G TO L

G

GAAP

GAAP is the acronym for Generally Accepted Accounting Principles, which is an accepted set of accounting procedures, policies and rules. Read on for more about the U.S. GAAP - Generally Accepted Accounting Principles

G & A

G & A is the acronym for General and Administrative Overheads.

Gain

Gain is the excess of total revenue over total expenses. Gain may also be used to refer to a rise in value, rate or prices.

Garnish

Garnish is to claim the debtor's wages/salary under a court order for previously defaulted debts.

Gearing Ratio

Gearing ratio is the ratio that measures the percentage of the total capital employed financed by long term debt.

Generally Accepted Auditing Standards

Generally Accepted Auditing Standards are the standards, rules and guidelines set by the Auditing Standards Board of the American Institute of Certified Public Accountants.

Gilt

Gilt, in general use, is a bond issued by the government.

Global Bond

Global bond is a bond which can be traded outside the country of its issue.

Global Funds

Global Fund is a type of mutual fund where the fund company can invest in companies located anywhere in the world

GMROI

GMROI is the acronym for Gross Margin Return on Investment.

Going Concern Concept

Going Concern Concept of Accounting assumes that the business will remain in existence for all the foreseeable future.

Going Public

Going public is used to indicate that a certain business is going to issue publicly traded share capital.

Going Rate

Going rate is the average cost of the products or services.

Golden Rules of Accounting

The Golden Rules of Accounting govern the treatment of various types of accounts in case of an economic event.

• For personal accounts, the rule is Debit the receiver; credit the giver.
• For real accounts the rule is Debit what comes in; Credit what goes out.
• For Nominal Accounts the rule is Debit all expenses or losses; Credit all incomes and gains.

Goods

The commodity in which a business trades, is collectively known as goods.

Goodwill

Goodwill is an intangible benefit one business enjoys over its competitor as the market is ready to absorb the goods of the former company even at a higher price.

Governance

Governance is the act of exercising authority or simply governing which is performed by the Board of Directors.

GP Ratio

GP Ratio is the acronym for Gross Profit Ratio. The Gross Profit ratio measures the relationship between the gross profit and sales. GP Ratio = (Gross Profit * 100) / Sales

Gross

Gross is an amount before any deductions or additions are made to it.

Gross Debt

Gross debt is the total of all the debt obligations of the business.

Gross Margin

Gross Margin is used synonymously with Gross Profit or Gross Profit Ratio.

Gross Profit

Gross profit is the excess of sales over production costs.

Gross Profit Method

Gross Profit Method is the inventory estimated that is based on gross margin.

Gross Revenue

Gross revenue is the money earned from sales of goods.

Gross Sales

Gross sales is the total value of sales prior to any discounts, deductions or returns.

H

Hard Assets

Hard Assets include physical assets and financial assets and do not include intangible assets.

Hard Costs

Hard costs are the total costs incurred on the purchase of assets.

Hidden Assets

Hidden assets are any value generating assets in the business that are not included in the balance sheet of the company.

High Credit

High Credit is the highest that a debtor has ever taken from any one creditor.

High Low Method

High-Low method is a method of approximating cost method is one which considers only the highest and lowest points of the given data and the activity in the given range.

High Yield Debt

High Yield Debt is a debt instrument that gives a higher yield/return as it is a higher risk instrument.

Hire and Purchase Agreement

Hire and Purchase agreement is an agreement where the buyer hires an asset/goods at a rate of rent and at the end of the renting period and after paying all the installments, receives ownership of the asset or goods.

Holding Company

A holding company is one that holds more than 50% stake in another company (known as subsidiary company).

Horizontal Financial Analysis

Horizontal Financial Analysis is the analysis of the ratios of one company with those of the competitors and with those of the industry.

Hostile Takeover

A hostile takeover is when one company buys out the other company whether the board approves of it or not. It is usually done by buying the majority stake of the company from the publicly traded share, thus becoming the majority stakeholder, bypassing the board of directors.

Human Capital

Human capital is the intellectual capital of the employees which the company enjoys.

Hybrid Instrument

Hybrid instrument is a bundled instrument containing two or more different types of risk management instruments.

I

Identifiable Assets and Liabilities

Identifiable assets and liabilities include both tangible and intangible items in the balance sheet.

Idle Time

Idle time is the time for which production activity gets suspended.

Immovable

Immovable is generally used in the context of assets which are permanent and stationary, like land and buildings.

Impairment of Value

Impairment of value is the permanent loss of value of an asset.

