Category: Financial Terms

Form 1095-B: Health Coverage Form 1095-B is an IRS form that reports minimum essential health insurance coverage under the Affordable Care Act (ACA). It shows who was covered, the coverage provider, and the months of coverage during the tax year. Key points Reports enrollment in minimum essential coverage (employer plans, Medicare, most Medicaid, and other…

Form 1095-A: Health Insurance Marketplace Statement Form 1095-A is the Health Insurance Marketplace statement sent to people who enrolled in a qualified health plan through the federal or a state Health Insurance Marketplace. It documents your monthly coverage, premiums, and any advance payments of the premium tax credit (APTC). You use the information on Form…

Form 1065: Partnership Income Guide and Filing Requirements Form 1065, the U.S. Return of Partnership Income, is the IRS tax return partnerships use to report business income, gains, losses, deductions, and credits. Partnerships themselves typically do not pay federal income tax; instead, profit or loss passes through to partners, who report their share on individual…

Form 1045: Application for Tentative Refund What it is Form 1045 is an IRS form that lets individuals, estates, and trusts request a quick, “tentative” refund when certain tax adjustments from a current year can be carried back to a prior year. The IRS is required to process a properly completed Form 1045 within 90…

Form 1040-X: Amended U.S. Individual Income Tax Return Form 1040-X is used to amend a previously filed individual federal income tax return (Form 1040, 1040-SR, or 1040-NR). Use it to correct or change information that affects your tax liability, credits, deductions, filing status, or dependents. Do not use Form 1040-X to correct simple mathematical errors…

Form 144: Notice of Proposed Sale of Securities What is Form 144? Form 144 is the notice filed with the U.S. Securities and Exchange Commission (SEC) when certain insiders propose to sell company securities. It is required under Rule 144 of the Securities Act of 1933 whenever proposed sales by an executive officer, director, or…

SEC Form 4: Statement of Changes in Beneficial Ownership SEC Form 4 documents material changes in ownership of a public company’s equity by insiders. It promotes transparency by disclosing purchases, sales, and other changes in an insider’s holdings so investors and regulators can monitor trading by officers, directors, and large shareholders. Key takeaways Insiders required…

SEC Form 3: Initial Statement of Beneficial Ownership SEC Form 3 is the initial disclosure that company insiders and certain large shareholders must file to report their beneficial ownership of a public company’s securities. The form creates a public record of holdings to promote transparency and help deter insider trading. Purpose Discloses holdings of directors,…

Forfeited Share A forfeited share is a company share that an owner loses for failing to meet purchase requirements or transfer restrictions. Common triggers include missing scheduled payments (call money) or selling/transferring shares during a restricted period. When shares are forfeited, they revert to the issuing company; the original holder loses any remaining claim to…

Forfaiting Forfaiting is a form of trade finance that lets exporters convert medium- and long-term receivables into immediate cash. The exporter sells receivables—typically evidenced by legally enforceable instruments such as bills of exchange or promissory notes—to a third party (the forfaiter) at a discount and without recourse. The forfaiter (often a bank or specialized finance…

Forex (FX) A global, electronic marketplace where participants buy, sell, and exchange currencies. Forex is the largest and most liquid financial market, operating 24 hours a day on weekdays across major financial centers. Key takeaways Forex is an over-the-counter (OTC) market with no single central exchange. Currencies trade in pairs (buy one, sell another); exchange…

Forensic Audit What is a forensic audit? A forensic audit is a detailed, investigative examination of an individual’s or organization’s financial records and transactions intended to uncover evidence of wrongdoing that can be used in legal proceedings. It is a specialized area of accounting focused on detecting, documenting, and quantifying fraud, embezzlement, and other financial…

Forensic Accounting: Definition and Overview Forensic accounting applies accounting, auditing, and investigative skills to examine financial records for use as legal evidence. Forensic accountants analyze transactions, trace funds, identify hidden assets, and quantify damages to support criminal prosecutions, civil litigation, insurance claims, and dispute resolution. They often serve as expert witnesses in court. Key Takeaways…

Foreign Tax Credit: Definition, How It Works, and Who Can Claim It The foreign tax credit (FTC) is a U.S. tax relief that offsets income taxes you paid to a foreign country or U.S. possession, reducing the risk of double taxation on the same income. It applies to both earned and unearned income and generally…

Foreign Portfolio Investment (FPI) Foreign portfolio investment (FPI) refers to holding financial assets—such as stocks, bonds, mutual funds, and ETFs—in a country other than the investor’s home market. FPIs are generally passive investments that do not grant management control over the underlying companies or assets. They are a common way for individuals and institutions to…

Foreign Investment: Definition, How It Works, and Types Key takeaways * Foreign investment is capital from one country invested in the companies, assets, or projects of another country. * Two primary forms are foreign direct investment (FDI) — long-term, controlling stakes or operations — and foreign portfolio investment (FPI) — purchases of foreign securities without…

Foreign Institutional Investor (FII) Foreign institutional investors (FIIs) are organizations that invest in financial assets outside their home countries. Common examples include pension funds, mutual funds, hedge funds, insurance companies, and investment banks. FIIs are major participants in global capital markets, especially in emerging economies where they provide liquidity and capital but can also introduce…

Foreign Exchange Risk Foreign exchange (FX) risk is the potential for financial loss that arises when transactions, investments, or financial statements involve more than one currency. Movements in exchange rates can change the local-currency value of revenues, costs, assets, and liabilities, affecting profit margins, balance sheets, and market valuations. How FX Risk Affects Transactions and…

