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M
Maintenance
Maintenance is the cost incurred for keeping an asset in working condition.
Managed Receivables
Managed receivables are those receivables on which the company performs billing and collection.
Management Accounting
Management accounting deals with the entire spectrum of collection, recording, examining and managing the financial activities of the company by the management.
Manufacturing Account
Manufacturing account gives the total of the prime and overhead costs of manufacturing finished goods.
Manufacturing Overhead
Manufacturing overheads include all the indirect labor costs, indirect material costs and indirect expenses used for manufacturing.
Marginal Benefit
Marginal benefit is the extra amount of benefit derived by an increase or decrease in a unit of an activity.
Marginal Profit
Marginal profit is the incremental profit derived by an increase in production by one unit of the goods.
Margin of Safety
Margin of Safety shows how far the sales level can fall, till the business starts incurring a loss.
Marketable Capacity
Marketable capacity is the difference between the total capacity absorbed by the market and the predicted capacity.
Marketable Security
Marketable security is an equity or debt security that can be easily traded.
Market Capitalization
Market capitalization is the total value of the issued shares in the market. Market Capitalization = Number of Shares * Current Market Price
Marketing Expense
Marketing expense is the money that the company spends on marketing their goods during the accounting period.
Market to Book Value
Market to Book Value = Market Capitalization / Tangible Assets
Master Budget
Master Budget is the main budget prepared by the business which includes several budgets that relate to each head for which the budget is prepared.
MAT
MAT is the acronym for Management, Administrative and Technological.
Matching Concept
Matching concept is the concept in accounting that says that the costs and revenues should be matched in the income statement.
Material Control
Material control is proactively controlling the materials that are used in the manufacturing activity.
Materiality Principle
Materiality principle says that accountants should use the Generally Accepted Accounting Principles, except when their use is difficult or financially unviable.
Materials Requisition Planning
Materials Requisition planning is the process of planning for materials that are required regularly in the process of production.
Materials
Materials is generally used to refer to the raw materials that are used in the process of production.
Maturity Value
Maturity value is the value that an investment will realize at the end of the maturity period.
Merger
Merger is the union of two or more businesses where one is not absorbed by the other, but instead, they both maintain their separate identities.
Minimum Wage
Minimum wage is the legally fixed lowest per hour wage that can be paid to an employee.
Miscellaneous Income
Miscellaneous income is the income which is derived from sources other than the usual sale of goods.
Mixed Costs
Mixed costs are those costs which have both, a fixed and variable component.
Modified Accrual Basis
Modified accrual basis is a combination of both the cash and accrual bases of accounting.
Modified Internal Rate of Return
Modified internal rate of return is the rate of return which is modified to match up with the required rate of return.
Monetary Assets
Monetary assets are the assets that are measured in their present collectible amounts, as opposed to their historical costs.
Money Measurement Concept
Money measurement concept is one of the most fundamental concepts in accounting which says that all the transactions should be measured in money terms.
N
Natural Accounts
Natural accounts are user-defined accounts for the various activities which are associated with the accounting entity that capture data at the transaction level.
Natural Classification
Natural classification of costs classifies the cost based on the nature of the cost item.
NEBT
NEBT is the acronym for Net Earnings Before Taxes.
Negative Amortization
Negative Amortization is when the outstanding principal balance of the loan increases rather than decreasing, as is the case with normal amortization.
Negative Cash Flow
Negative Cash flow is when the cash outflow exceeds the cash inflow.
Negative Goodwill
Negative goodwill is said to arise when the net assets exceed the cost of acquisition.
Negative Working Capital
Working Capital is said to be negative when the current assets exceed the current liabilities.
Negligence
Negligence is defined as an omission to do something that a reasonable man would have not forgotten to do.
Negotiable Instrument
Negotiable instrument is a document which represents a debt or money payable by one person to another.
Net
Net is the final amount calculated after all the necessary deductions are made to the gross amount.
Net Accounts Receivable
Net accounts receivable is the total accounts receivable minus a deduction for those accounts which, the company assumes, won't be collected.
Net Assets
Net assets is the difference between total assets and non-capital liabilities.
Net Book Value
Net book value is the current book value of an asset or a liability.
Net Cash Flow
Net cash flow is the difference between the cash inflows and the cash outflows for a business.
Net Contribution
Net contribution is the remaining amount after all the deductions are made to the gross amount.
