Debtors' Ledger Control Account (Sales Ledger Control Account)
A nominal ledger control account recording the total of entries made to individual debtors' ledgers from the sales day book and the cash receipts journal, used to ensure internal accounting controls.
Debugging
Debugging is the process of identifying, analyzing, and removing bugs or errors from computer programs. It is a critical aspect of software development, ensuring that programs run smoothly and efficiently.
Decedent
A decedent is a term used in law and in financial contexts to refer to a person who has died. It is most commonly used in the context of estates, taxes, and legal proceedings.
Decentralization
The delegation of decision-making responsibilities to the subunits of an organization. The advantages claimed for decentralization are that local managers are more aware of immediate problems, are better motivated, and have greater control over local circumstances. The disadvantages are the possibility of wasteful competition between subunits, duplication of services, and the loss of central control and access to information.
Deceptive Advertising
Deceptive advertising refers to marketing practices that make false claims or misleading statements, creating a false impression about products or services.
Deceptive Packaging
Deceptive packaging refers to packaging that creates a misleading impression about the quantity or quality of the product it contains.
Decision Making in Accounting
The act of deciding between alternative courses of action. In the running of a business, accounting information and techniques are used to facilitate decision making, employing models like discounted cash flow, critical-path analysis, marginal costing, and breakeven analysis.
Decision Model
A decision model is a mathematical simulation of the variables and elements inherent in business decisions, aimed at achieving the objectives of an organization by analyzing the relationships and constraints among those variables.
Decision Package
A Decision Package is a crucial procedure in Zero-Base Budgeting (ZBB) where a manager details recommended and alternative ways to undertake a proposed project, specifying the associated costs and time requirements.
Decision Support System (DSS)
A Decision Support System (DSS) is a computerized information system used to support decision-making activities in an organization, typically integrating various data sources and analytical models to assist in decision-making processes.
Decision Support System (DSS)
A computer-based program that aids managers in making decisions, particularly in situations where problem structures are not well-defined.
Decision Support System (DSS)
A Decision Support System (DSS) is an information system that supports business or organizational decision-making activities. DSSs serve the management, operations, and planning levels of an organization and help in making decisions, which may be rapidly changing and not easily specified in advance.
Decision Table
A decision table is a tool used to aid decision making by listing problems that require actions, alongside the estimated probabilities of outcomes. When probabilities are hard to estimate, criterions like maximax and maximin are used to choose the most favorable action.
Decision Tree
A decision tree is a diagram that illustrates all possible consequences of different decisions at various stages of decision-making, used primarily in decision analysis and machine learning to visualize decision paths.
Decision Trees
A Decision Tree is a graphical representation used for making decisions and mapping possible outcomes based on different choices. The tree structure allows for evaluating the impact of decisions and estimating their probabilities and expected values.
Declaration
A comprehensive term in law which can refer to formal pleadings, legal documents related to condominium creation, and statements made by an insured for insurance purposes.
Declaration of Dividend
A statement in which the directors of a company announce that a dividend of a certain amount is recommended to be paid to the shareholders, and the liability is recognized when declared.
Declaration of Estimated Tax
A requirement for taxpayers who do not have adequate tax withheld regularly, often applicable to self-employed individuals. It ensures that taxpayers can manage their tax liability by paying estimated taxes quarterly.
Declaration of Trust
A Declaration of Trust is a written statement by a trustee acknowledging that the property is held for the benefit of another party.
Declaratory Judgment
A declaratory judgment is a legal determination made by a court to establish the rights of the parties or provide a court's opinion on a question of law without requiring any action to be taken.
Declare
In various contexts, 'declare' means to announce formally or officially. It has distinct applications in finance, importation, and taxation.
Declining Balance Method
The declining balance method is a commonly used depreciation technique in accounting where an asset loses value by a fixed percentage each year, reflecting the reality that assets tend to lose more value early in their useful lives.
Declining-Balance Method
A method of accelerated depreciation where a percentage rate of depreciation is applied to the undepreciated balance, rather than the original cost. It is commonly used to depreciate assets that lose value quickly early in their useful lives.
Decommissioning Costs
Decommissioning costs represent the expenditures associated with ending an operation or activity, which might include dismantling infrastructure such as an oil rig and restoring the affected environment.
Decreasing Costs
An economic phenomenon where unit costs of production decline as the scale of operation or output volume increases, often due to factors like economies of scale and increased efficiency in production processes.
