An account code is a unique number assigned to an account in the chart of accounts, facilitating quick identification and classification of financial transactions based on various features such as asset type, location, or department.
Account reconciliation is a critical accounting procedure used to ensure that balances in financial records correspond with the actual account balances, typically those presented in bank statements. It is essential for maintaining the accuracy and integrity of a company's financial data.
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 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.
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.
An accounting system is designed to record, categorize, and report the financial transactions and events of a business in compliance with its policies and procedures.
An essential ledger account in the process of share capital application and allotment, detailing the financial transactions related to the acquisition of shares in a company.
An Automated Teller Machine (ATM) is a computerized device that provides customers with access to financial transactions in a public space without the need for a branch teller.
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.
A bank transfer is a method of transferring funds from one bank account to another, either within the same financial institution or between different institutions, through electronic means.
A banker's cheque, also known as a bank draft, is a payment instrument issued by a bank on behalf of a payer, which provides a guarantee of the funds because the bank holds the amount before issuing the cheque.
A banker's payment involves a bank draft drawn in favor of another bank to settle business between the two banks.
Bed and Breakfasting refers to a tax strategy where a shareholder sells a holding and buys it back the next day to realize a loss for tax purposes. However, legislative changes have rendered this practice obsolete for shares due to stricter time requirements.
A bill of exchange is an unconditional written order directed from one person (the drawer) to another (the drawee), mandating the drawee to pay a specified sum of money either on demand or at a future date. This financial instrument is both transferable and negotiable, enabling enforceable monetary transactions.
A Book-Keeper is a person responsible for recording the financial transactions and maintaining the books of account for a business. This role is vital for the accurate and efficient tracking of all financial events in an organization.
A bookkeeper is a professional responsible for recording financial transactions and maintaining accurate financial records for an organization. Bookkeepers use accounting systems to track expenses, income, and other monetary movements, aiding in the financial management of a business.
Books of account refer to the ledgers, journals, and other accounting records in which a business records its transactions. These records form the backbone of a company's financial information, ensuring that their financial status can be understood at any time.
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.
Cash accounting is an accounting method where transactions are recorded only when cash is received or paid. This system differs significantly from accrual accounting, which records transactions when they are earned or incurred. Cash accounting provides a simplified approach to managing VAT liabilities for eligible businesses.
A cash dispenser, also known as an Automated Teller Machine (ATM), is a specialized machine that allows bank customers to perform basic financial transactions without needing a branch representative.
A cash sale refers to a transaction where the payment for the purchased goods or services is made immediately in cash, rather than via credit terms. Proper accounting entries for cash sales should be recorded in the cash book.
A cashier's check is a secure payment instrument issued by a bank, which provides a guarantee that the payee will receive the check amount upon demand. It is drawn from the bank's own funds and is widely accepted in financial transactions.
CHAPS (Clearing House Automated Payment System) is a real-time gross settlement payment system operating in the UK, allowing for the quick and secure transfer of high-value or time-critical payments directly between bank accounts.
The Clearing House Interbank Payments System (CHIPS) is a U.S. private-sector, real-time interbank payments system for the transfer of large value transactions.
Refers to the date when the payer's bank confirms that the funds for a transfer are available and the instructions in a cheque have been processed.
Closing encompasses the completion of a transaction involving real estate or the final steps in accounting at the end of a fiscal period.
COD or 'Collect on Delivery' is a financial transaction where payment for goods is collected at the time of delivery rather than at the time of purchase. This term is often used interchangeably with 'Cash on Delivery'.
A columnar journal is a specialized accounting book or ledger with pre-printed columns designed to systematically facilitate the recording and categorization of numerical data. Often used in bookkeeping, these journals streamline the process of capturing financial transactions for further processing.
In financial contexts, a correspondent refers to a financial organization that regularly performs services on behalf of another institution within markets that the latter finds inaccessible. This commonly involves a depository relationship to cover expenses and streamline transactions.
A current account serves as an active account in the banking system where you can deposit and withdraw money via various mediums. It's crucial for personal, business, and international financial management.
A debit memorandum is a notice sent by a bank or financial institution indicating a deduction or charge made to an account, often due to reasons such as insufficient funds or returned checks.
The cumulative desire to hold cash as opposed to financial assets.
Disintermediation refers to the removal of intermediaries from financial transactions. This process, driven by technology, deregulation, and globalization, reduces costs but may increase credit risk.
A dormant company is an entity that has had no significant accounting transactions during the accounting period in question and therefore is exempt from certain financial and auditing obligations.
Double-entry cost accounting involves maintaining cost accounting records using the principles of double-entry bookkeeping, which ensures that every financial transaction is recorded in at least two accounts, balancing debits and credits.
A comprehensive examination of the term 'Draw' as it pertains to financial transactions, legal documentation, and the preparation of drafts.
Understanding the role of the drawee in financial transactions, including bill of exchange, cheques, and bank drafts.
The Dual Aspect Principle is a fundamental concept in accounting that asserts every financial transaction has two aspects: one that results in a debit entry and another that results in a credit entry.
Each way commission refers to the fees a broker earns for handling both the purchase and the sale sides of a trade.
Electronic banking, also known as e-banking, is a method of banking in which customers conduct transactions through electronic means, typically via the internet. This system allows for a range of financial activities, such as transferring money, paying bills, checking account balances, and more, without the need to visit a physical bank branch.
In accounting, an endorsement refers to the act of signing the back of a negotiable instrument, such as a check, to transfer ownership or authorize payment.
A comprehensive explanation of endorsement, outlining its various forms, significance in financial transactions, legal implications, and usage in insurance policies.
Pertaining to public finance and financial transactions; relating to the public treasury.