Net Debt
Net Debt = (Debt + Short Term Loans) - Current Assets.
Net Earnings
Refer Net Income
Net Income
Net income is the excess of the total revenue generated by the business over the expenses.
Net Interest Margin
Net interest margin is the excess of interest received on investment over interest paid for debt.
Net of Taxes
Net of taxes usually indicates the effect of applicable taxes, which has been considered in determining the overall effect of an item on the financial statements.
Net Operating Income
Net operating income is the excess of sales revenue over operating costs.
Net Operating Loss
Net operating loss is the excess of operating costs over sales revenue.
Net Operating Profit after Taxes (NOPAT)
NOPAT = Operating Income x (1 - Tax Rate).
Net Present Value
Net Present Value (NPV) is the difference between the present value of the full stream of future inflows of cash from an investment and the present value of cash outflow for purchasing the investment.
Net Profit
Net profit is the excess of income from all sources over the expenses.
Net Purchase
Net purchases is the amount of purchases after deducting the purchase returns, allowances and discounts.
Net Revenue
Net revenue = Gross revenue - (Discounts + Allowances + Sales Returns + Freight)
Net Sales
Net sales is the amount of sales attained after deducting the sales returns, allowances, discounts etc.
Net Worth
Net Worth of a Business = Total Assets - Total Liabilities
Nominal Accounts
Nominal accounts are account items for incomes and expenses of the business.
Nominal Capital
Nominal capital is the total face value of the authorized share capital.
Nominal Interest Rate
Nominal interest rate is the rate of interest that is specified in the contract document for a bond, loan etc.
Non-cash Expense
Non cash expenses are those which appear on the debit side of an income statement, but there is no actual outflow of cash for the same, for e.g. depreciation
Non Current Assets
Non current assets are those assets in the balance sheet that are not current assets.
Non Equity Share
Non equity share is a type of share which shows the indebtedness of company to the shareholder, but isn't part of the equity interest in the entity.
Non Fixed Asset
Non fixed assets are those assets in the balance sheet that are not fixed.
Non Performing Asset
Non performing asset is the asset that does not provide a return or is not effectual in generating income.
Non Profit Organization
Non-profit organizations are those organizations running for social benefit and not for making profit.
NOPLAT
NOPLAT is the acronym for Net Operating Profit Less Adjusted Taxes.
Not for Profit Accounting
Not for profit accounting is the practice of accounting for non profit organizations.
NPPE
NPPE is the acronym for Net Property, Plant and Equipment.
NPV
NPV is the acronym for Net Present Value
NWC
NWC is the acronym for Net Working Capital.
O
O & M
O & M is the acronym for Operations and Management.
Objectivity Principle
Objectivity principle of accounting states that transactions will be recorded on the basis of objective evidence available.
Off Balance Sheet Asset
An off balance sheet asset is one that represents a resource of the entity or something that is projected to have a future economic value.
Off Balance Sheet Financing
Off the balance sheet financing is a borrowing the details of which are not given in the balance sheet
Off the Books
Off the books is something which is not recorded in the books of accounts.
On Account
On account is a payment made to discharge the debt in full or in part.
Open Account
Open account is an arrangement where the payment may not be guaranteed.
Open Book Credit
Open book credit is a form of credit where the payment may not be assured.
Opening Balance
Opening balance is the balance carried forward of the account to the next accounting period.
Opening Stock
Opening stock is the opening balance of raw or processed inventory.
Operating Allowance
Operating Allowance is an advance/reimbursement which is made against certain costs/expenses and/or a reduction in amount payable to cover those certain costs/expenses.
Operating Assets
Operating assets are those long term assets that the business intends to use rather than sell.
Operating Budget
Operating budget is a combination of the various budgets that are set for operations. The various budgets included in operating budget are sales and collection budget, cost of goods sold budget, inventory and purchases budget and operating expenses budget.
Operating Cash Flow
Operating cash flow is the inflow and outflow of cash from the business for operational activities.
Operating Cash Flow Ratio
Operating cash flow ratio is calculated by cash flow from operations/current liabilities.
Operating Cost
Operating costs are those costs which are incurred for maintaining property.
Operating Cycle
Operating cycle is the time difference between purchasing raw materials and realizing the cash from the sales of finished goods.
Operating Expenditure
Operating Expenditure is the expenditure incurred on day-to-day items of expense in the business.
