Safe Harbor Rule
A concept in statutes and regulations whereby a person who meets listed requirements will be preserved from adverse legal action. Frequently, safe harbors are used where a legal requirement is somewhat ambiguous and carries a risk of punishment for an unintended violation.

Salary-Reduction Plan
A retirement plan in which money is taken automatically from employees’ salaries and put in a retirement fund, such as a 401(k).

Sales Discount
A reduction in the selling price usually as an inducement to consummate a sale. Sales Discount is on the income statement as a deduction from Gross Sales to get Net Sales.

Sales Tax
A tax levied by state and local governments, usually as a percentage of retail sales.

Salvage Value (see Residual Value)
The estimated net scrap, salvage, or trade-in value of a tangible asset at the estimated date of disposal.

Scienter Theory
Based on the word 'scienter', which is Latin for "having knowledge." In criminal law, the theory refers to knowledge by a defendant that his/her acts were illegal or his/her statements were lies and thus fraudulent. In securities, it is to knowingly transact a fraudulent securities deal.

S Corporation (see SUBCHAPTER S)

Secured
An obligation backed by a pledge of collateral. Opposite of unsecured.

Securitization
The conversion of loans and other bank assets into securities that can be traded in the securities market. Securitization enables banks to obtain capital.

Security Agreement
A document that gives a lender a claim to the assets that the borrower has put up as collateral for a loan. The security agreement must be signed by the borrower to be valid.

Self-Directed IRA
An individual retirement account (IRA) that allows its owner to decide how the funds should be invested.

Self-Insurance
A rainy day fund set aside for emergencies, illness, and periods of unemployment.

Senior Lien
When two or more liens have been placed on a property, the senior lien takes precedence over other liens and must be satisfied first. The senior lien is the first mortgage on the property.

Serial Bond
A bond issue in which the bonds mature periodically over a number of years.

Service Charge Accounting
In property management, is estate and property service charge accounting system that provides the mechanism for comprehensive service charge reconciliation reports for both the tenant and the property manager. Expenditure can be apportioned equally over the entire service charge period or can be allocated to a specific date range within the period. Full budget reporting and next period budget calculation routines are usually provided.

Settlement Date
The actual date of the transfer of a security from the buyer to the seller.

Severance Tax
Levied on production of natural resources taken from land or water bottoms within the territorial boundaries of a state.

Severally But Not Jointly
In a stock offering, when the people selling the stock are each responsible for selling their part, but not for selling the entire offering. In a jointly but severally arrangement, all parties are responsible for the sale of the offering.

Shareholder
An individual or company, (including corporations) that legally owns one or more shares of a company.

Sheriff’s Sale
An auction of a borrower’s property as part of a foreclosure. The proceeds go to help pay the borrower’s debts.

Short Sale
Selling a stock one does not own with the idea of making a profit by rebuying the stock later when the price goes down. A short sale works like this: The short seller, believing the stock will fall in price, has his or her broker “borrow” the stock from one of the broker’s clients. The stock is sold. The buyer of the stock gets the shares the broker borrowed. Meanwhile, with luck, the stock drops in value. The short seller buys the stock at the reduced price and returns the shares through the broker to the person they were borrowed from. The short seller keeps the profits, unless of course the stock went up instead of down after it was “borrowed.” If the stock went up, the short seller still must buy the shares in order to return them to the person they were borrowed from, and the short seller must buy the shares at the higher price.

Short Term Asset
An asset expected to be converted into cash within the normal operating cycle (usually one year), e.g. accounts receivable and inventory.

Short-Term Gain
For the purpose of determining capital gains and losses, a gain on an investment that was held for less than a year. Whether an investment gain is short-term or long-term is important because long-term capital gains sometimes receive preferential treatment.

Short Term Liability
A liability that will come due within one year or less.

Signature Loan
A loan given without collateral, but with only the borrower’s promise to pay and his or her signature on a promissory note. Such loans are given on the basis of the good standing of the borrower.

Silent Partnership
The relation of partnership sustained by a person who furnishes capital only, i.e., the partner is not involved in the day-to-day operations or decisions of the entity.

Simple Interest
Interest computed on principal alone, as opposed to compound interest which includes accrued interest in the calculation.

Simple IRA
A simplified pension plan for small businesses wanting to provide their employees with retirement savings options. Simple IRAs work much like 401(k)s—but at a much lower administrative cost to the employer.

