An 'Except For' opinion is one of the two qualified opinions that an auditor can render, indicating that the financial statements present the financial position fairly except for certain specified conditions requiring disclosure.
A comprehensive annual report filed by publicly traded companies to provide a detailed picture of their financial condition.
Abbreviated accounts, formerly known as modified accounts, are simplified financial statements that small companies in certain jurisdictions can file instead of full statutory accounts.
To assimilate or incorporate amounts in an account or a group of accounts so that they are absorbed and lose their identity.
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.
Accounting bases refer to the methods and techniques used to apply fundamental accounting concepts to financial transactions and items when preparing financial statements. The specific bases adopted by an organization form its accounting policies.
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.
The accounting entity concept is the principle that financial records are prepared for a distinct unit or entity regarded as separate from the individuals that own it, ensuring clear financial reporting.
Accounting exposure, also known as translation exposure, is the risk that a company's financial statements can be affected by exchange rate fluctuations when the company has foreign subsidiaries or international dealings.
The time frame for which a business prepares its accounts, used to measure financial performance and position.
An accounting period is a standardized time frame for tracking and reporting a company's financial performance and tax obligations. Commonly used in financial statements, accounting periods are vital for consistency and comparison.
An Accounting Plan is a detailed guide provided by certain European countries to standardize accounting practices, including definitions, rules for valuation, model financial statements, and a chart of accounts.
Accounting policies are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements. They ensure consistency, transparency, and comparability of financial reporting.
Accounting principles are the foundation rules and guidelines that companies must follow when reporting financial data, ensuring consistency, transparency, and comparability of financial statements.
Accounting profit refers to the amount of profit calculated using generally accepted accounting principles (GAAP) rather than tax rules. It represents the revenue for an accounting period less the expenses incurred, utilizing the concept of accrual accounting. There are several theoretical and practical challenges in determining this profit, leading to a certain variability in its measure.
Accounting records are essential documentation that provides a detailed account of financial transactions pertaining to a particular organization, allowing for accurate tracking and analysis of financial performance over time.
Accounting records are the documentation used to prepare, verify, and audit the financial statements of a company. They provide a detailed account of all financial transactions, assets, liabilities, equity, revenues, and expenses.
The Accounting Reference Date (ARD) is the date that marks the end of a company's financial year, crucial for the preparation of annual accounts and financial statements.
Instances in which corporations have been found in serious breach of accounting ethics by falsifying or manipulating information so that financial statements do not give a true and fair view of the company's performance.
A definitive set of criteria used to guide financial accounting and reporting practices globally, formulated by various authoritative bodies such as FASB, IASB, and FRC.
Accounts Payable (AP) is a short-term debt account, representing a company's obligation to pay off a short-term debt to its creditors or suppliers.
Accounts receivable (AR) refers to the balance of money owed to a firm for goods or services delivered or used but not yet paid for by customers. It is an essential component of a company’s balance sheet and is considered a current asset.
A system of accounting in which revenue is recognized when it is earned and expenses are recognized as they are incurred, providing a more accurate picture of a company's financial status across different periods.
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 liabilities are expenses that a company has recognized in the books before it has paid them. This concept is integral to the accrual method of accounting which emphasizes recognizing economic events regardless of cash transactions.
Accrued revenue refers to revenue that has been earned by a company but has not yet been recorded in the accounts because the corresponding invoice has not been sent or payment has not been received. It is considered an asset on the balance sheet.
Adjusting entries are critical for ensuring that financial statements reflect accurate and relevant financial information. They are posted to the accounting records at the end of an accounting period to correct any transactions or events that were not properly recorded during the accounting period.
Adjusting events, also known as post-balance-sheet events, occur between the balance-sheet date and the date on which financial statements are approved, providing additional evidence of conditions existing at the balance-sheet date.
An adverse opinion is a judgment expressed by auditors indicating that the financial statements of an entity do not accurately reflect its financial position. This is often due to material discrepancies between the auditor's findings and the company's reports.
All-purpose financial statements, also referred to as general purpose financial statements, are prepared with the objective of providing financial information that is useful to a wide range of users in making economic decisions.