Implicit Rate of Interest

The rate of interest is said to be implicit when the stated interest rate is different from the market rate.

Implied Costs

Implied costs are the hidden costs incurred on the assets that have already been paid for.

Imprest Basis

Imprest basis means that the cash balance for expenditure in the cash account is replaced at the end of every period.

Income

Income is the amount of money received during a period of time on account of anything.

Income Gearing Ratio

Income Gearing Ratio = Interest Expense / Operating Profit.

Income Tax

Income tax is the tax paid as a percentage of business or personal income.

Income Taxes Payable

Income taxes payable is the amount of money payable as income tax, but is not paid yet.

Incorporated

Incorporated is a type of business entity that has been allowed to operate as a corporation by the approval of the state government.

Incremental

Incremental means additional.

Incremental Budget

Incremental budget is the budget for the fixed overhead costs.

Incremental Cost

Incremental cost is the cost incurred for producing one additional unit of output.

Incremental Cost of Capital

Incremental cost of capital is the weighted cost of the additional capital raised.

Indirect Cost

Indirect costs are those costs which are not directly related to the process of production.

Indirect Shareholding

Indirect shareholding is when a company A holds a direct shareholding in company B and company B holds a direct shareholding in company C, company A is said to have an indirect shareholding in company C.

Industry Analysis

Industry analysis is the analysis of the financial performance of an industry as a whole.

Inflation Accounting

Inflation accounting is a form of accounting where the amounts are adjusted to the changing prices.

Inflation Adjustment

Inflation adjustment is to adjust the figure on an amount for increase or decrease in inflation.

Inherent Risk

Inherent risk is the risk that is intrinsic to any activity, investment etc.

Insolvency

Insolvency is a situation where an entity's liabilities exceed its assets and cannot be paid off.

Installation

Installation is the cost incurred to put an asset into use.

Installment Sale

Installment sale is selling a commodity and receiving the payments for it over successive periods instead of a lump sum.

Insurance Claim

Insurance claim is the written notification which the insured gives to the insurer to ask for the amount due under the policy.

Intangible Asset

An Intangible asset is an asset that cannot be physically seen or felt, but its presence benefits the company, e.g goodwill.

Intellectual Capital

Intellectual capital is the resource of specialized knowledge that a company has and is recognized as an asset to the company.

Interest

Interest is a fixed charge that is given as compensation for parting with immediate liquidity.

Interest-Bearing

Interest bearing is used to describe something that gives interest.

Interest Coverage

Interest Coverage Ratio = Net Interest Expense / EBIT

Interest Earnings

Interest earning is the total interest received by the company on various investments.

Interest Expense

Interest expense is the total interest paid by the company for various debts.

Interest Rate

Interest rate is a percentage of the total investment/debt at which the interest amount is given/paid.

Interim Audit

Interim audit is an audit that is conducted at some time during the year.

Interim Dividend

Interim Dividend is the dividend that is paid at some time during the year

Interim Statement

Interim statement gives the financial position of the business at some time during the year.

Internal Audit

Internal audit is the audit carried out by the audit committee in the company itself.

Internal Rate of Return

Internal rate of return is the rate of return, expressed as a percentage, the net present value for which is zero.

Intrinsic Value

Intrinsic value is the value of something by itself, irrespective of its use and whether it is used.

Inventory

Inventory is the stock of raw materials, work in progress or finished goods

Inventory Accumulation

Inventory accumulation is the extra inventory that was stored on account of unplanned events.

Inventory and Purchases Budget

Inventory and purchases budget is the budget set by the company for purchasing and storing inventory.

Inventory Control

Inventory Control is to maintain the optimum amount of inventory in the stores of the company.

Inventory Obsolescence

Inventory is said to be obsolete when it is no longer usable or salable.

Inventory Profits

Inventory profit is the profit that the company earns due to the rise in the prices of inventory.

Inventory Transfer

Inventory transfer is a process that physically tracks the transfer of inventory from one place to another.

Inventory Turnover Ratio

Inventory turnover ratio gives the number of times the inventory is purchased and used up for production or sold in a given period.

Inventory Valuation

Inventory valuation is the process of assigning monetary value to inventory.

Investment

Investment is purchasing something with an intention to gain a profit from its sale or getting income for it at regular intervals. Read on for Types of Investments

Investment Capital

Investment capital is the capital raised by the issue of shares or long term debt instruments like debentures.

Investment Expense

Investment expense is the expenses incurred on the inventory other than those expenses which are incurred for purchasing the inventory, like installation costs, brokerage etc.