Simplified Employee Pension Plan (SEP)
A retirement plan for small businesses. It allows small business people to set aside a specific percentage of their gross income for retirement.

Sinking Fund
A sum set apart periodically from the income of a government or a business and allowed to accumulate in order ultimately to pay off a debt. A preferred investment for a sinking fund is the purchase of the government's or firm's bonds that are to be paid off. Usually the fund is administered by a trustee.

Sole Proprietorship
When a business is owned by one person. Sole proprietorship is one of four types of business organization; the other three are a limited liability company, a partnership and a corporation.

Specific Identification Method
In an inventory, when each item is identified and accounted for. In some other types of inventorying methods, similar items are grouped.

Stable Dollar Assumption
When using money as a measuring unit and preparing financial statements expressed in dollars, accountants make the assumption that the dollar is a stable unit of measurement.

Stale Check
A check that is more than six months old.

Startup Costs
Or Organization Cost, in the U.S., is when a new corporation is created, the costs associated with the formation are not deductible. An election must be made to amortize organizational costs no later than the due date (including extensions) of the return for tax year in which the active trade or business begins. If an election is not made to amortize these costs, they must be capitalized on the books and are not subject to amortization resulting in permanent capitalization. Upon making the timely election, the corporation may recover these costs through amortization deductions over a 60 month period. Organizational expenditures include any expenditure which is:• incident to the creation of the corporation,• chargeable to capital account, and • is of a character which, if expended incident to the creation of a corporation having a limited life, would be amortizable over such life. The following are examples of organization costs:• legal services incident to the organization of the corporation, such as drafting the corporate charter, by-laws, minutes of organizational meetings, terms of original stock certificates, etc.• necessary accounting services.• expenses of temporary directors and of organizational meetings of directors or stockholders.• fees paid to state of incorporation.

Statement of Cash Flows
Measures the flow of money in and out of a business. One of four financial statements found in the annual report, it categorizes a company's cash receipts and disbursements for a given fiscal year by three major activities: operations, investments and financing.

Statement of Fund Balance
Part of the Financial Statements of certain regulated entities, e.g. local, county, and state, governments. The content or configuration of the Consolidated Financial Statements normally includes a Consolidated Statement of Fund Balance along with separate Statements of Fund Balance for all authorized funds within the jurisdiction, e.g. General Operating Fund and Airport Operating Fund.

Statement of Retained Earnings
One of the four basic financial statements; the Statement of Retained Earnings is a reconciliation of the Retained Earnings account. Information such as dividends or announced income is provided in the statement. The Statement of Retained Earnings provides information about what a company's management is doing with the company's earnings.

Statement of Stockholders' Equity
A summary of the changes in stockholders' equity of a corporation that have occurred during a specific period of time.

State Unemployment Tax Act (SUTA)
In the U.S., is the same as FUTA except from an individual U.S. state in compliance to federal guidelines. See also FEDERAL UNEMPLOYMENT TAX ACT.

Statute of Frauds
A legal statute that says a contract cannot be enforced unless it has the signature of the person against whom it is being enforced. In the case of a mortgage or other assumable debt, the signature of the borrower is required.

Statute of Limitations
A limit on the time within which a legal action can be brought or a file claimed.

Stock Split
The issuance of a substantial amount of additional shares, thereby reducing the par value of the stock on a proportionate basis.

Stumpage
Refers to: a) Timber in standing trees; usually sold without the land at a fixed price per tree or per stump, the stumps being counted when the land is cleared. (NOTE: Only trees above a certain size are allowed to be cut by loggers buying stumpage from the owners of land); or, b) A tax on the amount of timber cut, regulated by the price of lumber.

Sub-Chapter S
A legal corporate entity organized under the United States Federal Tax Code that allows Subchapter S Corporations to distribute all income / loss proportionately to its shareholders, who then claim that income / loss on their personal income taxes; thereby avoiding the payment of corporate taxes.

Subsidiary Corporation
A company that is owned wholly or partly by another company, called the parent company. The parent company usually owns a majority of the stock in the subsidiary.

Surplus
The amount by which a company’s assets exceed its liabilities and capital stock, as shown on the company’s balance sheet.

Synthetic Lease
A transaction that appears, from an accounting standpoint, as a lease, but as a loan from a tax standpoint; resulting in an off-balance sheet account of the financing and the tax benefits that accompany the financed asset