The allowance for bad debts is an estimate of the accounts receivable that a company does not expect to collect. This estimation is used to anticipate potential losses and adhere to the accounting principle of conservatism.
An audit test designed to provide evidence of the completeness, accuracy, and validity of accounting records and financial statements.
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.
Annual accounts, also known as annual reports, are comprehensive financial statements of an organization typically published annually and required by law for incorporated bodies in the UK.
Annual earnings represent the amount of profit a business or individual realizes in one fiscal year. The concept is crucial for financial performance assessment, taxation, and strategic planning.
An Annual Return is a document that must be filed with the Registrar of Companies within seven months of the end of the relevant accounting period, containing key information about the company, its directors, and its financial status.
An essential element in the statement of changes in financial position, providing insights into how funds are utilized within a business.
An appropriation account pertains to both governmental budgeting and corporate financial statements. It is instrumental in showing how government departments allocate and manage their funds over a financial year, as well as illustrating how profits are distributed in a partnership or a corporation.
In accounting, arrears refer to a liability or an obligation that has not been settled by its due date. This can apply to various financial scenarios such as unpaid dividends, interest, salaries, or rent.
A Statement of Basic Accounting Theory (ASOBAT) is an influential publication by the American Accounting Association advocating for user-friendly financial statements and emphasizing qualitative characteristics of accounting information.
The Asset Revaluation Reserve, often referred to as the Revaluation Reserve Account, represents the adjustments made to the value of a company's assets that are reflected on its balance sheet. This reserve is critical for accurately depicting the fair value of an entity's assets over time.
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.
An independent examination and subsequent expression of opinion on the financial statements of an organization, involving collecting evidence through compliance and substantive tests.
An audit completion checklist is a crucial tool used by audit staff to ensure that the financial statements being audited provide a true and fair view in compliance with statutory disclosures and accounting standards.
Audit evidence encompasses the information and data collected by auditors to form an audit opinion on the financial statements of an enterprise. This evidence is derived from a variety of sources and through different methodologies to ensure the accuracy and reliability of the financial statements.
The divergence between the perceived role of an auditor and the expectations of financial statement users, subdivided into communication and performance gaps.
Audit Fees, also known as auditors' remuneration, are the amounts payable to auditors for conducting an audit of a company's financial statements, which must be distinguished from fees for non-audit work and approved during the company's annual general meeting.
An audit opinion is an expression provided by auditors within an auditors' report, stating whether the financial statements have been prepared consistently using appropriate accounting policies and standards, and if there is adequate disclosure of vital information.
A document outlining the strategy for managing inherent and control risks in relation to the financial statements of an audit client.
An audit program is a detailed listing of the steps to be taken by an auditor, such as a Certified Public Accountant (CPA), when analyzing transactions to determine the acceptability of financial statements. Major accounting firms may prepare an audit program for each client and require the person who does the work to sign or initial each step performed.
The Audit Programme is a document outlining individual audit tests to be performed as per the audit plan to ensure that the accounting system operates efficiently and effectively.
An audit report is a formal opinion or disclaimer issued by an auditor as a result of an audit or evaluation of an entity’s financial statements. It represents the auditor's findings and communicates them to the stakeholders.
Audit risk refers to the risk that auditors fail to qualify their audit report when the financial statements are materially misleading, i.e., do not provide a true and fair view. Audit risk is comprised of three components: inherent risk, control risk, and detection risk.
An in-depth look into the purpose and different types of audit tests, including compliance tests and substantive tests, which are crucial for assessing the accuracy and completeness of financial statements.
Basic principles and essential procedures with which auditors are required to comply in conducting any audit of financial statements.
An auditor is a person or firm appointed to carry out an audit of an organization, ensuring financial statements are accurate and adhere to regulations.
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.
An auditors' report, also known as an audit report, is an official opinion issued by auditors appointed to examine the financial statements of a company or organization. The report provides an independent assessment of whether the financial statements present a 'true and fair view' of the company's financial performance and comply with regulatory requirements. It plays a crucial role in ensuring transparency and accountability in financial reporting.
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.
Backdating refers to the practice of making documents, agreements, or payments effective from a date in the past. This is often done to reflect an earlier agreed-upon period for financial or employment purposes.