Decreasing Returns to Scale
Decreasing returns to scale is a characteristic of the production of a good that requires proportionally higher amounts of inputs to produce each unit of output as the amount of output increases.
Decree
A decree is an authoritative order or official legal proclamation issued by a person or body with administrative or judicial jurisdiction. It primarily serves as a final court order or decision.
Decryption
Decryption is the process of converting encoded or encrypted information into a readable and understandable format. It is the reverse of encryption, which is the process of converting readable data into an unreadable format to protect its integrity and confidentiality.
Dedicated Line
A dedicated line is a communication link used exclusively for a specific purpose, such as connecting a fax machine or modem, or providing a permanent connection to the Internet.
Dedication of Land (Conveyance)
Dedication of land, also known as conveyance, is the practice of a private landowner granting a piece of land to the public, typically represented by a governmental entity, which accepts ownership. This is often done to promote goodwill or fulfill legal requirements.
Deductible
In a tax return, applies to an expense that may be subtracted from income, and in insurance, signifies the initial amount the insured must pay before insurance reimbursement is made for a claim.
Deduction
A deduction is an amount allowed to taxpayers under the Internal Revenue Code as an offset against gross income or adjusted gross income.
Deductions at Source
Deductions at Source, also known as withholding tax, involve a method of tax collection where a portion of income is deducted at the time of payment by the payer to ensure timely and efficient tax collection.
Deductions from Gross Income (DFROM)
Deductions from Gross Income refer to the allowable reductions from an individual's gross income to arrive at their taxable income, applicable within the framework of personal income tax.
Deductive Reasoning
Deductive reasoning is a logical method of coming to a conclusion by deducing from established facts what actions to take or what assertions to accept.
Deed
A legal document in writing that conveys an interest in land (real estate) from the grantor to the grantee, primarily functioning to transfer the title of the land.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is a legal process where a borrower voluntarily transfers the ownership of property to a lender to satisfy a loan that is in default and avoid foreclosure proceedings.
Deed of Arrangement
A written agreement between a debtor and their creditors, registered with the Insolvency Service, which outlines the repayment of debts or restructuring of debtor's affairs.
Deed of Partnership
A Deed of Partnership is a formal agreement drawn up in the form of a deed which outlines the respective capital contributions, profit-sharing percentages, and other significant details among partners in a partnership business.
Deed of Trust
A legal document transferring the title of property from its owner to a trustee, who holds it as security for a performance of obligations by the owner or a third party.
Deed of Variation
A deed by which the beneficiary under a will or an intestacy redirects the gift to some other person (who may or may not be a beneficiary of the estate). Provided this is done within two years of the deceased's death and statutory requirements are complied with, the redirection is not treated as a gift for inheritance tax or capital gains tax purposes.
Deed Restriction
A deed restriction is a clause in a deed that limits the use or the disposition of real estate property. These restrictions can dictate various uses and modifications of land or property ownership transfers and are legally binding.
Deemed Cost
Deemed cost represents a substituted value for the net book value of an asset when an entity transitions to a new accounting regime. This approach allows entities to treat assets as if initially recognized at this value on the specified date.
Deep Discount Bond
A deep discount bond is a debt security that sells for a substantial amount below its face value, often at a discount of more than 25%. Unlike original issue discount bonds, these bonds were initially issued at their par value but have since declined in market value.
Deep Market
A marketplace characterized by a high volume of transactions for a security, commodity, or currency, featuring narrow bid-offer spreads and the ability to handle sizable transactions without significant price movement.
Deep Pocket
A term used to describe a person or entity with a substantial amount of financial resources or assets, making them a potential target for litigation due to their perceived ability to pay large settlements or awards.
Deep Pockets
Seemingly inexhaustible financial resources, permitting one to remain in business after a prolonged period of negative cash flow. Also, often in litigation, the party having money to pay the claim.
Deeply Discounted Security
A loan stock or government security issued on terms that make the redemption value significantly higher than the issue price, often with more than 15% discrepancy or ½% per completed year.
Defalcation
Defalcation is a financial crime that involves the embezzlement of property or funds by an individual entrusted with its custody or control.
Default
Default in the context of accounting refers to the failure to fulfill a contractual or other legal obligation, including settling debts, defending legal proceedings, or submitting and paying Value Added Tax (VAT) on time.
Default Judgment
A judicial ruling in favor of the plaintiff when the defendant fails to respond to the legal action or fails to appear in court.
