Comprehensive Accounting and Financial Dictionary
Assets and Entity Holdings
Assets: This refers to the total resources or value owned and controlled by an entity as a result of past events from which future economic benefits are expected to flow.
Non-current assets: Long-term resources used in the business for more than one accounting period, such as property, plant, and equipment.
Property, plant and equipment: The physical, tangible assets an entity uses to produce goods or services, for rental to others, or for administrative purposes.
Current assets: Resources expected to be realized in cash, sold, or consumed during the entity's normal operating cycle or within twelve months, such as trade receivables and inventory.
The entity's holdings: These are the specific assets or properties held by the business entity.
Inventory: Goods held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials or supplies to be consumed in the production process or in the rendering of services.
Closing inventory: The valuation and reporting of stocks and goods remaining at the end of an accounting period.
Trade receivables: Amounts owed to the entity by customers for goods sold or services performed in the ordinary course of business.
Allowance for receivables: A provision or reserve set aside to represent the portion of receivables that the business expects may become uncollectible.
Residual value: The estimated amount that an entity would currently obtain from disposal of an asset, after deducting the estimated costs of disposal.
Liabilities, Loans, and Obligations
Liabilities: Present obligations of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.
Current liabilities: Obligations expected to be settled within the normal operating cycle or within twelve months from the reporting date.
Non-current liabilities: Long-term obligations and debts that are not due for settlement within one year.
Accounts payable: The debt or liability an entity owes to its suppliers or creditors for goods or services received.
bank loan (): A specific bank credit facility bearing an interest rate of , with a scheduled repayment year of .
Loans payable: Debts in the form of loans that must be repaid by the business.
Bonds payable: Long-term debt instruments issued by the entity that represent a promise to pay back the principal and interest.
Bank overdraft: A financial arrangement where the bank allows the entity to withdraw more money than it has in its account.
Bank overdraft interest: The cost or interest expense incurred for utilizing the bank overdraft facility.
Income tax liability: The amount of tax a business owes to the government based on its profitable performance.
Provisions: Liabilities of uncertain timing or amount that are recorded in the financial statements.
Provisions and contingent liabilities: Reserves for known obligations and potential liabilities that depend on the outcome of a future event.
Accruals and prepayments: Accounting adjustments for expenses incurred but not yet paid (accruals) or expenses paid in advance (prepayments).
Interest accrual: The accumulation of interest expense that has been incurred but not yet settled in cash.
Obligations: Legal or constructive commitments to perform in a certain way, often involving the future sacrifice of resources.
Settlement: The act of discharging or paying off an obligation.
Equity and Ownership Structure
Equity: The residual interest in the assets of the entity after deducting all its liabilities.
Equity and liabilities: The right-hand side of the balance sheet representing the funding of the entity's assets through debt and owner investment.
Opening equity: The total value of owner capital and reserves at the beginning of an accounting period.
Closing equity: The total capital and reserves remaining at the end of the reporting period.
Total equity at June : The grand total of owner's capital, reserves, and retained earnings specifically as of the date .
Share capital: The portion of the entity's equity that has been obtained by issuing shares to participants.
Equity share capital @ shares: Share capital where the individual shares have a nominal value of each.
Ordinary share capital: Capital representing the collective ownership of the business by ordinary shareholders.
Share premium: The excess amount received by a company over the par value of its shares during a new share issue.
New share issue: The process of offering new shares to equity participants to raise additional capital.
Retained earnings: The portion of net profit that is kept in the business and not distributed as dividends to shareholders.
The owners' stake: The proportion of the business that is owned by the current equity holders.
The proprietors' residual claim: The final right of the owners to the remaining assets once all external liabilities have been satisfied.
Equity participants: The individuals or organizations that contribute to the capital of the entity.
Contributions: Capital or resources provided to the entity by its owners.
Dividends paid: The portion of profits distributed to shareholders as a return on their investment.
Revaluation surplus: A reserve created when an asset's book value is increased to reflect its current market value.
Reserves: Funds set aside from profits for specific purposes or general strengthening of the financial position.
Revenue, Income, and Gains
Revenue / Sales: The total amount of money brought in by the company’s operations through the sale of goods or services.
Sales revenue: Income specifically generated from the volume of goods sold.
Service revenue: Income specifically generated from the provision of professional or labor-based services.
Revenues generated: The total value of economic benefits earned during a period.
The gross inflow: The total volume of economic benefits entering the entity during the reporting period from ordinary activities.
Deferred revenue: Money received by the entity for goods or services that have not yet been delivered or performed.
To earn: The process of completing the activities required to recognize revenue.
Gross profit: The difference between sales revenue and the cost of goods sold before subtracting operating expenses.
Net profit / Net income: The final profit remaining after all expenses, including taxes and interest, have been deducted from total revenue.
Other comprehensive income: Items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other standards.
Costs, Expenses, and Financial Performance
Cost of sales / goods sold (COGS): The direct costs attributable to the production or purchase of the goods sold by a company.
Operating expenses: Ongoing costs required to run the day-to-day business operations.
Administrative and selling expenses: Costs associated with the general management of the business and the marketing and sale of its products.
Distribution costs: Expenses incurred to move goods from the entity to the customer.
Financial performance: The measure of how effectively an entity generates profit and manages its resources.
Economic value: The worth or utility of an asset or entity based on the future benefits it provides.
Depreciation for the year: The systematic allocation of the depreciable amount of a tangible asset over its useful life for the current period.
Depletions: The reduction in the value of natural resources (such as timber, minerals, or oil) as they are extracted; also used generally for asset amortization.
Incurred: Expenses or liabilities that have been recorded because the transaction has already taken place, regardless of when cash is paid.
Income tax: A tax levied on the net income or profit of an entity.
Income tax underprovision: A situation where the actual tax liability for a previous year was higher than the amount originally estimated or reserved.
Irrecoverable debts: Amounts owed by customers that are definitely known to be uncollectible and are written off.
Irrecoverable debts and allowances for doubtful debts: The combined accounting for specific bad debts and the general estimation of potential losses from credit sales.
Insurance: Payments made to a provider to protect the entity against potential future losses or risks.
Discounts: Reductions in the price of goods or services offered to customers.
Accounting Adjustments, Periods, and Entities
The accounting period: The specific timeframe (such as a month, quarter, or year) for which financial statements are prepared.
Adjusting the trial balance figures: The process of making journal entries at the end of an accounting period to accurately reflect the entity's financial position.
Common adjustments: Standard or typical end-of-period modifications, such as recording accruals, prepayments, or depreciation.
Fiscal: Relating to government revenue, taxes, or the specific financial year designated for tax reporting.
Business operations: The various activities involved in the production of goods or services and the regular functioning of the entity.
The ordinary activities: The primary and regular business functions performed by the entity to generate revenue.
Events after the reporting period: Significant occurrences, both favorable and unfavorable, that happen between the end of the reporting period and the date when the financial statements are authorized for issue.
To arise: The process of a liability, asset, or event coming into existence.
To flow: The movement of economic benefits into or out of the entity.
To generate: The act of creating or producing economic value, revenue, or results.
To decrease: The reduction in the value, amount, or size of an accounting figure.
To increase: The growth or addition to the value or amount of an accounting figure.
To deduct / Subtract: The process of taking away an amount from a total to find the remainder or net result.
To include: The act of incorporating specific data or items within a larger category or report.
To relate: The connection or association between different accounting items or concepts.