Foreign Exchange Reserves: Purpose and Global Impact Foreign exchange (FX) reserves are assets—typically foreign currencies and foreign-denominated bonds or securities—held by a country’s central bank. They serve as a financial buffer and a tool for implementing and supporting monetary and exchange-rate policy. What FX Reserves Include Foreign banknotes and deposits Government bonds and treasury bills…

Foreign Exchange (Forex): How the Market Works Key takeaways Forex (FX) is the global, decentralized marketplace for exchanging one national currency for another. It is the largest and most liquid financial market, with trading volumes of several trillion dollars each day. Currencies trade in pairs (e.g., EUR/USD); transactions occur in the spot, forward, and futures…

Foreign Earned Income Exclusion The Foreign Earned Income Exclusion (FEIE) lets qualifying U.S. taxpayers exclude a portion of income earned while living and working abroad from U.S. federal income tax. It helps prevent double taxation for Americans working overseas, but you still must file U.S. tax returns and meet specific requirements to claim it. Key…

Foreign Direct Investment (FDI): Definition and Overview Foreign direct investment (FDI) is a substantial, long-term investment by a company, institutional investor, or government into a business or project located in another country. Unlike passive purchases of foreign stocks or bonds, FDI typically involves acquiring a controlling stake or otherwise exercising significant influence over management, operations,…

Foreign Currency Swap A foreign currency swap is a bilateral agreement to exchange interest payments — and sometimes principal — denominated in two different currencies. It lets parties obtain financing in another currency or hedge exposure to exchange-rate and interest-rate movements over a multi-year horizon. How it works Parties agree on two notional principal amounts,…

Foreign Currency Convertible Bond (FCCB) A foreign currency convertible bond (FCCB) is a convertible bond issued in a currency different from the issuer’s home currency. It combines features of debt (periodic coupon payments and principal repayment) with an equity option (the right to convert the bond into the issuer’s shares or depositary receipts). Companies use…

Foreign Corrupt Practices Act (FCPA) Key takeaways * The FCPA is a U.S. law that prohibits paying bribes to foreign officials to obtain or retain business. * It has two main components: anti-bribery provisions and books, records, and internal control requirements. * The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) jointly…

What Is Foreign Aid? Foreign aid is the voluntary transfer of resources—money, goods, services, or technical assistance—from one country (or organization) to another. It is most commonly provided by wealthier nations to developing countries to respond to disasters, support economic development, improve health and education, strengthen infrastructure, or provide military and humanitarian assistance. Aid can…

Foreign Account Tax Compliance Act (FATCA): Overview and Key Compliance Rules What is FATCA? The Foreign Account Tax Compliance Act (FATCA) is a U.S. law designed to combat offshore tax evasion. It requires U.S. persons to report specified foreign financial assets and obliges foreign financial institutions (FFIs) to identify and report accounts held by U.S….

Foregone Earnings: What They Are and How Fees Erode Investment Returns What are foregone earnings? Foregone earnings are the difference between the returns an investor actually receives and the returns they would have earned in the absence of fees, sales charges, or other costs. In practice, foregone earnings represent the portion of investment gains surrendered…

Foreclosure Key takeaways * Foreclosure is the legal process lenders use to recover money owed by taking and selling a mortgaged property after borrower default. * Laws and timelines vary by state; some states require court action (judicial foreclosure) while others allow faster nonjudicial procedures. * Foreclosure typically remains on a borrower’s credit report for…

Forecasting Forecasting uses historical data, statistical models, and expert judgment to predict future trends. It’s a planning tool widely used in business, investing, and policy to reduce uncertainty and guide decisions—not a guarantee of outcomes. Key takeaways Forecasting blends quantitative analysis (data, models, machine learning) and qualitative judgment (expert opinion, market research). Businesses use forecasts…

Force Majeure: Definition, Elements, and Practical Guidance What is force majeure? A force majeure clause excuses or suspends contractual performance when an extraordinary event outside the parties’ control makes performance impossible, illegal, or impracticable. Common examples include natural disasters (earthquakes, floods, hurricanes), war or terrorism, and major public-health crises such as pandemics. The doctrine originated…

Forbearance: Meaning, Who Qualifies, and How It Works Key takeaways * Forbearance is a temporary postponement or reduction of loan payments, most commonly used for student loans and mortgages. * It is negotiated between the borrower and the lender; lenders may agree to forbearance to avoid foreclosure or default losses. * Forbearance does not erase…

For Sale by Owner (FSBO) What is FSBO? For Sale by Owner (FSBO) is the sale of a home directly by the owner without hiring a listing real estate agent. Sellers choose FSBO primarily to avoid paying a seller’s agent commission, but they take on the tasks and risks normally handled by the agent. Explore…

Footnotes to the Financial Statements Footnotes to the financial statements are supplemental disclosures that explain the numbers in the balance sheet, income statement, and cash flow statement. They clarify accounting policies, assumptions, estimates, and events that affect reported results but are too detailed or technical to include in the main statements. Well-written footnotes can reveal…

Food and Drug Administration (FDA) The Food and Drug Administration (FDA) is the U.S. federal agency responsible for protecting and promoting public health by regulating food, drugs, medical devices, biologics, cosmetics, tobacco products, veterinary products, and products that emit radiation. The agency evaluates safety, efficacy, and security across these categories, inspects production facilities, oversees clinical…