Defeasance
Irrevocably committing specific assets to meet long-term obligations, providing a method to eliminate liabilities from a company's balance sheet that cannot be repaid early.
Defective
Defective refers to something that is incomplete or faulty. In legal and consumer contexts, it signifies that an item is not reasonably safe for a use that can be reasonably anticipated.
Defective Accounts
Defective Accounts refer to financial records that do not comply with legislative or accounting standards, necessitating revision as per the Companies Act.
Defective Title
A defective title refers to an ownership right or claim on property, particularly real estate or negotiable instruments, that is legally flawed or encumbered in a manner that diminishes its marketability or validity.
Defendant
In legal contexts, a defendant is a party against whom a lawsuit has been filed in a civil proceeding or an individual charged with a crime in a criminal proceeding.
Defended Takeover Bid
A defended takeover bid refers to an acquisition attempt where the directors of the target company actively oppose the bid, employing various defenses to prevent the takeover.
Defensive Interval Ratio
A ratio that demonstrates the ability of a business to satisfy its current debts by calculating the time for which it can operate on current liquid assets, without needing revenue from the next period's sales.
Defensive Securities
Defensive securities are stocks and bonds that offer greater stability and relatively safe returns, especially during market downturns.
Defensive Spending
Defensive spending refers to strategic expenditures by a company aimed at maintaining its market position and countering competitive threats. It is closely related to the concept of competitive parity.
Deferral of Taxes
Deferral of taxes allows an individual or business to postpone the payment of taxes from the current year to a later year, providing financial flexibility and potentially reducing the overall tax burden.
Deferred Account
A deferred account is a financial account that postpones tax obligations until a later date, allowing the account holder to potentially reduce their current tax burden.
Deferred Annuity
A deferred annuity is an annuity in which payments do not start at once but either at a specified later date or when the policyholder reaches a specified age.
Deferred Asset
A deferred asset, also known as a deferred debit, represents an expenditure that has been made and recognized but not yet expensed according to the matching principle of accounting.
Deferred Benefits and Payments
Deferred benefits and payments refer to financial arrangements where the receipt of money, benefits, or income is delayed into a future time period, often as part of retirement or other long-term financial planning strategies.
Deferred Billing
Deferred billing refers to the delayed invoicing of a credit order at the request of the seller. This practice allows buyers to receive products or services before the actual bill is due.
Deferred Charge
A deferred charge is an intangible expenditure that is carried forward as an asset and amortized over the life of the benefit it represents. An example includes fees for arranging a 30-year mortgage on income-producing real estate.
Deferred Compensation
Deferred compensation is a tax-advantaged plan under which an employee postpones a portion of their salary in exchange for the employer's promise to pay this salary in the future, usually to achieve tax benefits and retirement planning.
Deferred Compensation Plan
A Deferred Compensation Plan is a financial arrangement in which a portion of an executive's current earnings is deferred until retirement or a specified future date.
Deferred Contribution Plan
A deferred contribution plan is an arrangement where unused deductions or credit carryovers to a profit-sharing plan can be added to an employer's future contributions on a tax-deductible basis. This occurs when the employer's contribution to the profit-sharing plan is below the annual 15% of employee compensation allowed by the Federal Tax Code.
Deferred Credit (Deferred Income; Deferred Liability)
Deferred Credit represents income received or recorded before it is earned, and it adheres to the accruals concept by being carried forward on the balance sheet until it is matched with the period in which it is earned.
Deferred Debit (Deferred Asset; Deferred Expense)
An item of expenditure incurred in an accounting period but, under the accruals concept, not matched with the income it will generate. Instead of being treated as an operating cost for that period, it is treated as an asset with the intention of treating it as an operating cost to be charged against the income it will generate in a future period.
Deferred Gain
Deferred gain refers to any gain from a transaction that is not subject to tax in the year it is realized but is instead postponed until a future period.
Deferred Group Annuity
A deferred group annuity is a retirement income product where income payments start at a future date and continue for life, funded through annual contributions that purchase single-premium deferred annuities.
Deferred Income
Deferred income, also known as unearned revenue or deferred revenue, refers to payments received by a business for goods or services that have yet to be delivered or completed.
Deferred Interest Bond
A deferred interest bond is a type of bond that does not pay interest periodically like traditional bonds. Instead, it accrues interest, which is paid in a lump sum at maturity. An example of a deferred interest bond is a zero coupon bond.
