Accounting Terminology Guide

R

R
R&D

Research is a planned activity aimed at discovery of new knowledge with the hope of developing new or improved products and services. Development is the translation of research findings into a plan or design of new or improved products and services.

Rate of Return

The amount of PROFIT or INTEREST earned on an INVESTMENT, usually expressed as a percentage, such as an interest; the COST OF CAPITAL; the cost of money.

Ratio Analysis

Comparison of actual or projected data for a particular company to other data for that company or industry in order to analyze trends or relationships.

Raw Material

Something in its natural state that will be used in a manufacturing process.

Raw Materials Inventory Account

Another term for MATERIALS INVENTORY ACCOUNT.

Real Estate

Piece of land and all physical property related to it, including houses, fences, landscaping, and all rights to the air above and earth below the property.

Real Estate Investment Trust (REIT)

Investor-owned TRUST which invests in real estate and, instead of paying income tax on its income, reports to each of its owners his or her pro rata share of its income for inclusion on their income tax returns. This unique trust arrangement is specifically provided for in the INTERNAL REVENUE CODE.

Real Estate Mortgage Investment Conduit (REMIC)

An entity that holds a fixed pool of mortgages and issues multiple classes of interests in itself to investors. A qualified REMIC is generally taxed like a partnership, unless it takes contributions after its start up day or engages in a prohibited transaction.

Real Income

Income of an individual, group, or country adjusted for changes in purchasing power caused by INFLATION.

Real Interest Rate

Current INTEREST RATE minus INFLATION RATE.

Real Property

LAND and improvements, including buildings and PERSONAL PROPERTY, that is permanently attached to the land or customarily transferred with the land.

Real Rate of Return

RETURN on an INVESTMENT adjusted for INFLATION.

Realization

Conversion into CASH, as happens in the sale of asset.

Realized Profit (or Loss)

PROFIT or LOSS resulting from the sale or other disposal of a SECURITY.

Reasonable Assurance

Management's assessment of the effectiveness of internal control over financial reporting is expressed at the level of reasonable assurance. It includes the understanding that there is a remote likelihood that materialmisstatements will not be prevented or detected on a timely basis. It is a high level of assurance.

Rebate

In lending, UNEARNED INTEREST refunded to a borrower if the LOAN is paid off before MATURITY.

Recapitalization

An internal reorganization of a corporation including a rearrangement of the capital structure by changing the kind of stock or the number of shares outstanding or issuing stock instead of bonds. It is distinguished from most other types of reorganization because it involves only one corporation and is usually accomplished by the surrender by shareholders of their securities for other stock or securities of a different type.