Operating Expenses
Operating expenses are the general and administrative and selling expenses of the business.
Operating Expenses to Sales
Operating expenses to sales ratio gives the percentage of the total sales revenue that is used to pay for operating expenses.
Operating Income
Operating income is the excess of revenues from operations over the operating expenses.
Operating Leverage
Operating Leverage is the ratio of fixed operating costs to the total operating costs.
Operating Margin
Operating margin is the ratio which compares operating income to sales revenue.
Operating Profit
Operating profit is the excess of gross profit over operating expenses.
Operating Profit to Sales
Operating profit to sales ratio is the ratio which compares the operating profit to the sales and shows how much percentage of sales constitutes the operating profit.
Operating Ratio
Operating Ratio = Operating Expenses / Operating Revenues
Operating Revenue
Operating revenue is the revenue earned on the basis of day-to-day operations like sales.
Operating Risk
Operating risk is the risk inherent to the operations of any specific business.
Operating Transfer
Operating transfer is where a transfer of funds or resources is made from one account to another to fund the operations of that account.
Opportunity Cost
Opportunity cost is the cost of choosing or not choosing one investment plan or an operation over another.
Order of Liquidity
Order of liquidity is a format for preparing the balance sheet where all items on the asset side of the balance sheet are listed in descending order of liquidity.
Order of Permanence
Order of permanence is format for preparing the balance sheet where all the fixed assets are arranged in the descending order of their permanence.
Ordinary Asset
Ordinary asset is a non-capital asset that is used for business purposes.
Ordinary Income
Ordinary income is the income earned through the ordinary course of business and not from any capital gains or extraordinary windfall gains.
Organization Cost
Organization cost is the expenses incurred to begin a business entity. These costs are also known as startup costs and include the money spent on legal fees etc.
Other Income
Other income is the income derived from sources other than the main activity of the business.
Out of the Pocket
Out of the pocket expenses are those that require an outlay of cash in a given time period.
Outstanding
Outstanding is an unpaid amount owed to someone.
Outstanding Shares
Outstanding shares is the number of shares that are currently issued by the company and held by the shareholders.
Overdraft
Overdraft is a facility given by a bank to an account holder that allows the account holder to have a negative balance.
Overhead
Overhead is the cost which is not directly incurred on production, but indirectly incurred for other reasons.
Overhead Budget
Overhead budget gives all the expected production costs other than direct materials and direct labor.
Overhead Rate
Overhead rate is calculated by totaling all the expenses for one year, excluding labor and materials, and then divided by the total cost of labor and materials.
Overtime
Overtime is the work done in excess of the regular working hours.
Overstated
Something is said to be overstated when it is quoted to be more than it actually is.
P
PA
PA is the acronym for per annum.
Paid Up Capital
Paid up capital is the total amount paid by the shareholders for acquiring the stock of the company.
P & L
P & L is the acronym for profit and loss statement. It gives the details regarding the incomes and expenses of the business over the accounting period.
Parent Company
Parent company is the company which has a lot of subsidiaries under it.
Partnership
Partnership is a business type which has not been incorporated but has more than one owner.
Par Value
Par value is the face value. It is usually used while referring to bonds or other financial instruments.
Payable
Payable is some amount which is not paid by the business. It is a liability.
Payables Turnover
Payables Turnover = Purchases / Payables
Payable to Shareholders
Payable to shareholders generally refers to the payments that are to be made to shareholders.
Payback Period
Payback period is the period of time required to recover the amount spent for capital investment.
Pay Cycle
Pay cycle is a set of rules that define the criteria for selection of scheduled payments for payment creation.
Payment Due Date
Payment due date specifies the last date till which the payment must be made.
Payout Ratio
Payout ratio is the dividend paid by the company to the shareholders out of earnings expressed as a percentage.
Payroll
Payroll is the list of all the employees in the organization and their salaries.
PBT
PBT is the acronym for Profit Before Taxes.
Per Annum
Per annum means each year
P/E Ratio
Price to Earnings ratio compares the current price of the share to the earnings per share. P/E Ratio = Market Price of the Share / Earnings per Share.
Performance Budget
Performance budget is a budget format that individually relates the input of resources and the output of services for each unit in an organization.
Performing Asset
Performing asset is an asset which has been giving a good steady return over its functional life.
Period Cost
Period costs are those which cannot be accumulated and need to be paid off by charging them against the revenue in that year itself.
