A reversing entry is a journal entry made to nullify a previous journal entry, thereby preventing errors caused by the previous entry.
The sales ledger, also known as the debtors' ledger, is an accounting record that tracks the sales transactions and amounts owed by customers.
Sales Returns and Allowances is an account used to accumulate price reductions given to customers due to goods being returned or merchandise being defective and not suited to customers' needs.
A secondary auditor is an auditor assigned to audit the financial statements of a subsidiary company, who is not the same auditor as the one auditing the parent company's financials.
A secret reserve or hidden reserve is an account or fund that is not disclosed to stakeholders, often used by companies to smooth earnings over time.
Segment reporting is the presentation of financial information in an entity's annual report for different operational segments that meet specific criteria, ensuring transparency and insight into diverse business activities.
The Statement of Financial Accounting Concepts (SFAC) is a set of guidelines that provides a framework for the creation, presentation, and interpretation of financial reports prepared by the Financial Accounting Standards Board (FASB).
A standard auditors' report in the USA that conforms to the short-form reporting requirements of the Securities and Exchange Commission and the American Institute of Certified Public Accountants. The report is generally divided into two paragraphs: one outlining what the auditor has done and the other detailing the findings.
A series of statements issued by the Auditing Practices Board (APB) detailing basic principles and essential procedures in auditing, applicable to audits of financial statements for periods commencing before 15 December 2004.
A Statement of Change in Financial Position is a financial report that provides detailed information about a company's sources and applications of funds over a specific period.
A Statement of Changes in Financial Position details the sources and uses of an entity's financial resources during a specific period. It is commonly referred to as a Cash-Flow Statement.
The SCFP is a financial statement that provides a detailed picture of a company's financial health over a specific period, highlighting the changes affecting working capital and non-working capital due to significant noncurrent transactions.
A Statement of Income, also known as a Profit and Loss Statement, is a financial document that summarizes the revenues, costs, and expenses incurred during a specific period, often a fiscal quarter or year.
A detailed summary that outlines the changes in equity for a company over a financial period, reflecting the sources of funding and how funds have been utilized.
The Statement of Partners' Capital, typically presented on the balance sheet, indicates the net worth of each partner's interest in a business partnership.
A significant document issued by the Accounting Standards Board (ASB) intended to establish a conceptual framework for UK accounting standards, comprising seven key chapters and serving as the cornerstone for the Financial Reporting Standard Applicable in the UK and Republic of Ireland.
Statements of Standard Accounting Practice (SSAPs) are formal standards for financial reporting and accounting, issued by recognized authorities to ensure consistency, transparency, and adherence to best practices across organizations.
Statutory accounts are mandatory financial statements that companies must prepare and file annually according to the legal requirements set by governing bodies, such as the Companies Act.
A statutory audit is an examination of a company’s financial statements and records, as mandated by regulatory bodies to ensure fairness and accuracy.
Stockholders' equity represents the ownership interest of shareholders in a corporation, calculated as the difference between total assets and total liabilities.
The straight-line method of depreciation is a calculation method whereby an equal amount of an asset's cost is allocated as an expense for each year of the asset's useful life. This method is commonly used for accounting and tax purposes.
A subsequent event is a material happening that occurs after the date of the financial statements but before the audit report is issued. Footnote disclosure is required to inform financial statement users properly. Typically, such events have a significant impact on financial position or earning capacity.
Audit tests designed to check the completeness, ownership, existence, valuation, and disclosure of the information contained in the accounting records and financial statements of an organization being audited.
A preliminary sum that represents the total of a set of numbers before any additional amounts, such as taxes or discounts, are included.
Sundry expenses refer to small, miscellaneous costs that are not easily classified under a specific heading in the accounting records.
An approach to auditing focused on evaluating an organization's internal control system to determine the quality of its accounting system, thereby assessing the required level of substantive testing for financial statements.
A visual representation used in accounting to depict individual ledger accounts, reflecting debits and credits in a format resembling the letter 'T'.
A visual representation used in accounting to represent individual accounts where debits and credits are recorded. Resembling the capital letter 'T', it simplifies the tracing of transactions and helps ensure accurate bookkeeping.
Teeming and lading, often seen as just 'teeming and lading,' is an accounting fraud method where receipts or payments are delayed in recording to cover up cash shortages caused by theft or employee fraud.
Timing differences arise when there are differences between the recognition of income and expenses for tax purposes and their recognition in financial statements. These discrepancies are temporary and typically reverse over subsequent periods.
Trade debtors, also known as trade receivables, represent amounts owed to a business by its customers for goods or services delivered or used but not yet paid for. It is a key component in the working capital of a business.
A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. This process helps ensure the accuracy of the company’s financial records and is a critical step in the accounting cycle.
An essential audit concept, primarily used in the UK, requiring auditors to ensure that the published accounts of companies present a 'true and fair view' of the organization's financial position, even if it means departing from legal requirements.
The Trueblood Report, prepared by a committee chaired by Robert M. Trueblood and published by the American Institute of Certified Public Accountants (AICPA) in 1971, aims to define the fundamental objectives of financial statements. The report was instrumental in shaping the Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Concepts No. 1.
Unappropriated retained earnings refer to the portion of a company's retained earnings that have not been earmarked for any specific purpose and can be used for general business activities. This is akin to regular retained earnings unless a portion has been set aside for particular uses.
Undistributed profits, also known as retained earnings or net income, refer to the portion of a company's earnings that is not distributed to shareholders as dividends but is retained by the company for reinvestment in its operations, debt repayment, or other purposes.
Undivided profit refers to the portion of a bank's profits that have neither been paid out as dividends nor transferred to the bank's surplus account, as shown on the balance sheet.
An unqualified opinion is an independent auditor's opinion that a company's financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles (GAAP). It is also referred to as a clean opinion.
Unrealized profit/loss refers to the profit or loss that exists on paper due to holding assets, rather than actually selling or otherwise disposing them to capture the gain or loss in cash.
The unrecovered cost represents the unexpired book value of an asset, typically calculated as the original cost less accumulated depreciation.
A value-added statement outlines the wealth that a company has created for its stakeholders and how that wealth is distributed among employees, shareholders, governments, and others.
Vertical analysis is a financial analysis method wherein each line item in a financial statement is listed as a percentage of a base item.
A write-down is a reduction in the book value of an asset on a company's financial statements, typically due to a decline in the asset's market value. This accounting procedure adjusts the carrying value of an asset to reflect its current estimated recoverable amount.
Written-Down Value (WDV) refers to the depreciated value of an asset after accounting for depreciation or amortization up to a specific date. It represents the current book value of an asset in the financial statements.
A year-end dividend is a distribution of profits made by a corporation to its shareholders, declared at or near the end of the business year and typically paid from retained earnings.
