AAA stands for the American Accounting Association, a leading professional organization dedicated to the advancement of accounting education, research, and practice.
An absorption account is utilized in double-entry cost accounting to track the amount of overhead costs absorbed by production activities.
An account is a financial statement of indebtedness from one person to another. It documents transactions and is integral to recording and maintaining financial records.
An Account Statement is a detailed record of financial transactions for a specific period. It provides a summary of all activities within an account, showing the resulting balances and transactions.
Accounting is the process of identifying, measuring, recording, and communicating economic transactions. Typically, this is done using monetary terms and involves the preparation of financial statements such as profit and loss accounts and balance sheets.
The Accounting and Financial Women's Alliance (AFWA) is a U.S. organization focused on promoting the career advancement of women in accounting and related fields through education, networking, and publicity.
The accounting cycle is the sequence of steps in accounting for a financial transaction entered into by an organization. It involves recording transactions in the books of account and aggregating them in financial statements for a financial period.
Accounting principles are the fundamental rules, concepts, and guidelines governing currently accepted accounting practices and procedures. They form the foundation upon which financial transactions are recorded and reported, ensuring consistency, reliability, and comparability of financial statements.
The Accounting Standards Committee (ASC) was a joint committee established in 1976 to create and issue accounting standards in the UK. It was later replaced by the Accounting Standards Board (ASB) due to concerns about its effectiveness.
The Accounts Payable Ledger is a detailed accounting record of amounts owed to suppliers, listing each credit transaction involving a supplier and tracking the outstanding balances.
An accrual is an accounting estimate of a liability for expenses not yet invoiced or requested for payment at the time the accounts are prepared, presenting a more accurate financial snapshot.
Accrual Basis or Accrual Method is an accounting method whereby income and expense items are included in taxable income or expense as they are earned or incurred, even though they may not yet have been received or actually paid in cash.
Accrued charges represent obligations for goods or services that have been received or consumed but not yet paid for by the end of the accounting period.
An accrued expense is a cost that has been incurred but not yet paid. These are obligations that a company must pay out in the future for services or goods that have already been received.
Accrued interest or accrued income refers to interest or other income that has been earned but not yet received by the entity. It accumulates periodically and is recorded in the financial statements as interest receivable or accrued income.
Accrued liabilities refer to amounts that a company owes but have not yet been paid. These liabilities are recognized in the company's financial statements even though the related cash outflows have not yet occurred. Accrued liabilities do not necessarily indicate a default or delinquency.
Accrued taxes represent the amount of taxes owed, based on income earned or property value assessment, but not yet paid. This concept plays a crucial role in accounting, taxation, and financial reporting.
The actuarial present value of an employer's postretirement benefits other than pensions, attributed to employee service rendered up to a specified date. These benefits often include retiree medical or retiree life insurance benefits.
Actual cost refers to the tangible expenditure incurred in carrying out specific activities of an organization, as opposed to budgeted or standard costs. It represents the real outlay of funds, including invoices paid, wages, materials, and other expenses.
Additional Paid-In Capital (APIC) represents the excess amount received by a company from investors over the par value of its issued stock.
An adjusted basis, or adjusted tax basis, refers to the original cost or other basis of property, reduced by depreciation deductions and increased by capital expenditures. It serves as the base amount from which to measure gains and losses for tax purposes.
Administration overhead includes general office operations costs such as salaries, stationery, and telecommunication expenses, essential for executing administrative activities within an organization.
Words written on a bill of exchange to indicate that the drawee has been informed that the bill is being drawn on him or her.
Age analysis is a crucial component of the credit control system, enabling businesses to categorize and evaluate outstanding debtor accounts based on the length of time they have been overdue, ensuring timely follow-ups and effective credit management.
A critical tool for analyzing the quality of a company's receivables, the aging schedule classifies trade accounts receivables by their date of sale and reveals patterns of delinquency.
