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Superglossary - Accounting
Category: Economy and Finance > Accounting
Date & country: 16/12/2013, US
Words: 614


Above The Line
This term can be applied to many aspects of accounting. It means transactions, assets etc., that are

Account
A section in a ledger devoted to a single aspect of a business (eg. a Bank account, Wages account, O

Account Payable
An amount owed to a supplier for good or services purchased on credit

Account Receivable
A current asset representing money due for services performed or merchandise sold on credit.

Account Receivable Turnover
A measure used to determine a company's average collection period for receivables

Accounting
A service activity designed to accumulate, measure, and communicate financial information about econ

Accounting Cycle
This covers everything from opening the books at the start of the year to closing them at the end. I

Accounting Equation
The formula used to prepare a balance sheet

Accounting Model
The basic accounting assumptions, concepts, principles, and procedures that determine the manner of

Accounting System
The set of manual and computerized procedures and controls that provide for identifying relevant tra

Accounts Payable
An account in the nominal ledger which contains the overall balance of the Purchase Ledger.

Accounts Payable Ledger
A subsidiary ledger which holds the accounts of a business's suppliers. A single control account is

Accounts Receivable
An account in the nominal ledger which contains the overall balance of the Sales Ledger.

Accounts Receivable Ledger
A subsidiary ledger which holds the accounts of a business's customers. A single control account is

Accretive
If a company acquires another and says the deal is 'accretive to earnings', it means that the result

Accrual Basis
Gross income is recognized when earned.

Accrual Method Of Accounting
Most businesses use the accrual method of accounting (because it is usually required by law). When y

Accrual-Basis Accounting
A system of accounting in which revenues and expenses are recorded as they are earned and incurred,

Accruals
If during the course of a business certain charges are incurred but no invoice is received then thes

Accrued Expenses
Expenses that arise through adjusting entries when accounting for unrecorded expenses.

Accrued Liabilities
Liabilities that arise through adjusting entries when accounting for unrecorded liabilities.

Accumulated Depreciation
The total depreciation recorded on an asset since its acquisition

Accumulated Depreciation Account
This is an account held in the nominal ledger which holds the depreciation of a fixed asset until th

Acid-Test Ratio (Or Quick Ratio)
A measure of a firm's ability to meet current liabilities

Adjusted Gross Income
An individual taxpayer's total income minus deductions (adjustments) for individual retirement plan

Adjusting Entries
Entries required at the end of each accounting period to recognize, on an accrual basis, revenues an

Adjustments To Gross Income
Amounts deducted from the gross income of an individual taxpayer in arriving at adjusted gross incom

Advanced Corporation Tax (ACT)
This is corporation tax paid in advance when a limited company issues a dividend. ACT is then deduct

Adverse Opinion
Audit report indicating the auditor believes the overall financial statements are so materially miss

Aging Accounts Receivable
The process of categorizing each account receivable by the number of days it has been outstanding.

Allowance Method
The recording of estimated losses due to uncollectible accounts as expenses during the period in whi

Amortization
The depreciation (or repayment) of an (usually) intangible asset (eg. loan, mortgage) over a fixed p

Annual Percentage Rate (APR)
The cost of credit on a yearly basis, expressed as a percentage rather than a dollar amount.

Annual Report
A document that summarizes the results of operations and financial status of a company for the past

Annualize
To convert anything into a yearly figure. Eg. if profits are reported as running at

Annuity
A series of equal amounts to be received or paid at the end of equal time intervals.

Appropriation Account
An account in the nominal ledger which shows how the net profits of a business (usually a partnershi

Arms-Length Transactions
Business dealings between independent and rational parties who are looking out for their own interes

Arrears
Bills which should have been paid. For example, if you have forgotten to pay your last 3 months rent

Articulation
The interrelationships among the financial statements.

Asset Turnover Ratio
An overall measure of how effectively assets are used during a period

Assets
Assets represent what a business owns or is due. Equipment, vehicles, buildings, creditors, money in

At Cost
The 'at cost' price usually refers to the price originally paid for something, as opposed to, say, t

Audit
The result of an independent accountant's review of the statements and footnotes to ensure complianc

Audit Committee
Members of a client's board of directors who are responsible for dealing with the external and inter

Audit Report
A report issued by an independent CPA that expresses an opinion about whether the financial statemen

Audit Trail
A list of transactions in the order they occurred.