In accounting and finance, 'float' refers to various concepts including delayed money processing, publicly held stock proportions, contingency fund allocation, and processes related to financial transactions and securities.
The General Journal, often regarded as the book of original entry, is a pivotal element in the accounting process. It is where all financial transactions are initially recorded before they are posted to the ledger accounts. The General Journal includes straightforward and complex entries and serves numerous accounting purposes.
The General Ledger (GL) is a key component of an organization's accounting system, serving as a comprehensive record of all financial transactions made over the life of an organization.
Hard dollars refer to actual payments made by customers or investors, in contrast to soft money, which may include tax-deductible amounts or funds that don't need to be paid in full. This term is also associated with hard money, which are loans provided with stricter terms.
A Holder in Due Course is a holder who has taken a negotiable instrument in good faith for value, without notice of any defect or claim to it. This legal concept is crucial in financial and property transactions to ensure the integrity and reliability of negotiable instruments.
An invoice is a detailed bill sent from a seller to a buyer, outlining the products or services provided, prices, payment terms, and due dates.
A journal entry is the act of recording a transaction in an accounting journal, such as the general journal. It ensures that financial transactions are accurately captured and balanced, reflecting the debits and credits involved.
In accounting, to journalize means to record financial transactions in a journal, such as the general journal, as a part of the accounting process.
A financial transaction where one party sells a piece of land to another party and then leases it back for a long-term period. This arrangement allows the seller to continue using the land while freeing up capital.
Lawful money refers to physical currency that a government has declared to be legally acceptable for financial transactions within its jurisdiction. This includes banknotes and coins that are officially recognized as a medium of exchange.
In accounting, a loss is the amount by which the expenses of a transaction or operation exceed the income produced.
The Medallion Stamp Program is a securities transfer process approved by the Securities Transfer Association. It enables participating financial institutions to guarantee signatures for the transfer of securities.
A mortgage assumption is a financial arrangement where a buyer takes over the seller's existing mortgage, continuing to make payments under the same terms.
A multifunctional card is a versatile plastic card issued by banks or building societies, designed to perform multiple financial transactions such as debit card, cash card, and cheque card functions, facilitating easy access to various banking services using a personal identification number (PIN).
Off the balance sheet (OBS) refers to financial transactions where the property involved does not appear on the company’s balance sheet. This technique is often used to keep debt-to-equity ratios lower and manage financial reporting more favorably.
Pay can refer to the compensation given to personnel for services performed or the act of exchanging money for goods or services.
Understanding the concept of 'Payable to Bearer' in the realm of bills of exchange and how it differs from 'Payable to Order'. This term is essential for those involved in financial transactions using negotiable instruments.
A payee is an individual or entity to whom a debt is payable or to whose order a bill, note, or check is made payable, thus playing a crucial role in financial transactions.
A Payment Date is the specific date on which a declared stock dividend, bond interest payment, or a bill payment is due.
A payment method refers to the means of payment employed by a customer when making a purchase or settling an invoice. Common payment methods include cash, check, money order, or credit card.
Personal accounts are used to record transactions with individuals or entities, such as debtors and creditors. These accounts are essential for managing relations and obligations with people and organizations.
A Petty Cash Book is a ledger used to record small or minor financial transactions that occur within a business, typically managed through an imprest system.
Proceeds refer to the amount of money or capital generated from a transaction or a series of transactions, typically calculated after applicable costs, fees, and commissions have been deducted.
The Purchases Account is used to record transactions involving the acquisition of goods either on credit or for cash. It plays a critical role in managing a company's inventory and financial records.
Remit refers to the process of paying for purchased goods or services by cash, check, or electronic payment. It encompasses various methods of transferring funds to settle debts or obligations.
Understanding remittance, its types and examples, frequently asked questions, related terms, references, and further readings.
A bookkeeping system that records only one aspect of each transaction, either a debit or a credit. Unlike double-entry bookkeeping, it does not balance. Single-entry bookkeeping is simpler and often used by small businesses.
A plastic card embedded with a microprocessor that stores and updates information for purposes such as performing financial transactions and storing personal medical records.
The first document to record a transaction, serving as proof of an event recorded by the company’s accounting system.
A Special Purpose Vehicle (SPV) is a separate legal entity created by a parent company to isolate financial risk. The SPV is often used for a single specific purpose, such as to facilitate complex financial transactions, isolation of assets, and credit enhancement in securitization.
Statutory Books, as mandated by the Companies Act, ensure proper accounting records, enabling directors to accurately oversee the financial positioning and transactions of a company.
A stop payment is the revocation of payment on a check after the check has been sent or delivered to the payee. So long as the check has not been cashed, the writer has up to six months to request a stop payment. The stop payment right does not apply to electronic funds transfers.
Telephone banking is a form of home banking that enables customers to conduct various banking transactions over the phone, providing convenience and accessibility without needing to visit a bank branch.
The day on which a security or commodity future trade actually takes place. The settlement date usually follows the trade date by three business days but can vary depending on the transaction and method of delivery used.
The date on which a transaction in the money market took place.
Transfer tax is a tax paid upon the passing of title to property or to a valuable interest. This tax can apply to real estate transactions and certain financial transactions.
In banking, uncollected funds refer to the portion of a bank deposit made up of checks that have not yet been collected by the depository bank. This means that payment has not yet been acknowledged by the bank on which a check was drawn. Typically, a bank will not allow a depositor to draw on uncollected funds.
A voucher serves as a receipt for money or any document that supports an entry in a book of account, acting as evidence for financial transactions.
A withdrawal refers to the act of removing or taking out money from a place where it is kept, such as a bank account or a mutual fund.