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.
The balance sheet, also known as the statement of financial position, is a vital financial statement that outlines a company's total assets and liabilities at a specific point in time, providing a snapshot of its financial health.
A Balance Sheet Audit focuses specifically on verifying the existence, ownership, valuation, and presentation of a company's assets and liabilities as stated in the balance sheet.
Also known as the accounting equation, the balance sheet equation is the foundational formula that forms the basis of double-entry bookkeeping: Assets = Liabilities + Equity. This equation ensures that a company's financial statements are balanced, indicating that all resources (assets) owned by the company are financed either by borrowing (liabilities) or by investing funds (owner’s equity).
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.
Balance sheet reserves are amounts set aside in pension plans and other insurance contracts, expressed as liabilities on the company's balance sheet, to ensure future benefit payments to policy owners.
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.
Denotes entries printed below the horizontal line on a company's profit and loss account, indicating how the profit is distributed or where funds to finance the loss originate. It contrasts with above-the-line entries, which focus on ongoing operational activities.
Bills payable refers to the amounts a company owes to its creditors for the purchase of goods or services that were bought on credit.
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.
Black-Box Accounting refers to financial statements based on complex accounting methodologies that, while accurate and legal, obfuscate rather than clarify financial data. Techniques such as restatements of revenues, inventory, earnings, and the use of derivatives and off-the-books partnerships can be involved.
Book profit or loss, also known as accounting profit or loss, is the net income or deficit as recorded in the financial statements of a company before accounting for any unrealized gains or losses.
A budget expenditure head is a method of analyzing a budget and presenting financial statements under major headings, each of which is managed by a particular manager responsible for overseeing the budgeting and control within their area.
A Comprehensive Annual Financial Report (CAFR) is a detailed presentation of a state, municipality, or other governmental entity's financial condition. It can serve various stakeholders, including citizens, governing bodies, investors, and creditors.
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.
Understand the accounting process of including borrowing costs in the cost of a qualifying asset and how this affects financial statements.
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.
Carried forward (c/f) is an accounting practice of bringing the balance of an account from one accounting period over to the next.
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.
Cash-flow accounting is an accounting method that focuses on the inflows and outflows of cash within a business, providing a clear picture of the company's liquidity.
A Certified Public Accountant (CPA) is a designation given to accounting professionals who have passed the Uniform CPA Examination and met additional state-specific educational and experience requirements. CPAs are licensed to provide audit opinions on financial statements and offer various other accounting services.
The chargeable account period, often refered to as the accounting period, is the specific time duration under consideration for which financial transactions are recorded and financial statements are prepared.
A technique used by auditors to confirm the amounts outstanding from debtors to ensure that the debts exist and are correctly valued in a company's financial statements.
Circulating assets, also known as current assets, are the assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.
A clean opinion, also known as an unqualified opinion, is an auditor's verdict that a company's financial statements are accurate and comply with Generally Accepted Accounting Principles (GAAP).
Final entries made at the end of an accounting period to close off the income and expense ledgers to the profit and loss account.
In accounting, a closing entry is one of the final entries made at year-end to close accounts and transfer the amounts to financial statements, ensuring all temporary accounts are reset for the next accounting period.
The assignment of an identification number to each account in the financial statements, enabling organized and efficient tracking and management of financial information.
Columnar accounts refer to accounts that are organized in multiple columns to present financial information more clearly and systematically. This structure is often used to present a trial balance, facilitating automatic adjustments into financial statements.
In the USA, a combined financial statement involves the aggregation of the financial statements of a related group of entities to present financial information as if the group was a single entity. Intercompany transactions are eliminated from combined financial statements.
An account used to record commissions paid by an organization to agents and others. This account is essential for tracking costs attributed to sales commissions within a company's financial statements.
An account used to record commissions received by an organization in a double-entry accounting system.
Common size analysis is a standard tool used to compare the financial statements of different companies by converting account groupings to a percentage of the whole, often sales revenues.
A company auditor examines the financial statements of a company to ensure accuracy and compliance with the Companies Act. Since 1989, appointment as a company auditor is restricted to registered auditors only.