Deferred Liability
Deferred liability refers to financial obligations that a company incurs but will not pay until a future period. It represents money that has been received for goods or services not yet delivered, and thus is classified as a liability until the delivery is made.
Deferred Maintenance
Deferred maintenance in appraisal refers to the postponement of important repairs or upkeep measures which results in physical depreciation. Common examples include broken window glass, missing roof shingles, peeling paint, and broken gutters.
Deferred Ordinary Share
A type of ordinary share where dividends are deferred and paid only after other types of ordinary shares have been compensated, often favoring founder members or large profit entitlements.
Deferred Payments
Deferred payments refer to payments that are extended over a period of time or put off to a future date. This arrangement allows the payer to delay full payment until an agreed-upon future date.
Deferred Retirement
Deferred retirement refers to the act of postponing retirement beyond the normal retirement age, which typically does not result in an increase in monthly retirement income when the employee actually retires.
Deferred Taxation
Deferred taxation refers to the sum set aside for tax in the accounts of an organization that will become payable in a period other than the one under review. It arises due to timing differences between tax rules and accounting conventions.
Deferred Wage Increase
A deferred wage increase involves delaying the implementation of a wage increase until a later date. In collective bargaining, it serves as a concessionary labor tactic for winning a wage increase from management.
Deferred-Payment Annuity
A type of annuity contract where payments to the annuitant are postponed until a specified number of periods have elapsed, or until the annuitant reaches a certain age. Also known as a deferred annuity.
Deficiency (Tax)
A deficiency in tax occurs when a taxpayer's correct tax liability exceeds the taxes previously paid for that taxable year. It can be identified during an audit of the taxpayer's return and may lead to penalties.
Deficiency Judgment
A deficiency judgment is a court order stating that a borrower still owes money on a loan when the security or collateral does not fully satisfy the defaulted debt.
Deficiency Letter
A deficiency letter is a written notice from the Securities and Exchange Commission (SEC) to a prospective issuer of securities, indicating that the preliminary prospectus needs revision or expansion. Addressing deficiency letters promptly is crucial to avoid prolonging the registration period.
Deficit
A deficit occurs when expenditures surpass revenues, creating a shortfall that must be managed through measures such as borrowing or cost-cutting.
Deficit Financing
Deficit financing refers to the practice by a government agency of borrowing funds to cover a revenue shortfall. While this method can stimulate the economy in the short term, prolonged deficit financing may drive up interest rates and eventually slow economic growth.
Deficit Net Worth
Deficit Net Worth, also known as negative net worth, occurs when a company's liabilities exceed its assets and capital stock, often due to operating losses.
Deficit Spending
Deficit spending refers to the situation where a government's expenditures exceed its revenues, causing a shortfall that must be financed through borrowing. This tactic is often employed for economic stimulus during periods of low economic activity.
Defined-Benefit Pension Plan
A defined-benefit pension plan promises to pay a specified amount to each person who retires after a set number of years of service. These plans pay no taxes on their investment income.
Defined-Benefit Pension Scheme
A defined-benefit (DB) pension scheme is an occupational pension plan where the retirement benefits are predetermined by a specific formula, typically incorporating years of service and salary levels. The pension is funded accordingly, and accounting for pension costs presents specific challenges governed by Section 28 of the Financial Reporting Standard in the UK and IAS 19.
Defined-Contribution (DC) Pension Scheme
A Defined-Contribution (DC) Pension Scheme is a retirement plan where employer, employee, or both make contributions on a regular basis, and the final benefits depend on the investment's performance.
Defined-Contribution Pension Plan
A type of pension plan where the contributions are fixed, but the benefits vary based on investment returns. Employees and sometimes employers contribute to a tax-deferred account with flexible investment options.
Defined-Contribution Pension Scheme
A defined-contribution pension scheme is a type of retirement plan wherein the benefits received depend on the contributions made by the member, the investment performance of those contributions, and the annuity available at retirement. Unlike defined-benefit plans, the pension amount is not predetermined.
Deflation
Deflation refers to a general decrease in prices across a range of goods and services. It is often associated with reduced levels of output, employment, and trade. Unlike controlled disinflation, deflation can have severe negative impacts on the economy.
Deflationary Gap
A deflationary gap is an economic term that describes a situation where the Gross Domestic Product (GDP) is below its full-employment level, leading to unemployed resources and potentially falling prices (deflation).

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.