Illiquid  
When cash flows generated by the firm are insufficient to meet the debt service. When speaking of money or an economy: being very liquid means it is driven by primarily by cash, checking/saving accounts, treasury bills, stocks and bonds, etc; while being very illiquid means it is driven primarily by human capital.

Impaired Assets
In banking, applies to all problem assets which banks hold, and is not limited to problem loans. In addition to loans, it also captures off- balance sheet exposures and assets which have come onto banks balance sheets through enforcement of security conditions. See IMPAIRMENT OF VALUE.

Impaired Goodwill
The recognition of the reduction in value of the intangible asset known as goodwill.

Impairment of Value 
The permanent decline in the value of an asset. The entry is to debit the loss account and credit the asset for the loss in utility.

Implicit Rate of Interest
When the stated interest rate is not indicative of the market rate at the time a note is negotiated, the value of the asset (cash or non-cash) or service exchanged for the note establishes the market rate

Imprest Basis
In cash accounts, means that the exact amount of fund expenditures is replaced periodically.

Imputed Costs
Refer to the cost of an asset, service, or company that is not physically recorded in any accounts but is implicit in the product.

Imputed Value
The logical or implicit value that is not recorded in any accounts, e.g., in the projection of annual figures, values are imputed for months for which the actual values are not yet known.

Income Smoothing
Refers to measures taken to reduce the probability of income shocks before they occur, and includes strategies like diversifying income sources; making low-risk production and employment choices; building up physical, human, and social assets; and ensuring good financial management.

Income Statement
A report describing a corporation’s activities, its profit, and its losses over a fixed period.

Income Summary Account
The account in the general ledger used to summarize the revenue and expenses for the fiscal period.

Income Taxes Payable
Income taxes due including current portion of deferred taxes.

Incorporation
A legal process through which a company receives a charter and the state in which it is based allows it to operate as a corporation.

Indemnity
An obligation to pay all costs of damage, pain, or suffering.

Indenture
A document that states the terms under which a bond is issued. The indenture declares the maturity date, the interest, and other information. It is an agreement between lender and borrower which details specific terms of the bond issuance. Specifies legal obligations of bond issuer and rights of bondholders. There is usually a indenture document spelling out the specific terms of a bond as well as the rights and responsibilities of both the issuer of the security and the holder

Index
A numerical measurement that compares past and present economic activity. The Dow Jones Industrial Average is an index of stock performance. The Consumer Price Index measures the price of consumer goods.

Indirect Cost
That portion of cost that is indirectly expended in providing a product or service for sale (cannot be traced to a given cost object in an economically feasible manner) and is included in the calculation of COST OF GOODS SOLD, e.g. rent, utilities, equipment maintenance, etc. Opposite of direct cost.




 

Individual Retirement Account (IRA)
A retirement account to which individuals can deposit $3,000 (or more) annually out of earnings. IRAs provide two significant income tax benefits: IRA contributions may reduce an individual’s taxable income, and IRA earnings are not taxed. Withdrawals from an IRA can be made after age 591/2 at which time the withdrawals are taxed as normal income.

Individual Retirement Account Rollover
Rule allowing holders of individual retirement accounts (IRAs) to pass on the accumulated savings in one IRA to another IRA, provided that they do so within the first 60 days of closing the first IRA.

Inflation
An increase in the general price level of goods and services; alternatively, a decrease in the purchasing power of the dollar or other currency.

Inheritance Tax
Tax that heirs must pay in order to receive property from an estate. Not all states have inheritance taxes.

Insolvency
Being unable to pay debts.

Installment Sale
Selling property and receiving the sales price over a series of payments, instead of all at once at the close of the sale, is an installment sale. As the seller, unless you elect out, you will report the gain on that transaction as you receive it through the series of payments. As the buyer, you will usually pay interest on the unpaid balance.

Intangible Assets
An asset that is not physical in nature. Examples are things like copyrights, patents, intellectual property, or goodwill. An intangible asset is the opposite of tangible asset.
The assets of a company that aren’t property but are assets nonetheless. For example, an established clientele is an intangible asset.

Interest
Amount of money paid to borrow capital. Typically, the interest is expressed as a percentage of the principal that was borrowed.

Interest Rate
The price of borrowing money. The interest rate is usually expressed as a percentage of the total principal borrowed, although sometimes the rate of interest on a loan is tied to an index of some kind.

Interest Rate Cap
A fixed limit on the amount that a borrower must pay in interest on a loan.

Interim Audit
An audit conducted during the fiscal year usually as a means of minimizing the work and time involved in concluding the audit after the fiscal year. A corporation might have an interim audit covering the first nine months of the fiscal year so that at the end of the fiscal year most of the auditing will focus on the last three months of the fiscal year thus allowing for a comprehensive audit and early completion of the audit reports. An interim audit does not usually yield any formal reports from the external auditors.

Internal Rate of Return (IRR)
The profit that an investment earns expressed as a percentage. Typically, IRRs are stated as annual profit percentages. On an investment that pays interest and for which there is no change in value, such as a bank savings account, the interest rate is the IRR.

Inter Vivos Trust
Latin for between the living. An inter vivos trust gives one person’s property to another person.

Inventory
In a business, a list of a stock on hand, with the value of each item and the total value of all items by category.

Involuntary Bankruptcy
A petition by creditors asking a bankruptcy court to declare a firm bankrupt, the firm having failed to pay its debts and meet its financial obligations. Also called a creditor’s opinion.

Irrevocable Trust
A trust that cannot be revoked without the approval of the beneficiary. An irrevocable trust cannot be changed in any way without the beneficiary’s approval.