The American Institute of Certified Public Accountants (AICPA) is the national professional organization of Certified Public Accountants (CPAs) in the United States, offering resources, training, and advocacy to its members.
Allocation involves distributing resources for specific uses or spreading costs over multiple products, customers, people, or time periods.
Allocation in accounting refers to the process of distributing resources, costs, or investments among various accounting entities or activities.
In the USA, the professional organization of certified public accountants. The Institute provides technical advice and guidance to its members and such government bodies as the Securities and Exchange Commission. It issues many influential publications in the areas of accounting, auditing, and taxation.
Amortization is the process of gradually writing off the initial cost of an asset over a specific term or the repayment of debt in installments.
Amortization refers to the process of reducing debt through periodic payments or the systematic write-off of intangible asset costs over a set period.
Amortized cost refers to the part of the value of an asset that has been written off due to accumulated depreciation over time. It is a key accounting concept used to allocate the cost of an asset over its useful life.
In financial contexts, the term 'amount' refers to a specific sum represented numerically, often in dollar terms, used in transactions, budgeting, accounting, and various business contexts.
Annual accounts, also known as annual financial statements, are comprehensive reports on a company's financial position and performance over a fiscal year. These accounts include the balance sheet, income statement, statement of changes in equity, and cash flow statement.
Application controls are controls relating to transactions and standing data for each computer-based accounting system, specific to each application. These controls ensure the completeness and accuracy of accounting records and the validity of entries.
An essential element in the statement of changes in financial position, providing insights into how funds are utilized within a business.
Apportionment refers to the distribution or allocation of income, expenses, property, or tax liability among different entities, individuals, or states. It is a concept widely used in fields such as accounting, taxation, and real estate.
Appropriation in accounting refers to the allocation of net profits of an organization in its accounts. This can include dividends to shareholders, transfers to reserves, and amounts for taxation.
Arrearage refers to the amount of overdue payments that are owed and unpaid. This can apply to various financial obligations, including loans, mortgages, bond interests, and dividends on cumulative preferred stock.
In accounting terms, an asset refers to any resource owned or controlled by an entity that is expected to provide future economic benefits. Assets can be either tangible or intangible.
Asset valuation involves determining the current worth of an organization's assets, considering various valuation methods including revaluation and present value calculations.
At-risk rules are tax laws designed to limit the amount of tax losses an investor can claim from certain industries, including oil and gas, movie production, farming, and real estate. These rules ensure that losses are deductible only to the extent of money the equity investor stands to lose.
An attest function is performed by a qualified auditor who provides an audit opinion on the truth and fairness of the financial statements of an organization.
Attributable profit is the portion of the total estimated profit from a long-term contract, reflecting the fair share of work completed, minus estimated remedial, maintenance, and other non-recoverable costs at a specific accounting date.
In accounting and auditing, an attribute is a specific characteristic or feature that each member of a population either has or does not have.
An audit limited in scope due to restrictions on certain accounts, reduced period, or restricted access to records. Often pertinent in accounting and taxation scenarios.
Audit working papers contain detailed evidence and information gathered during an audit, forming the basis upon which auditors can form an opinion and providing critical future reference.
The Auditing Standards Board (ASB) is the American Institute of Certified Public Accountants' (AICPA) senior technical committee designated to issue Statements on Auditing Standards (SASs). Since 2002, ultimate oversight of the auditing profession in the United States has rested with the Public Company Accounting Oversight Board (PCAOB).
An auditor's certificate, opinion, or report is an official document issued by an independent auditor asserting the accuracy and fairness of an organization's financial statements.
Auditors' remuneration is the compensation paid to auditors for the services they provide in scrutinizing a company's financial statements. This term is often interchangeable with audit fees.
An auditors' report provides an independent opinion on the fairness and accuracy of a company's financial statements, central to ensuring transparency and integrity in financial reporting.
AVCO stands for Average Cost Method, an inventory valuation method applied to calculate the cost of goods sold and end inventory by averaging the cost of all items available for sale during the period.