Periodicity Concept
Periodicity Concept is the accounting concept which states that each accounting period has an economic activity associated with it, and that this activity can be measured, accounted for, and reported.
Periodic Valuation
Periodic valuation of the assets deals with determining the future value of assets and investment portfolios.
Perpetuity
Perpetuity is an annuity which is payable forever.
Persistent Earnings
Persistent earnings are continually recurring level of earnings from one accounting period to the other.
Personal Accounts
Personal account is a type of account that keeps the record of transactions of different people associated with the business, such as debtors and creditors.
Personal Equity
Personal equity is that portion of the owned equity that is invested in the asset.
Petty Cash
Petty cash is a cash allowance made for small, day-to-day cash expenses.
Physical Inventory
Physical inventory is the total inventory present in the warehouses.
Piecemeal
Piecemeal is either one thing at a time or a little bit at a time.
PITI
PITI is the acronym for Principle, Interest, Taxes and Insurance.
Plant Asset
Plant asset is the physical asset of the company where all the production activity takes place.
Pledged Accounts Receivable
Pledged accounts receivable is a short term loan arrangement where the accounts receivable of the business are kept as security with the lender.
Pledged Assets
Pledged asset is the asset given to the lender of a loan as security. In case the person who has taken the loan defaults on the payment, then the assets will be taken by the lender.
Pledged Revenue
Pledged revenue is that part of the revenue that has to be obligatorily used to service a debt.
PLS
PLS is the acronym for Profit and Loss Sharing.
Portfolio
A portfolio is the details and summary of all the investments as purchased by a business entity or an individual.
Posting
Posting is to record all the transactions from the journal in the individual ledger accounts.
Preference Shares
Preference shares are a type of capital stock, the holders of which enjoy the first right on the dividends of the company, which may be at a fixed rate and may even be cumulative.
Preferred Creditor
Preferred creditor is the creditor whose debt is to be paid off before paying off the debts of other creditors.
Premium On Capital Stock
Premium on capital stock is the excess of paid value for the shares over the face value.
Pre-Operating Costs
Pre-operating costs are costs which are deferred till the related assets are ready for the revenue service at which time the costs are charged to operations.
Prepaid Expenses
Prepaid expenses are those expenses which have been paid for in advance
Present Value
Present value is the discounted value of the amount of money receivable in the future as a lump sum or an annuity.
Price to Book Ratio
Price to Book Ratio = Stock Capitalization / Book Value of Shares
Price to Cash Flow Ratio
Price to Cash Flow Ratio = Price per Share / Cash Flow per Share
Price to Revenue Ratio
Price to revenue = Market Value per Share / Revenue per Share
Prime Cost
Prime Cost is the total of direct materials and direct labor used for production
Proceeds
Proceeds is the money that comes into the business on account of sales etc.
Process Costing
Process costing is the costing which is done on the various process of the business to find out the cost of each process.
Product
Product or goods is the main commodity which is sold by the business to generate its revenues.
Product Cost
Product cost is the cost of inventory in the warehouses of the business.
Product Invoice
Product invoice is the invoice for the sale of products.
Production Budget
Production budget is the budget set for all the activities related to production.
Productive Activity
Productive activity is any such activity which will produce economic value for the business.
Productivity Ratio
Productivity Ratio is the ratio of the output produced by the business to the input used by the business for production.
Professional Fees
Professional fees are the fees charged by service professionals for the service delivered by them.
Profit
Profit is the excess of income over expenses.
Profitability Ratios
Profitability ratios is the set of ratios which help measure the profitability of the business.
Profit after Tax
Profit after tax is the excess of revenue over all the expenses and after payment of tax.
Profit Before Taxes
Profit before tax is the profit earned by the business before making the deduction for tax.
Promissory Note
A promissory note is a financial instrument made by the debtor stating that the debtor intends to pay the money he owes to the creditor in the specified period and is signed by the debtor to that effect.
Proprietary Asset
Proprietary asset is the asset which is considered as intellectual property and should not be disclosed.
Proprietary Theory
Proprietary theory assumes no difference between the business and its owners and considers them as one and the same.
Proprietor's Draw
Proprietor's draw is the cash withdrawal made by the proprietor from the business for his personal use.
Proprietor's Fund
Proprietor's fund = Owners Capital + Net Profit - Proprietor's Draw
Public Offering
Public issue is the decision made by the company to raise more capital by the public issue of share capital.
