Natural Business Year
A fiscal year based on the cycle of the given business rather than a calendar year. The year ends with inventories and activities at a low level, e.g., after winter shipments for a ski manufacturer.

Natural Classification (of costs)
Focuses on the nature of the cost item. In this classification structure, the total operating costs of an activity can be classified into manufacturing costs and commercial costs. Manufacturing costs include all direct materials and direct labor, as well as, factory overhead. Such factory overhead costs include indirect materials (such as factory supplies & lubricants), indirect labor (such as supervision and inspection) and other indirect costs (such as rent, insurance, and utilities). Commercial expenses include marketing expenses (such as advertising, printing, and sales salaries) and administrative (general and administrative (G&A) expenses (such as administrative office salaries, rent, and legal expenses).

Negative Amortization
A loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid Interest is added to the outstanding principal, to be repaid later.

Negative Goodwill
Arises where the net assets at the date of acquisition, fairly valued, exceed the cost of acquisition. It is reflected on the balance sheet net of other intangible assets. Negative goodwill is recognized as income as follows:

a) To the extent that negative goodwill relates to expected future losses and expenses, it is recognized in the income statement when the future losses and expenses are recognized.

b) The amount of negative goodwill relating to identifiable non-monetary assets (not exceeding the fair values of such acquired assets), is recognized as income on a systematic basis over the remaining useful lives of the identifiable acquired depreciable/amortizable assets with a maximum of 20 years.

c) The amount of the negative goodwill in excess of the fair values of the acquired identifiable non-monetary assets is recognized as income immediately.

d) The amount of the negative goodwill relating to monetary assets is recognized as income immediately.

NOTE: Intangible assets are not revalued.

Negligence
The omission to do something which a reasonable man, guided by those ordinary considerations which ordinarily regulate human affairs, would do, or the doing of something which a reasonable and prudent man would not do.

Negotiable
Capable of being transferred from one party to another. Checks, drafts, securities, and commercial paper are negotiable.

Net-Asset Value
The total value of a share in a mutual fund. The net-asset value is what each share would be worth if all shares were suddenly paid out.

Net Book Value
The current book value of an asset or liability; i.e., its original book value net of any accounting adjustments such as depreciation.

Net Income
The difference between a businesses total revenue and its total expenses. This caption and amount is usually found at the bottom of a company's Profit and Loss statement. Same as Net Profit.

Net Operating Loss (NOL)
Experienced by a business when business deductions exceed business income for the fiscal year. For income tax purposes, a net operating loss can be used to offset income in a prior year, or a taxpayer can elect to forego the carry back and carry the net operating loss forward.

Net Profit
The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Same as Net Income.

Net Worth
The total value of the assets of a business less the liabilities.

Nexus
Dependent upon usage, is a. the means of connection between things linked in series; or, b. a connected series or group; or, c. is the sufficient presence within the jurisdiction of a taxing authority. The taxable income of a multi-state corporation may be apportioned to a specific state only if the corporation has a sufficient nexus in the state. The nexus for state sales tax requires a physical presence in the state, whereas the nexus for state income tax purposes requires more than just solicitations of sales.

No-Load Fund
A mutual fund that charges no sales commission.

Nominal Ledger
The account book showing expenditure on nominal accounts i.e. named business accounts such as postage, printing, etc.

Nominal Value
The par, or face, value of something e.g. a share issue.

Nonprofit Organization 
One that has committed legally not to distribute any net earnings (profits) to individuals with control over it such as members, officers, directors, or trustees. It may pay them for services rendered and goods provided. Also known as NOT-FOR-PROFIT ORGANIZATION.

Nonrecourse
Refers to the lack of a legal claim against a party to a contract. In a nonrecourse arrangement, one or both parties are not liable if the contract is not fulfilled. The “wronged” parties, therefore, have no recourse to the law.

Nonrecurring
An income statement item that is infrequent in occurrence or unusual in nature.

Normal Rate of Return
For individuals, is the average rate of return on all investments, i.e. the average of all returns yields the normal rate of return. For capital investments for businesses, it is the profit relative to capital investment.

Notary Public
A public officer who attests to the authenticity of deeds, affidavits, and depositions.

Note
A written promise to pay a debt or sum of money.

Notes Payable
In a general ledger, an account showing the business’s liability for promissory notes.

Notes Receivable
In a general ledger, an account showing the business’s promissory notes received from customers.