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Glossary of Accounting, Financial & Investing Information - C 

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Call option

See option.


A callable security is one which can be redeemed by the issuer before the expiry date.

Capital assets

Capital assets include almost everything you own, such as your home, household furnishings, car, coin or stamp collections, jewelry, gold, silver and other metals, and investments such as stocks and bonds.

See also noncapital asset.

Capital gain or loss

A capital gain or loss is the gain or loss resulting from the sale of a capital asset, such as stocks, bonds, art, and coins or other collectibles.  You have a capital gain if you sell the asset for more than your basis, and a capital loss if you sell the asset for less than your basis.  You may not deduct losses on the sale of personal-use property such as your home or car.

A capital gain or loss is classified as long-term if you hold the asset for more than one year before you dispose of it.  It is classified as short-term if the asset is held for one year or less.

Long-term capital gains and losses are added together, and the result is the net long-term capital gain or loss.

Short-term capital gains and losses are added together, and the result is the net short-term capital gain or loss.

If your net long-term capital gain is more than your net short-term capital loss, this is a net capital gain.

If your capital losses are more than your capital gains, you can claim a maximum of $3,000 in a year, or $1,500 if you are married and filing separately.

See Internal Revenue Service (IRS) information:

Topic 409 - Capital Gains and Losses

Publication 550, Investment Income and Expenses

Publication 544, Sales and Other Dispositions of Assets

Topic 701 - Sale of Your Home

Publication 523, Selling Your Home

Topic 703 - Basis of Assets

Publication 551 - Basis of Assets

Capital real property

Capital real property includes land and buildings, and any items which are installed in and attached to the buildings or land.   Depreciation expense can be claimed on buildings and attachments which are used to produce income, but not on land.

Capital stock

Capital stock is the total amount of money (equity) invested in a corporation by its shareholders (owners).  The capital stock is made up of individual shares, which are registered in the names of the shareholders (also called stockholders).

A corporation may have more than one class of share, with different rights attached to them.  At least one class of shares will have voting rights, but there may be classes of shares which do not have voting rights.  There are many corporations with 2 classes of shares, let's say Class A and Class B shares, where the Class A shares have voting rights, and Class B shares do not.  In many of these cases, the Class B shareholders will have a much greater investment in the corporation than the Class A shareholders.  The Class B shares are issued in order to raise funds without losing voting control.

See also common shares and preferred shares.

Cash method accounting

Under the cash method, or cash basis, for preparing accounting records, the revenues and expenses are recorded when the revenues are received and the expenses are paid.  Using the accrual method, revenues and costs are recorded in the accounting period in which they occur, even if the revenue has not been received or the costs have not been paid.  

Most non-farm taxpayers engaged in business are required to use the accrual method for preparing their tax returns.  Farmers may choose the cash method, but corporations or partnerships engaged in farming must report their income using the accrual method.  There are some exceptions to this.  See the IRS publication Farmers Audit Technical Guide (ATG) - Chapter Two - Income, Cash/Accrual/Hybrid.  Note:  the old ATG has been removed by IRS and the new ATG will be posted as soon as it is completed and approved for publication. Not available as of March 22, 2020.

Cashflow / cashflow per share

The "cashflow" used in reporting cashflow per share usually means net income with depreciation and amortization added back.  See also operating cashflow and free cashflow.

Cashflow per share is cashflow divided by the total number of common shares outstanding.

Cashflow statement

The cashflow statement is a financial statement which reports the reasons for changes in cash balances for a period of time. It provides details of changes in cash balances resulting from operating activities, financing activities, and investing activities.

Central bank

A central bank, such as the Federal Reserve Bank, tries to prevent the country's currency from rising or falling too much or too quickly.

See the Federal Reserve Bank website for more information on how it functions.

Closed-end fund

This is an investment company which has a fixed number of shares.  The shares trade on a stock exchange (such as  NYSE, AMEX, etc) at market value.

See also mutual fund, open-end fund, exchange traded fund, and management expense ratio.


Collateral is property which is pledged as security for the repayment of a loan.

Commercial paper

Commercial paper is a short term debt instrument issued by a corporation and sold through brokerages to investors.


In financial markets, usually refers to agricultural or resource products, which are traded on commodities exchanges.  Examples:  wheat, coffee, lumber, oil, copper, pork bellies, etc.

Common shares

When a corporation is formed, common shares are purchased by investors who then become shareholders in the corporation, and hold voting privileges.  Common shareholders elect the board of directors, and vote on other matters which require the approval of the owners of the company.  If a corporation is liquidated, the common shareholders have the right to a share of the assets of the corporation, after any prior claims on the corporation have been settled.

A corporation may authorize an unlimited number of common shares to be issued, so that they may raise funds in the future by issuing more shares.

See also capital stock and preferred shares.


A group of individuals.  See corporation.


A conglomerate is a company which operates in multiple industries.

Consolidated financial statements

Consolidated financial statements group together the financial results of a parent company and its subsidiaries.

Consumer price index (CPI)

The consumer price index (CPI) is a measurement produced by the U.S. Department of Labor which is meant to reflect the increase in the cost of living.  Current and historical CPI data can be obtained from the Department of Labor website.


A contract is a legally binding agreement between two parties.


A convertible bond, debenture or preferred share is a security which may be exchanged, usually for common shares of the company, at a set price, for a fixed period of time.


A corporation is a separate legal entity, which is formed by application to the government.  The corporation issues shares (capital stock) to one or more shareholders.  A corporation has limited liability.  This means that the liability of the shareholders is limited to the amount of their investment in the shares of the corporation.

See also public corporation.

Cost basis (stocks)

The cost basis is calculated separately for each stock owned by an investor, and is used to calculate the gain or loss on the sale of shares of the stock.  Your cost basis is the amount you paid for the shares you are selling, including any commissions.  If you have purchased shares of the same stock at various times for different prices, the cost basis of shares sold is the basis of the shares which were acquired first (first-in first-out).  Weighted average cost per share cannot be used, except for certain mutual fund shares.


A coupon is the interest payment portion of a bond.  When a bond is issued, a brokerage company will buy bonds and will sometimes split them into two parts to sell separately.  One part is the interest payment (coupon), and the other part is the maturity value of the bonds, sold as strip bonds.

Covered call option

See covered vs. uncovered (naked) call.

Covered put option

See covered vs. uncovered (naked) put.

Current account

The current account of the U.S. is a measurement of the flow of goods, services, and investment income to and from other countries. If the U.S. is receiving more money from investment income and exports of goods and services than it is paying out, then there is a current account surplus.  Investment income includes interest, dividends, and property rental income. 

Current assets

These are assets which are expected to be either consumed or converted to cash within one year, or are able to be readily converted to cash.  Examples are accounts receivable, inventories, short term investments, and prepaid expenses such as insurance.

Current liabilities

These are debts which are due to be paid within one year, such as accounts payable, accrued liabilities, and the portion of long term debt which is due within 1 year.

Current ratio  (C/R)

Current assets divided by current liabilities.  This is a measure of the liquidity of the company.

Example:  current assets $25,000, current liabilities $20,000, C/R = 25,000/20,000 = 1.25

Cyclical stock

A cyclical stock is one which tends to have greater price fluctuations over an economic cycle.  Manufacturing and resources tend to be cyclical sectors.

Revised: October 12, 2021

Copyright 2008 Boat Harbour Holdings Ltd.   See Reproduction of information on

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