tax-sheltered annuity (TSA) plan, 4) a simplified employee pension plan (SEP), or 5) a local, state, county, or federally sponsored retirement plan.

Actuary: Insurance contracts and retirement plans require professional calculation of payments to be received and benefits to be paid. An actuary analyzes all probability and risk estimates based upon past experiences to confirm obligations are pragmatic and attainable.

Additional Voluntary Contributions: Employers frequently establish qualified tax-deferred retirement plans for eligible employees. Some employers match employee contributions to a predetermined maximum percentage level. Beyond any matching amount, employees are permitted to deposit additional voluntary contributions, usually pre-tax, up to a scheduled monetary limitation.

Adjustable Rate Mortgage (ARM): Also called a variable rate mortgage. A mortgage in which the interest rate is adjusted periodically, usually at intervals of one, three, or five years, based on a measure or an index, such as the rate on US Treasury bills or the average national mortgage rate. In exchange for assuming some of the risk of a rise in interest rates, a borrower receives a lower rate at the beginning of an ARM than if he or she had taken out a fixed-rate mortgage.

Adjusted Gross Income (AGI): On a federal income tax return, AGI is calculated by first combining income from all sources, and then subtracting certain allowable deductions and adjustments to income.

Advance: A services company may establish a salary advance to assist new employees with initial cash flow problems, or to help seasoned employees with emergency needs. The advance represents money received before it is actually earned. In addition, some businesses will establish an employee cash advance program to provide for business-related travel expenses.

Aggressive Growth Fund: A mutual fund with the objective of maximizing long-term capital growth, rather than dividend income, by investing in narrow market segments and small company stocks.

Allocation Formula: Employers make contributions to employee profit sharing accounts based on an allocation formula. The formula also governs the reallocation of funds forfeited by employees who terminate from the plan.

Alternative Minimum Tax (Corporation): A federal tax applied to regular business income with adjustments made for tax preference items.

American Stock Exchange (AMEX): Stock exchange located in downtown Manhattan, generally trading in smaller stocks compared to the New York Stock Exchange (NYSE).

Amortization: The process of reducing an outstanding loan balance by making regular payments of principal and interest until the debt’s maturity.

Annual Percentage Rate (APR): The cost of credit or a loan expressed as a simple annual percentage. The Federal Truth In Lending Act requires all consumer credit agreements and loans to disclose the APR in large, bold type. On a mortgage, the APR is usually higher than the stated interest rate, since it includes points and other charges.

Annual Report:The yearly financial statement issued by a mutual fund to its shareholders. It reports on the fund’s assets, liabilities, and year-end earnings, as well as certain historical information.

Annuitant: The person to whom an annuity is payable.

Annuity Cash Refund: In an income for life annuity, the contract may include a death benefit for the total premiums paid. When the annuitant dies, the annuity cash refund will be the net sum of premiums paid minus the amount received in annuity payments.

Annuity Certain: An option in an annuity contract where the annuity owner selects a future level payment of income covering a specified number of years, generally ten years. If the annuitant predeceases before the expiration of the annuity payments, the remaining obligation is transferred to the designated beneficiary in the annuity contract.

Annuity Joint and Survivor: In contrast to distribution of income for one annuitant, an annuity joint and survivor provides for annuitized payments over two designated lives. Upon the death of the first annuitant, the surviving annuitant receives prearranged, continued payments for life, based on a percentage received by the first annuitant.

Annuity Joint Life: While two or more individuals may be named annuitants, payments cease at the death of the first annuitant in an annuity joint life contract.

Annuity Modified Refund: In a contributory retirement plan, the annuity beneficiary of a deceased retiree receives the accumulated balance of the pension fund.

Annuity Payout Option: An alternative an annuitant has for how he or she may receive annuity payments. Annuities may be received in a variety of ways: as a fixed dollar amount, for a fixed period, or over the lifetime(s) of one or two annuitants.

Annuity: A life insurance contract guaranteeing the purchaser, or his or her beneficiary, payment in the future, usually during retirement. Annuities may be structured in different ways with different payout options. Funds invested in an annuity grow on a tax-deferred basis.

Application Fee: A fee lenders may charge to process a loan application. Paying this fee does not guarantee loan approval. Some lenders apply the cost of the application fee toward certain closing costs.

Appraisal: An assessment of a property’s value based on information from recent sales of similar properties.

Asset Allocation: The process of determining how investment funds will be apportioned among different classes of financial assets, such as stocks and bonds. Many financial advisers believe that the investment mix has a greater impact on long-term portfolio performance than does any individual investment.

Asset Class: Securities with similar features. The three main asset classes are stocks, bonds, and cash reserves.

Asset: Property with a cash value, such as real estate, equipment, savings, and investments.

Assignment: The legal transfer of the entire or partial ownership of an asset, such as an insurance policy, to another person or entity.

Automatic Reinvestment: A prearranged investment plan that automatically deposits mutual fund dividends or capital gains back into the fund to purchase additional shares.

Backup Withholding: Unless a Social Security or Tax Identification number is filed with a financial institution, the Internal Revenue Service requires 20% of all interest or dividend income be withheld. Backup withholding may be avoided by filing a W-9 form when opening an account with a financial institution.

Balance: The amount of money in a bank account after deposits, withdrawals, interest, and bank charges.

Balloon Mortgage: A mortgage with a final payment considerably larger than the preceding payments. Balloon mortgages are typically used when borrowers anticipate receiving a large sum of extra cash to pay the balance, or when they expect to refinance before the balloon payment comes due.

Bankruptcy: An inability to pay outstanding debt, in full or in part, or declaring insolvency may lead to bankruptcy. There are three parties to any bankruptcy proceeding: debits, creditors, and a trustee. Bankruptcy is an expensive process and may adversely affect future credit opportunities. Some more recognizable bankruptcy applications are:

Chapter 7: A debtor (individual) is declared bankrupt and a court appointed trustee initiates a liquidation process and a discharge of all eligible debts. The debtor has no financial sources to a