Purchase Account
Purchase account is the ledger account in which all the purchases of the raw materials or inventory are recorded.
Purchase Discount
Purchase discount is the discount given by the seller to the business for purchases.
Purchase Method
Purchases method is an accounting method for an acquisition using market value for the consolidation of the net assets of the two entities on the balance sheet.
Purchase Order
Purchase order is to place a requisition to purchase goods with the supplier of raw materials.
Purchase Returns
Purchase returns is the part of inventory which is returned to the seller due to bad quality, unusable nature of the goods supplied etc.
Purchases
Purchases are all the goods purchased by the company for production or resale.
Purchases Budget
Each company sets a purchase budget where the total expense on purchases is fixed.
Q
Quick Assets
Quick assets is the sum of the current assets minus inventory.
Quotation
Quotation is a declaration of price at which the seller is willing to sell his goods.
R
RAB
RAB is the acronym for Regulatory Asset Base.
Rate of Return
Rate of return is the gain or loss made by an investment or a business as a whole, expressed as a percentage.
Ratio
Ratio is a mathematical instrument which helps compare the performance of two accounting results.
Ratio Analysis
Ratio analysis is to use the various ratios that help compare the performance of the company with other companies, or with its previous results or for checking internal efficiency.
Real Accounts
Real accounts are those accounts which deal with the transactions for an asset or a liability account.
Realizable Value
Realizable value is the value that is expected on converting the assets held by the company to cash.
Realization Principle
Realization principle of accounting states that the revenue should be recognized when the goods are sold or the service is delivered.
Rebate
Rebate is the payment made to the customer to induce him into a sale or to induce early payment for the sale.
Recast Earnings
Recast earnings are those earnings which can be made if some costs can be eliminated.
Receipt
Receipt can be either an act of receiving money or a document made by the receiver of cash acknowledging that the money has been received.
Receivable
Receivable is the money which is due to the business and has not yet been received.
Receiver
Receiver is someone who receives something, which may be cash, assets etc.
Reconciliation
Reconciliation is the process of cross-checking and correcting/adjusting the balance of two statements so that the figures of both these statements match for the single item.
Recording Principle
Recording principle in accounting governs the time of recording a particular entry. It says that the entry should be recorded when the cash is earned or pledged rather than when the actual inflow or outflow of cash takes place.
Recourse Note
Recourse note is the right of the payee to demand payment from the maker or endorser of a negotiable instrument.
Recovery
Recovery is the collection of amounts receivable that had previously been written of as bad debts.
Recurring Entry
A recurring entry is the entry that occurs regularly on the same date (of different months) and has the same amount.
Redeemable
Redeemable is something that can be converted to cash.
Redemption
Redemption is to pay off the principal amount on a redeemable debt or security.
Register
Register is to record the entries for the transactions in the official books or registers.
Registered Bonds
Registered Bonds are those for which the names and contact details of the bond holders are maintained by the issuing company.
Regulation
Regulation is the control or direction according to the rules set by the government.
Reimbursement
Reimbursement is to repay the amount to a person who had previously borne the expense on our behalf.
Related Party Transaction
Related party transaction is a transaction between two parties where one party has a significant control or influence over the other.
Relevance Concept
Relevance concept is the accounting concept which refers to the capacity of accounting information to make an impact on the decision makers.
Reliability Concept
Reliability concept is the accounting concept which says that the financial reporting by the company should be reliable and trustworthy.
Remittance Advice
Remittance advice is the notification sent to a debtor to remind him of the payment due.
Remuneration
Remuneration is the act of paying for the goods purchased or services received.
Replacement Cost
Replacement cost is the total cost at current prices of an asset which may not necessarily be an exact duplicate of the subject asset but serves the same purpose or performs the same function as the original.
Replacement Value
Replacement value is the cost spent to replace an item or an asset.
Reported Earnings Per Share
Reported earnings per share is the part of the total profit actually payable to the shareholders divided by the number of shares available.
Representation Expenses
Representation expenses are those which are incurred for representational purposes such as business parties.
Reserve
Reserve is a pool of money created out of profits for a specific purpose or as a security for contingencies
Residual
Residual is what is left when the rest of the entity is taken away.
Residual Claim
Residual claim is the claim made on the earnings after all the other debt obligations have been satisfied.
