It's time to roll up those sleeves and build your accounting vocabulary. To help with this, we've compiled an assortment of basic financial terms. Glossary of Accounting Terms. Account: A record that holds the results of financial transactions. Accountant's Equation: The equation that is the basis of the . What is Accounting? • Method of reporting financial activity of a business. • Financial transactions recorded in an orderly fashion.
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Accounting and Finance Glossary Page 2 of 21 йаTutor2u Limited All Rights Reserved. Term. Description. Absorption costing. Absorption costing is. Article. Accounting Terminology Accounts Receivable (Sundry Debtors). .. Before Owners' Salary - this is a term used to indicate what the financial result is. This dictionary provides a basic vocabulary of terms used in accounting, from personal finance and investments to company accounts, balance sheets and stock.
The amount of dividend paid is proportionate to the number of shares held.
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Financial Reporting Standard Title of an accounting standard issued by the UK Accounting Standards Board as a definitive statement of best practice issued from onwards — predecessor documents are Statements of Standard Accounting Practice, many of which remain valid.
The risk relates to being unable to meet payments of interest or repayment of capital as they fall due.
For a limited liability company there would be: Usually applied when discussing a particular line of activity. IASB International Accounting Standards Board, an independent body that sets accounting standards accepted as a basis for accounting in many countries, including all Member States of the European Union.
30 Easy-to-learn English Terms for Accounting
Contrast with repair which restores the existing useful life or existing expected future benefit. Also called profit and loss account.
The date on which a company comes into existence. It is illegal for a person who is in possession of inside information to download or sell shares on the basis of that information. Includes rules on accounting information in annual reports. Also called a non-controlling interest. Also described as fixed assets. Also described as long-term liabilities. Also called equity interest. Precedes the publication of the full annual report. The announcement is made to the entire stock market so that all investors receive information at the same time.
Initially recognised as an asset, then transferred to expense in the period when the benefit is enjoyed. Also called a prepaid expense. Also called income statement. Registrar of Companies An official authorised by the government to maintain a record of all annual reports and other documents issued by a company.
Justified by reference to value to the business. Return may appear in the form of regular cash payments dividends to the investor, or in a growth in the value of the amount invested.
It may be used to describe an inventory of goods held for resale or for use in business.
It may also be used to describe shares in the ownership of a company. The meaning will usually be obvious from the way in which the word is used. Asset - Items of value that are owned. Audit Trail - Allow financial transactions to be traced to their source. Auditors - Examine financial accounts and records to evaluate their accuracy and the financial condition of the entity. Balance Sheet - Provides a snapshot of a business' assets, liabilities, and equity on a given date. Bookkeeping - Recording of financial transactions in an accounting system.
Budgeting - Budgeting involves maintaining a financial plan to control cash flow. Capital Stock - Total amount of common and preferred stock issued by a company. Capital Surplus - The amount in excess of par value for shares of common stock.
Capitalized Expense - Accumulated expenses that are expensed over time. Cash Flow - The difference in money flowing in and out. A negative flow indicates more money going out than coming in. A positive flow shows more money coming in than going out.
Cash-Basis Accounting - Records when cash is received through revenues and disbursed for expenses. Chart of Accounts - An organization's list of accounts used to record financial transactions.
Cost Accounting - Used internally to determine the cost of operations and to establish a budget to increase profitability. Credit - Entered in the right column of accounts.
Liability, equity and revenue increase on the credit side. Debit - Entered in the left column of accounts. Assets and expenses increase on the debit side. Departmental Accounting - Shows individual departments' income, expenses and net profit. Depreciation - The decrease in an asset's value over time. Dividends - Profits returned to the shareholders of a corporation. Double-Entry Bookkeeping - Requires entries of debits and credits for each financial transaction.
Equity - Represents the value of company ownership. Financial Accounting - The accounting branch that prepares financial reporting primarily for external users.
Financial Statement - Financial Statements detail the financial activities of a business. Fixed Asset - Used for a long period of time, e.
General Ledger - Where debit and credit transactions are recorded. Goodwill - Intangible asset a business enjoys like its reputation or brand popularity.
Income Statement - A Financial Statement documents the difference in revenue and expenses resulting in income.
Inventory Valuation - A valuation method modified for use in real estate and business appraisals. Inventory - Inventory consists of raw materials, work in progress, and finished goods. Invoice - An Invoice shows the amount of money owed for goods or services received. Job Costing - Job Costing tracks costs of a particular job against its revenues.
Journal - The first place financial transactions are entered.
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They are entered chronologically. Liability - Liabilities are the obligations of an entity, usually financial in nature. Liquid Asset - Consist of cash and other assets that can be easily converted to cash. Loan - A monetary advance from a lender to a borrower. Master Account - A Master Account has subsidiary accounts.Capital Definition: Cash and funds, but also machinery and tangible assets that can contribute to earning more money, like computers, company vehicles, etc.
Learn these terms before your accounting classes start and you will definitely be a step ahead of everyone else in your classes. The amount of dividend paid is proportionate to the number of shares held.
Sometimes called subsidiary undertaking. It is calculated as current assets minus current liabilities. If the company is doing well, the value of the shares goes up.
Legal and Privacy Notice. The discount is often expressed a percentage of the invoiced amount.
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