LSP FB B2 - Unit 5: ACCOUNTING AND FINANCIAL REPORTING

Accrual Accounting

Recording revenues and expenses when they happen, not when cash is received or paid.

Comparability

Ensuring financial statements can be compared across companies or time periods.

Compliance

Following accounting laws, rules, or standards.

Consistency

Using the same accounting methods over time.

Fair Value Accounting

Recording assets and liabilities at their current market price.

Going Concern

The assumption that a business will continue operating in the future.

Materiality

Reporting only financial information that significantly impacts decisions.

Prudence

Being cautious in financial reporting to avoid overstating income or assets.

Reliability

Ensuring financial information is accurate and trustworthy.

Disclosure

Sharing important financial information in reports.

Financial Accounting

Recording, summarizing, and reporting financial transactions.

Managerial Accounting

Providing financial data for internal decision-making.

Internal Management

The team responsible for running a company.

External Stakeholder

People or groups outside the company affected by its performance.

Current Ratio

A measure of a company's ability to pay short-term debts (Current Assets ÷ Current Liabilities).

Debt-to-Equity Ratio

Measures how much debt a company has compared to its equity.

Profit Margin

A percentage showing how much of a company's revenue becomes profit.

Profitability

The ability of a business to generate profits.

Return on Equity (ROE)

A measure of how well a company uses shareholders' money to make a profit.

Cost of Goods Sold (COGS)

The cost of making or buying products sold by a company.

Operating Expenses

The costs of running a business (e.g., salaries, rent, utilities).

Net Income

The company's total profit after deducting expenses.

Retained Earnings

Profits kept by a company instead of being distributed as dividends.

Financial Risk

The possibility of losing money due to poor financial management or market changes.

Loan-to-Deposit Ratio

Measures how much a bank lends compared to customer deposits.

Net Interest Income

The difference between interest earned on loans and interest paid on deposits.

Net Interest Margin

A ratio showing how well a bank earns interest income compared to its assets.

Non-Interest Income

Income from fees, commissions, and other sources not related to lending.

Non-Performing Loan (NPL)

A loan where the borrower has not made payments for a long time.

Regulator

A government or official body that controls financial activities.

Asset

Anything valuable owned by a company, like cash, buildings, or equipment.

Market Value

The price an asset would sell for in the market.

Equity

The value left for owners after all debts are paid (Assets - Liabilities).

Investor

A person or company that puts money into a business expecting a profit.

Dividend

A portion of a company's profit paid to shareholders.

Cash Conversion Cycle

The time it takes for a company to turn inventory into cash from sales.

Advances

Money paid before goods or services are received.

Deposit

Money placed in a bank or an advance payment for goods/services.

Creditor

A person or company that lends money or supplies goods/services on credit.

Overarching

A general or important idea that influences everything in a subject.

Interpret

To explain or understand financial data and reports.