Authorized Stock
The amount and type of stock that may be issued by a company, as specified in its articles of incorp

Available-For-Sale Securities
Debt and equity securities not classified as trading, held-to-maturity, or equity method securities.

Average Annual Return
The rate of return on investments averaged over a specific period of time(e.g., the last 20 years).

Bad Debt
An uncollectible account receivable.

Bad Debts Account
An account in the nominal ledger to record the value of un-recoverable debts from customers. Real ba

Bad Debts Reserve Account
An account used to record an estimate of bad debts for the year (usually as a percentage of sales).

Balance Sheet
A summary of all the accounts of a business. Usually prepared at the end of each financial year. The

Balancing Charge
When a fixed asset is sold or disposed of, any loss or gain on the asset can be reclaimed against (o

Bank Reconciliation
The process of systematically comparing the cash balance as reported by the bank with the cash balan

Bank Statement
Monthly record of all activity within an account, provided by the bank.

Bankrupt
If an individual or unincorporated company has greater liabilities than it has assets, the person or

Bankruptcy
Situation where a person files with the court to be released from debts. May entail sale of the debt

Banks
Corporations chartered by state or federal government to offer numerous financial services such as c

Basket Purchase
The purchase of two or more assets acquired together at a single price.

Below The Line
This term is applied to items within a business which would not normally be associated with the ever

Bill
A term typically used to describe a purchase invoice (eg. an invoice from a supplier).

Board Of Directors
Individuals elected by the stockholders to govern a corporation.

Bond
A contract between a borrower and a lender in which the borrower promises to pay a specified rate of

Bond Carrying Value
The face value of bonds minus the unamortized discount or plus the unamortized premium.

Bond Discount
The difference between the face value and the sales price when bonds are sold below their face value

Bond Indenture
A contract between a bond issuer and a bond purchaser that specifies the terms of a bond.

Bond Maturity Date
The date at which a bond principal or face amount becomes payable.

Bond Premium
The difference between the face value and the sales price when bonds are sold above their face value

Book Value
The net amount shown in the accounts for an asset, liability, or owners' equity item.

Book Value Per Share
A measure of net worth

Bought Ledger
See Purchase Ledger .

Budget
A financial plan that summarizes future income and expenditures over a period of time.

Burn Rate
The rate at which a company spends its money. Example

Business
An organization operated with the objective of making a profit from the sale of goods or services.

Business Documents
Records of transactions used as the basis for recording accounting entries

Business Expenses
Expenses that have been paid or incurred in the course of business and that are ordinary, necessary,

Calendar Year
An entity's reporting year, covering 12 months and ending on December 31.

Callable Bonds
Bonds for which the issuer reserves the right to pay the obligation before its maturity date.

Called-Up Share Capital
The value of unpaid (but issued shares) which a company has requested payment for. See Paid-up Share

Cancelled Check
A check that has been stamped to show it has been paid.

Capital
An amount of money put into the business (often by way of a loan) as opposed to money earned by the

Capital Account
An account in which a proprietor's or partner's interest in a firm is recorded

Capital Allowances (UK Specific)
The depreciation on a fixed asset is shown in the Profit and Loss account, but is added back again f

Capital Assets
See Fixed Assets .

Capital Employed (CE)
Gross CE=Total assets, Net CE=Fixed assets plus (current assets less current liabilities).

Capital Expenditure
An expenditure that is recorded as an asset because it is expected to benefit more than the current

Capital Gain
The excess of the selling price over the cost basis when assets, such as securities and other person

Capital Gains Tax
When a fixed asset is sold at a profit, the profit may be liable to a tax called Capital Gains Tax.

Capital Lease
A leasing transaction that is recorded as a purchase by the lessee.

Capital Loss
A negative difference between an asset

Capital Stock
The portion of a corporation's owners' equity contributed by investors (owners) in exchange for shar

Cash
Coins, currency, money orders, checks, and funds on deposit with financial institutions

Cash Accounting
This term describes an accounting method whereby only invoices and bills which have been paid are ac

Cash Basis
Gross income is recognized when cash is received.

Cash Book
A journal where a business's cash sales and purchases are entered. A cash book can also be used to r

Cash Disbursements Journal
A special journal in which all cash paid out for supplies, merchandise, salaries, and other items is

Cash Dividend
A cash distribution of earnings to shareholders.

Cash Equivalents
Short-term, highly liquid investments that can be converted easily into cash.