Residual Equity Theory
Residual equity theory states that the owners of common stock are the actual owners of the company.
Residual Income
Residual income is the income which will be earned without any additional effort or expense.
Residual Value
Residual value is defined as the book value of a fixed asset after it has been fully depreciated.
Resource Absorption
Resource absorption is when all the limited resources of the company are absorbed.
Restricted Assets
Restricted assets are those whose use or working is restricted by law.
Results from Operations
Results for operations is the commonly used synonym for financial statement.
Retained Earnings
Retained earnings are that part of the distributable profit which have not been given to the owners, but retained in the business for future use.
Retained Earnings Statement;
Retained earnings statement is the statement that gives the details regarding the earnings retained by the company in the business.
Return on Assets
Return on asset is the ratio which compares the net profit after tax to the total assets in the company. Return on Assets = Earnings after Tax / Total Assets
Return on Capital Employed
Return on Capital employed is a measure of how effectively a business is using its capital. Return on Capital Employed = Profit Before Income and Taxes / (Total Assets - Current Liabilities)
Return on Equity
Return on Equity = Net Income / Shareholders Equity
Return on Investment
Return on investment measures the total cash coming into the business on account of an investment.
Return on Sales
Return on Sales = Earning before Taxes / Total Sales.
Return on Shareholder Equity
Return on Shareholder Equity = Profit after Tax / Shareholder Equity
Revaluation
Revaluation is an activity conducted by the company to review the value of the assets of the company to make sure that they are not undervalued or overvalued.
Revenue
Revenue is the money that comes in on account of sales of goods or provision of services.
Revenue Adjustment
Revenue adjustment is an entry that adjusts the revenue based on received data.
Revenue Expenditure
Revenue expenditure is the total cost that is incurred on revenue generating activities.
Revenue Principle
Refer Realization Principle
Reversing Entry
Reversing entry is a rectifying entry which is made to correct an original mistake in recording the entry.
Risk
Risk is a chance of losing or not gaining value from an economic activity.
Risk Adjusted Return
Risk adjusted return is subtracting the rate of return of one asset from the rate of return of another asset, both asset having similar risks.
ROACE
ROACE is the acronym for Return on Average Capital Employed
ROI
ROI is the acronym for Return on Investment. Read on to know How to Calculate Return on Investment.
S
Safety Stock
Safety stock is the amount of stock a company defines as the lowest the inventory level of the company can go.
Salary
Salary is the remuneration paid to the employees of the organization.
Sales
Sales is the money generated by selling the goods of the company. Sales = Number of Units * Cost per Unit
Sales Account
The sales account is the ledger account which gives the details regarding the sales of the business.
Sales and Collection Budget
Sales and collection budget is the amount of sales that the company expects to make in the year and the revenues that it expects to collect.
Sales and Marketing Expense
Sales and marketing expenses are the total expenses spent on creating awareness for the company and the products in the market and selling them.
Sales Discount
The discount allowed by the company on sales to induce early cash payment is called sales discount.
Sales Invoice
Sales invoice is the record of the transaction between the buyer and the seller, made by the seller.
Sales Journal
Sales Journal is where the entry for sales of goods is chronologically made.
Sales Order
Sales order is the contract in which the buyer and the seller of the goods agree on the terms of a contract.
Sales Proceeds
Sales proceeds is the money realized from sales.
Sales Returns
Sales return is the goods returned by the customer to the business due to poor quality, unsuitability etc.
Sales Revenue
Sales revenue is the revenue realized from the sale of goods.
Sales Tax
Sales tax is the tax levied on the sale of a product by the government.
Salvage Value
Salvage value is the scrap value realized on the sale of a fully depreciated asset or a asset which cannot be used for production.
Scrap Value
Refer Salvage Value
Selling and Administrative Expense Budget
Selling and administrative expenses budget gives the amount that is allocated for selling and administrative expenses of the business.
Semi Fixed Costs
Semi fixed costs are those costs where one component of the cost is fixed and the other is variable. They are also known as semi variable costs.
Sensitive Assets
Sensitive assets are those assets, the return or usability of which can be affected by external uncontrollable factors.
Sensitive Liabilities
Sensitive liabilities are those which have a floating interest rate which can be affected by external uncontrollable factors.
Sensitivity Analysis
Sensitivity analysis helps the company check the sensitivity of an item in relation to the various external or internal changes.
