Accounting Terminology Guide

W

W
Wage

Payment for services of employees at an hourly rate.

Walkthroughs

The most effective means for an AUDITOR to confirm his understanding how internal control over financial reporting is designed and operates to evaluate and test its effectiveness. It includes making inquiries of and observing the personnel who actually perform the controls; reviewing documents that are used in, and that result from, the application of the controls; and comparing supporting documentation to the accounting records. In a walkthrough, the auditor traces a transaction from origination through the company's information systems to the point where it is reflected in the company's financial reports. Walkthroughs provide the auditor with evidence to:

1. Confirm the auditor's understanding of the process flow of transactions.
2. Confirm the auditor's understanding of the design of controls identified for all five components of internal control over financial reporting, including those related to the prevention or detection of fraud.
3. Confirm that the auditor's understanding of the process is complete by determining whether all points in the process at which misstatements related to each relevant financial statement assertion that could occur have been identified.
4. Evaluate the effectiveness of the design of controls.
5. Confirm whether controls have been placed in operation.

Warrant

Option to purchase additional SECURITIES from the issuer.

Wash Sale

A wash sale occurs if stock or securities are sold at a LOSS and the seller acquires substantially identical stock or SECURITIES 30 days before or after the sale. Stock or securities for this purpose includes contracts or operations to acquire or sell stock or securities. Losses incurred in a wash sale cannot be deducted. It does not matter if the total 60 day period begins in one tax year and ends in another. However, the disallowed loss is not permanently lost. Instead, the basis in the newly acquired stock or securities is the same basis as of the stock or securities sold, adjusted by the difference in price of the stock or securities.

Weighted-Average-Cost Method

An AVERAGE-COST METHOD procedure for determining the cost of ENDING INVENTORY under the PERIODIC INVENTORY SYSTEM

Wholesale

The sale of goods in large quantities, especially to a person or COMPANY that plans to sell them at retail.

Wholesaler

Middleman or distributor who sells mainly to retailers, jobbers, other merchants, and industrial, commercial, and institutional users as distinguished from consumers.

With Recourse

Able to collect losses on uncollectible accounts from the seller.

Withholding

Amount withheld or deducted from employee salaries by the employer and paid by the employer, for the employee, to the proper authority.

Withholding Allowance

Each taxpayer is allowed to claim a withholding allowance, which exempts a certain amount of wages from being subject to WITHHOLDING. The allowance is designed to prevent too much taxes being withheld from a taxpayers wages and a person can compute this by completing form W-4 and submitting it to their employer.

Without Recourse

Obligated to bear losses from uncollectible accounts.

Work in Progress

INVENTORY account consisting of partially completed goods awaiting completion and transfer to finished inventory.

Working Capital

Excess of CURRENT ASSETS over CURRENT LIABILITIES.

Working Interest

Direct participation with UNLIMITED LIABILITY, as distinguished from passive LIMITED PARTNERSHIP shares.

Working Papers

(1) Records kept by the AUDITOR of the procedures applied, the tests performed, the information obtained, and the pertinent conclusions reached in the course of the AUDIT. (2) Any records developed by a CERTIFIED PUBLIC ACCOUNTANT (CPA) during an audit.

Worksheet

A type of working paper used as a preliminary step in the preparation of FINANCIAL STATEMENTS.

Wrap-Around Mortgage

Second MORTGAGE which conveniently expands the total amount of borrowing by the mortgagor without disturbing the original mortgage.

Write Off

Charging an ASSET ACCOUNT to EXPENSE or LOSS.