Individual Retirement Account (IRA), tax-sheltered retirement plan, originally created (1974) to assist individuals not covered by company pensions. Under the U.S. tax law of 1981, IRA provisions were liberalized to allow individuals to contribute up to $2,000 per year (up from $1,500) to such accounts, and coverage was extended to employees already in corporate pension programs. These contributions are deductible from federal income tax payments. IRA monies may be placed in high-yield investments, with taxation deferred until money is withdrawn after retirement. In 1998, Congress instituted the Roth IRA, in which the earnings are tax-free but there are no tax-deduction benefits for the contributions made each year.

Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. Accounts receivable constitute a major portion of the assets of many companies, and they may even be sold or pledged as collateral to obtain loans. Seealso account payable; factoring.

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Any amount owed as the result of a purchase of goods or services on a credit basis. Although a firm making a purchase issues no written promise of payment, it enters the amount owed as a current liability in its accounts. Companies often incur this type of short-term debt in order to finance their inventories, especially in industries where inventory turnover is rapid. Seealso account receivable.

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