Separate Determination Concept
Separate determination concept in accounting says that each component of every category of assets or liabilities should be valued separately.
Separate Valuation Concept
Separate valuation concept in accounting says that in order to determine the aggregate amount of an asset or a liability, each individual asset or liability comprising the aggregate must be determined separately.
Service Charge
Service charge is the charge which is paid over and above the basic fee for delivering a service.
Setoff
Setoff is a way of discharging a debt by creating a debt of the same amount against the creditor, by the sale of goods etc.
Share
A share is a part of the business. It is the total capital divided into small individual parts.
Share Capital
Share capital is the capital raised by the company by a public issue of shares in favor of cash.
Shareholder Loan
Shareholder loan is any loan given to a shareholder by the company.
Share Premium
Share premium is the additional price paid for purchasing the stock, over and above the par value of the share at the time of issue.
Short Term Asset
Short term asset is an asset which is expected to be converted into cash within a year.
Short Term Liability
Short term liability is the liability that is expected to be paid off within a year.
Simple Journal Entry
Simple journal entry is one which has only one debit effect and one credit effect.
Single Entry Bookkeeping
Single entry book keeping is the opposite of double entry bookkeeping and only one effect of a transaction is recorded.
Sinking Fund
Sinking fund is a fund created by depositing the profits of each year with the objective of ultimately paying off a debt.
Solvency
Solvency is a situation where the assets of the entity are sufficiently more than the liabilities.
Split Payment
Split payment is a mode of payment which allows you to pay partly in cash and partly on credit.
Spoilage
Spoilage includes all the materials wasted or spoiled in the process of production.
Spontaneous Assets
Spontaneous assets are those that arise from the day-to-day operations of the business.
Spontaneous Liabilities
Spontaneous liabilities are those that arise from the day-to-day liabilities of the business
Spot Cash
Spot cash is the immediate payment of cash.
Standard Cost System
Standard cost system is the cost system that is specifically designed to allocate various costs under their respective heads.
Startup Costs
Startup costs are the various costs incurred in starting the business. Legal fees and registration fees are included in the startup costs.
Stated Capital
Stated capital is the amount of cash declared by the business as capital in the financial statements of the company.
Statement of Accounts
Statement of account is the details of all the transactions between a debtor and creditor.
Statement of Cash Flows
Statement of cash flows shows the inflow and outflow of the cash from the business.
Statement of Retained Earnings
Statement of retained earnings gives the details of how the retained earnings of the company are being utilized.
Statement of stockholders equity
Statement of stockholders equity is the summary of the changes in shareholder equity for the accounting period.
Statutory Account
Statutory account is an account created by the operation of law, rather than as a business need.
Statutory Deductions
Statutory deductions are those which are made in compliance of some law or regulation.
T
Tainted Accounts Receivable
Tainted accounts receivable are those which have some legal problems attached to them, related to fraud, misuse etc.
Takeover
Takeover is when one company buys a controlling stake in or entirely purchases another.
Tangible Assets
Tangible assets are those which can be seen or touched.
Tangible Book Value
Tangible book value is the summation of all the tangible assets of the business.
Tangible Capital
Tangible capital is the total of outstanding stocks and retained earnings.
Target Costing
Target costing involves setting a price for the product and then getting the production costs in line with the target price, so that the business can earn profit too.
Target Margin
Target margin is the desired profit on a product.
Tariff
Tariff is the tax paid by the importing country on the import of goods.
Tax
Tax is the amount charged against the profits of a business by the government for allowing the activity of the business in the country.
Taxable Benefits
Taxable benefits are those non-cash benefits provided by the employer to the employee on which tax is to be paid.
Taxable Income
Taxable income is the income earned by an individual or a business entity on which the tax liability is decided.
Tax Accounting
Tax accounting means taking into consideration the effect of taxes while planning business strategies.
Tax Base
Tax base is the value of the taxable assets, income and property.
Tax Effect Method
Tax effect method says that the effect on tax to be paid, must be shown in the books of accounts in the year in which the income is recorded, irrespective of when the tax is actually paid.
Technically Bankrupt
Technically bankrupt is a situation where the company's liabilities have exceeded its assets, currently, but the creditors haven't yet asked for their money.
Term Bonds
Term bonds are bonds which are held for a certain predefined amount of time whose principal amount is payable at maturity.