Average Cost (also known as Weighted-Average Cost) is a method of determining the cost per unit by dividing total costs by the total output. This method includes recalculating the unit value for raw materials or finished goods after each new consignment.
B/D is an accounting abbreviation that stands for 'Brought Down.' It is used to indicate the balance of an account from the previous page or period is being carried forward to the current page or period in a ledger or financial statement.
B/F, an abbreviation for 'brought forward,' refers to an accounting practice where balances from a previous period are carried over to the current period, ensuring continuity in financial reporting. This term is crucial for maintaining accurate financial records year-over-year or across accounting periods.
A Bachelor of Business Administration (BBA) is a four-year degree program that equips students with comprehensive knowledge of business principles, ethics, and practices. The program encompasses a variety of business-related disciplines and offers specializations in areas such as accounting, finance, marketing, management, business statistics, and real estate.
Bad debt refers to an amount owed by a debtor that is unlikely to be recovered, such as when a company goes into liquidation. The full amount should be written off to the profit and loss account of the relevant period or to a provision for bad debts upon identification, in line with accounting prudence principles.
Bad debts recovered are those debts that were previously classified as bad and written off but later recovered either in part or in full. These recovered debts should be recorded back into the profit and loss account of the period, or relevant provisions.
Bad-debt recovery is the receipt of an amount, whether partially or in full, that had previously been written off as uncollectible. This often occurs after the debt has been removed from accounting records.
The amount representing the difference between the debit and credit sides of an account. It is brought down onto the opposite side of the account to ensure equal totals.
Methods of presenting a balance sheet as set out in the Companies Act. Details the two formats available, vertical and horizontal, with specific disclosure requirements.
A balancing figure is inserted in accounting to ensure that the totals of both sides of the ledger are equal, typically when preparing a trial balance.
A Bank Report is a document generated by a banking institution at the request of an auditor to provide detailed information regarding a business's transactions and interactions with the bank over a specified period.
Basic Earnings Per Share (Basic EPS) is a financial metric used to measure a company's profitability on a per-share basis, without considering any dilutive effects from convertible securities or options.
The basis upon which personal income or business profits are assessed in the UK for each fiscal year. The specific rules for each income-tax schedule detail the profits or income to be assessed in that year.
The term 'Beginning of Year' (BOY) is commonly used in financial analysis and reporting to indicate the start of a fiscal year. In accounting, it acts as a reference point for comparing year-over-year performance and financial statements.
The billing cycle is the interval between periodic billings for goods sold or services rendered, normally one month, or a system whereby bills or statements are mailed at periodic intervals in the course of a month in order to distribute the clerical workload evenly.
The term 'billion' has historically had different definitions in the USA and the UK. It once meant one million million (10^12) in the UK and one thousand million (10^9) in the USA. However, it is now almost universally accepted to mean one thousand million (10^9).
Bills Receivable refers to a category of current assets on a company’s balance sheet, representing promissory notes or bills of exchange held by the company until their maturity.
In finance and accounting, the term 'book' may refer to preliminary indications of interest in underwriting securities, a record maintained by a specialist of buy and sell orders, the action of giving accounting recognition to transactions, or collectively, the journals, ledgers, and other accounting records of a business.
Book depreciation, also known as accounting depreciation, refers to the allocation of the cost of tangible assets over their useful lives, reflecting the wear and tear, deterioration, or obsolescence of these assets.
A Book of Account refers to the formal record maintained by a business entity to document its financial transactions. These records are essential for bookkeeping and accounting, ensuring that all financial activities are accurately tracked and reported. Books of account typically include journals, ledgers, and other financial documents that reflect the business's financial performance and position.
Book-keeping is the meticulous recording and organization of a business's financial transactions. It provides a foundation for critical financial statements such as the profit and loss account and the balance sheet.