Investment Tax Credit

Investment tax credit is a tax credit that is given to the businesses to write off a portion of the cost of purchasing equipment.

Investment Turnover

Investment turnover is the ratio used to measure the number of times an asset or investment revolves.

Invoice

An invoice is an itemized bill which gives the details of the items purchased or sold.

IPO

IPO is the acronym for Initial Public Offering. It is the first time that a business goes public with the issue of shares.

J

JIT

JIT is the acronym for Just-in-Time.

Job Costing

Job Costing is the allocation of time, material and expenses to an individual job or project.

Joint Account

Joint Account is the financial account that is used and run by two or more account holders.

Joint Payee Endorsement

Joint Payee endorsement is when a bank draft is made out to two parties, and both parties are required to endorse the back of the bank draft before it is honored by the bank.

Joint Stock Company

Joint Stock Company is a type of company that enjoys some features of a partnership and some features of a corporation.

Joint Venture

Joint Venture is a business activity started by two or more people, who invest capital for that business activity. Read on for more about Venture Capital

Joint Ventures and Investments

Joint Ventures and Investments is the total investments and equity in a joint venture.

Journal

Journal is the first record of transactions of the business as they occur.

Journal Entry

Journal entry is a record of the transactions made by the business.

K

Kaizen Budgeting

Kaizen Budgeting is the budgeting approach which takes into consideration projected future costs rather than current practices.

Kaizen Costing

Kaizen costing is reducing the cost of production in small steps.

L

Lag Time

Lag time is the time between two closely related phenomena such as stimulus and response.

Land

Land is the asset account in which the details and the costs of land holding for the business are given.

Leasehold Improvements

Leasehold improvements are repairs and improvements made to leasehold land by the lessee.

Ledger

Ledger is the book which consists of various individual accounts to which the journal entries are posted.

Ledger Group

Ledger group is a group of ledgers that consist of a primary ledger and a number of secondary ledgers.

Leverage

Leverage is the property rising or falling at a greater proportion than the comparable investments.

Leverage Ratios

Leverage ratios measure the impact of equity and debt capital on profitability.

Levied

Levied is a charge that is imposed or collected.

Liability

Liability is a loan or a debt for the business that needs to be discharged.

LIFO

LIFO is the acronym for Last In First Out. It means that the inventory which is purchased last is used or sold first.

LIFO Liquidation

LIFO Liquidation is the process of reducing the reported value of the inventory.

LIFO Reserve

LIFO reserve is the difference between the LIFO level of inventory and the FIFO level of inventory.

Lifting and Operating expenses

Lifting and Operating expenses are generally incurred in the oil and energy industry, in the running and maintenance of oil wells.

Limited Company

Limited Company is a legal entity that is owned by shareholders. Read more on Corporation Types.

Limited Liability

Limited liability is when the owner's liability for the business is restricted to his share in the business. Read on for An Explanation of LLC (Limited Liability Company).

Line of Credit

Line of Credit is an agreement between a financial institution and a business where the financial institution agrees an upper limit on the amount sanctioned without having to take another loan.

Liquid Assets

Liquid assets are cash and those assets that are easily convertible to cash.

Liquidating Dividends

Liquidating dividends are those dividends that are paid by the company at the time of liquidation/bankruptcy

Liquidation

Liquidation is selling off all the assets of the business to pay off the debts of the business.

Liquidity

Liquidity is the ability of the business to meet all current debt obligations.

Liquidity Ratio

Liquidity Ratio = (Cash + Marketable Securities) / Current Liabilities

Loaded Labor Rate

Loaded labor rate is the total of the employee remuneration, benefits, capital expenses and other overheads on labor.

Loan

Loan is when a lender allows the borrower to take some of the assets owned by the lender for a specified amount of time, that will be returned at the end of the specified period along with interest. Read on to know about Mortgage Loan Underwriting

LOC

LOC is the acronym for Letter of Credit.

Long-Lived Assets

Long-lived assets are those which are not consumed in the normal course of business.

Long Term Debt

Long term debt is a type of financing that is taken by a business and the maturity of which is several years hence.

Long Term Debt-to-Equity

Long term Debt-to-Equity Ratio = Long Term Liabilities / Shareholder Equity

Long Term Liabilities

Long term liabilities are those which are due for over a year.

Long Term Receivables

Long term receivables are those receivables which will be received after a year.

Loss

Loss is the excess of expenses over incomes in any context.