Term Debt
Term debt is a debt that will mature at a certain predefined date in the future.
Terminal Value
Terminal value is the total discounted amount realizable in the future.
Term Loans
Term loan is a loan taken from a lender for a specified period of time.
Time Value of Money
Time value of money is a concept that states that money in hand today is more valuable than money receivable tomorrow.
Total Assets
Total assets is the sum of all the fixed and current assets.
Total Asset Turnover
Total asset turnover gives the efficiency of the business in managing their assets.
Trade Debtors
Trade debtors are those who owe the business money, on account of goods sold to them on credit.
Trade Discount
Trade discount is reducing the selling price of goods to boost sales.
Trading Concern
Trading concern is one that derives its products for sale by purchasing products from other producers for resale to their customer base, thereby generating revenue.
Transportation Costs
Transportation costs are those which are incurred in transporting the goods from one place to another.
Trial Balance
Trial balance is listing all the ledger accounts and their balances.
Turnover
Turnover is sales.
U
Unabsorbed Costs
Unabsorbed costs are those which occur when the cost structure does not fully reflect all variable and/or fixed costs.
Unallocated Costs
Unallocated costs are those which are not included in the cost of goods sold.
Unappropriated Profits
Unappropriated profits are those which have been withdrawn from the business by the proprietors or not appropriated.
Uncollectible Accounts Expense
Uncollectible accounts expense is the expense incurred in trying to realize payment from a debtor, but the debtor does not make the payment.
Uncontrollable Expense
Uncontrollable expense is that expense incurred in the usual course of business which cannot be controlled.
Underabsorbed Overhead
Underabsorbed overhead is the total overhead that is not allocated to the product sold.
Under-Billing
Under-billing is not receiving the full amount payable or billing for a lower amount than what is receivable.
Under-Stated
Understated is to state less than what it actually is.
Underwriting
Underwriting is to protect by insuring and to guarantee financial support.
Unearned Rent
Unearned rent is the rent received in advance before it is actually earned.
Unearned Revenue
Unearned revenue is the revenue received before it is actually earned.
Unfavorable Variance
Unfavorable variance is when the actual costs incurred are greater than the standard costs.
Unliquidated
Unliquidated is an asset which has not been converted to cash.
Unrealized Accounts Receivables
Unrealized accounts receivable are bad debts.
Unrealized Income
Unrealized income is that income which is earned but not yet received.
Unresolved Equity
Unresolved equity is the difference between the total assets and the total liabilities in the balance sheet.
Unrestricted Assets
Unrestricted assets are those on which there is no government regulation regarding their use.
Unsecured debt
Unsecured debt is one where the borrower provides no collateral against the debt to the lender.
Usage Variance
Usage variance is the difference between the budgeted and actual use of materials.
Useful Life
Useful life is the approximate amount of time for which the asset is assumed to be useful before it is fully depreciated.
V
Valuation Allowance
Valuation allowance is an allowance which provides for changes in the value of the assets of the company.
Valuation Date
Valuation date is the date on which the valuation is made.
Variable Costs
Variable costs are those which vary with an increase or decrease in the production.
Variable Expenses
Refer Variable Costs
Variable Interest Rate
Variable interest rate is the interest rate which changes depending on the changes in an underlying interest rate index.
Variances
Variance is a difference between something projected and actual.
Variance Analysis
Variance analysis is the use of the various types of variances to analyze the overall performance.
W
WACC
WACC is the acronym for Weighted Average Cost of Capital.
Wage
Wage is the remuneration paid to a worker for production of goods and services.
Warehouse
Warehouse is a store where all the unsold finished goods or the unused raw materials are kept.
Wholly Owned Subsidiary
Wholly owned subsidiary is one whose 100% of the stock is owned by the parent company
Windfall gains
Windfall gain is a profit which the company gets as a result of an uncontrollable event
WIP
WIP is the acronym for Work in Progress.
Working Capital
Working Capital = Current Assets - Current Liabilities
Working Capital Turnover
Working capital turnover shows how efficiently the working capital of the business is employed.
Write Off
Write off is to decrease the value of an item.
Y
Yield
Yield is the annual return on investment which is expressed as a percentage.
YTM
YTM is the acronym for Yield to Maturity.
YTD
YTD is the acronym for years to date.
Z
Zero Coupon Bonds
Zero coupon bonds are those on which interest is not paid on a yearly basis.
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