Accounting & Tax Definitions -- G

GAAP: Abbreviation for generally accepted accounting principles. Accounting principles that have been given formal recognition or authoritative support.

GAAS: Abbreviation for generally accepted auditing standards. Auditing standards that have been given formal recognition or authoritative support.

Gain: The excess of the amount realized from a sale or exchange over the adjusted basis of the property sold or exchanged.

General Journal: Journal in which transactions are recorded for which specific journals are not provided (for example, adjustments and corrections). In a small operation the general journal may be the only book of original entry.

General Depreciation System: The most commonly used MACRS system. Personal property is depreciated using the declining-balance method (double or 150 percent, depending on the recovery class) switching to straight line when that method results in the larger deduction. Residential rental property is depreciated using the straight-line method over 27.5 years, and nonresidential real property is depreciated using the straight-line method over 39 years (31.5 years for property placed in service before May 13, 1993).

General Ledger: Ledger in which all the assets, liabilities, equity, revenue and expenses are posted and from which financial statements are prepared.

General Rule: Used to determine the taxable portion of a pension or annuity.

General Straight-Line Depreciation System: A MACRS system of depreciation using the straight-line method over the normal MACRS recovery period for the asset.

Gift: For income tax purposes, the words "gift" and "contribution" usually have separate meanings, the latter word being used in connection with contributions to charitable, religious, etc., organizations, whereas the word "gift" refers to transfers of money or property to private individuals, needy persons, friends, relatives, etc. The recipient of a gift is not required to include it in his gross income, and the maker of the gift is not entitled to deduct it (except for business gifts to customers of $25 or less per donee per year).

Gift Tax: A graduated federal tax paid by donors on gifts exceeding $11,000 (for 2004) per year per donee.

Golden Parachute: An agreement entered into by a corporation with its top executives to make substantial payments to the executives in the event of a change in corporate control. Such payments are treated as compensation.

Goodwill: The difference between going-concern value and tangible asset value (tangible assets include identifiable intangible assets having values that can be separately determined).

Government Bonds Issued at a Discount: Certain U.S. Government bonds (Series E and EE) are issued at a discount and do not pay interest during the life of the bond. Instead, the bonds are redeemable at increasing fixed amounts. Thus, the difference between the purchase price and the amount received upon redemption represents interest income to the holder. A cash-basis taxpayer may defer recognition of taxable income until such bonds are redeemed or until the year of final maturity, whichever is earlier. Alternatively, the taxpayer may elect to include the annual increase in the value of the bond in gross income on an annual basis.

Gross Income: This deals with all the money, goods and property you receive that must be included as taxable income. Fact: people who use the barter system (exchanging non-monetary goods/services as payment) have to include whatever they've bartered for as part of their gross income.

Gross Rents: Total income from rents before expenses or the depreciation or cost recovery deduction.

Group Term Life Insurance: Life insurance coverage purchased by an employer for a group of employees. Such insurance is renewable on a year-to-year basis and does not accumulate in value; that is, no cash surrender value is built up. The premiums paid by the employer on such insurance are usually not taxed to an employee unless coverage exceeds $50,000.

Guaranteed Return: A specific amount to be paid by an annuity. This may be a certain payment for a given number of years or a given amount to be paid regardless of death.