Borrowing costs refer to the expenses incurred by an organization when it borrows money. These costs typically include interest payments and may also encompass arrangement fees and intermediary fees. Depending on accounting standards and conditions, they can either be expensed immediately or capitalized as an asset.
In book-keeping, 'brought down' (abbreviated as b/d) refers to an opening balance that has been transferred from the previous period to the current ledger.
In bookkeeping, the term 'brought forward' (b/f) describes an amount that is the total of the corresponding column on the previous page, helping ensure continuity and accuracy in financial records.
A business entity is an organization established as a separate entity for the purpose of conducting business. It functions independently of its owners and has its own legal rights and obligations.
A calendar year refers to a continuous period beginning on January 1 and ending on December 31, widely used for financial and accounting purposes. In contrast, a fiscal year can vary depending on the organization's specific reporting requirements.
In finance and accounting, 'capital' refers to various forms of assets, interests, or financial contributions that play a critical role in the functioning of an entity or the production process, enhancing productivity and enabling operations.
Capital contributed in excess of par value represents the amount paid for stock above its stated par value, as reflected in the owner's equity section of a balance sheet.
Capital transactions refer to significant financial activities involving things like share capital and reserves, long-term debt capital, or fixed assets of a company, as opposed to revenue transactions which are common, operational activities.
Understand the accounting process of including borrowing costs in the cost of a qualifying asset and how this affects financial statements.
Carriage outwards refers to the delivery costs incurred when a business sends goods to customers. These costs are accounted for as an expense in the profit and loss account.
In book-keeping, 'carried down' (**c/d**) refers to an amount that is to be transferred as the opening balance in the next accounting period.
Carried Down (C/D) is an accounting term used to indicate that the total balance from the previous page of a ledger is carried down to the top of the new page.
An accounting term used to describe the total of a column of figures that is to be the first item in the corresponding column on the next page.
The term 'carve out' refers to the separation of a specific interest, such as the current income stream of a property, from the property itself. For instance, an owner might sell a portion of future mineral production from a property for a set number of years, creating a carved-out interest in that mineral property.
An accounting method where transactions are recorded only when cash is received or paid. This method does not account for debtors, prepayments, creditors, accruals, stocks, and fixed assets.
Cash disbursement refers to the amount of money paid out by a business or individual during a specific period for expenses, purchases, or other financial obligations.
Cash earnings refer to the income that a business generates from its operations after accounting for cash revenues and cash expenses, specifically excluding noncash expenses such as depreciation.
Cash equivalents are highly liquid investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of changes in value.
A Cash Payments Journal is a specialized accounting book or log used to record all cash disbursements made by a business in a sequential manner.
A Cash Receipts Journal is a specialized accounting ledger used to record all cash inflows received by a business, such as payments from customers, cash sales, and other receipts. Each entry is chronologically organized to ensure accurate tracking and reconciliation.
The Cash Receipts Journal is a specialized accounting ledger used to record all cash inflows received by an organization. This ledger often records cash deposits into the organization's bank account and may be combined with other journals for comprehensive cash flow tracking.
A day book utilized for recording payments of cash from an organization's bank account, often integrated with a cash-receipts journal to form a complete cash book.
A cashbook is an accounting book used to record all cash receipts and cash disbursements, and its balance ties closely to the cash account in the general ledger, which is reflected on the balance sheet.
The Certified Management Accountant (CMA) is a professional certification awarded by the Institute of Management Accountants (IMA) to individuals who have demonstrated expertise in management accounting through education, examination, and experience.
A Certified Public Accountant (CPA) is a professional designation awarded to accountants who meet specific education, experience, and examination requirements within the jurisdiction of a U.S. state. CPAs hold responsibilities in accounting, auditing, taxation, and financial consulting for both corporations and individuals.
An instruction indicating that all freight charges on a shipment of goods will be paid by the consignee upon receipt.
The Chart of Accounts (CoA) is a detailed listing of all the individual accounts used by an organization’s accounting system, providing a structured framework for categorizing transactions and financial data.
