The Accounting Council is a body established to provide advice on accounting and financial reporting policies, aiding the Financial Reporting Council (FRC) in the development of Financial Reporting Standards.
An accounting cushion refers to the practice of recording larger provisions for expenses in one fiscal year to minimize expenses in future years. This practice results in understated earnings for the current period but overstates earnings in subsequent periods.
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 Directive (2014/95/EU) aims to simplify the disclosure requirements for small companies, notably through the introduction of abridged accounts, and includes special rules for micro-entities. The directive was incorporated into UK law in 2015 and applies to financial periods beginning on or after 1 January 2016.
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.
The concept of an accounting entity is fundamental in financial accounting and establishes the financial boundaries for businesses, organizations, or any other entities.
The Accounting Equation forms the foundation of the balance sheet and illustrates how assets, liabilities, and equity are interrelated, ensuring that the balance sheet remains balanced.
An accounting error is an inaccurate measurement or representation of an accounting-related item not caused by intentional fraud. Errors can stem from negligence or the misapplication of Generally Accepted Accounting Principles (GAAP). These errors may manifest as dollar discrepancies or compliance issues in employing accounting policies and procedures.
Principles of morally right conduct in the accounting profession, emphasizing the need for accountants to act in the public interest while operating in a commercial environment.
An accounting event is a transaction or change, either internal or external, that is recognized by the accounting recording system. It involves recording entries as debits and credits.
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.
A comprehensive document detailing a business's accounting policies and procedures, often including account codes and a chart of accounts. Key aspects include methods for treating depreciation and other asset-related processes.
An accounting method refers to the rules a company follows in reporting revenues and expenses, which are crucial for computing income and determining taxable income.
An accounting package is a type of business software designed to help businesses manage their accounting processes including invoicing, payroll, accounts payable, accounts receivable, and general ledger functions.
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 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.
Accounting principles are the foundation rules and guidelines that companies must follow when reporting financial data, ensuring consistency, transparency, and comparability of financial statements.
The Accounting Principles Board (APB) was a board of the American Institute of Certified Public Accountants (AICPA) that issued a series of accountant's opinions constituting much of what is known as Generally Accepted Accounting Principles (GAAP) from 1959 to 1973.
The Accounting Principles Board (APB) was the authoritative body that preceded the Financial Accounting Standards Board (FASB) in the USA. Established in 1959 by the American Institute of Certified Public Accountants (AICPA), it issued 31 Opinions that significantly contributed to the theory and practice of accounting and continue to influence Generally Accepted Accounting Principles (GAAP).
The Accounting Principles Board (APB) was the authoritative body of the American Institute of Certified Public Accountants (AICPA) charged with the establishment of accounting principles and the promotion of consistency and improvement in the field of financial accounting and reporting.
An accounting procedure is the specific accounting method that a company uses to handle routine accounting matters. These procedures may be written in a manual to assist new employees in learning the system.
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.
The Accounting Rate of Return (ARR) is an accounting metric that measures the profitability of an organization by comparing the profit before interest and taxation to the capital employed over a specified period. Commonly used variants include profit after interest and taxation and average capital employed for the period.
The Accounting Rate of Return (ARR) is a financial ratio used to measure the expected profitability of an investment, defined as the ratio of average annual accounting profit to the initial investment cost.
An in-depth look at accounting ratios, which are vital tools in financial statement analysis to assess a company's performance and position.
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), also known as the reporting date, signifies the end of an accounting reference period, such as a financial year, for a company. It is essential for preparing financial statements and other required reports.
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.
Formerly known as the Financial Reporting Release, Accounting Series Releases (ASRs) were publications by the U.S. Securities and Exchange Commission (SEC) that discussed policies and procedures related to financial reporting and accounting standards in the USA.
Programs used to maintain books of account on computers. The software can be used to record transactions, maintain account balances, and prepare financial statements and reports. Many different accounting software packages exist.
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.
The Accounting Standards Board (ASB) was the recognised body for setting accounting standards in the UK from its establishment in 1990 until its functions were subsumed under the Financial Reporting Council (FRC) in 2012.
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.
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 accounting technician is a professional who handles financial record keeping and the preparation of financial reports. Often referred to as a book-keeper, they are crucial to the financial health of an organization.
An EU directive (2003) requiring companies to publish comprehensive information on their financial and non-financial performance, including environmental and employee matters.
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.
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.
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.
The Accounts Receivable Collection Period measures the average amount of time it takes for a company to collect payments from its credit customers. This is a crucial metric for analyzing a company's efficiency in managing its receivables and cash flow.
Accounts Receivable Financing is a short-term financing arrangement where a company uses its accounts receivable as collateral to obtain working capital advances.
An Accounts Receivable Ledger is a detailed listing of transactions for each customer, showing how much each customer owes. Each transaction that generates a receivable is recorded under that customer, making it possible to determine individual balances. The total balance in this ledger should match the corresponding figure in the General Ledger.
The Accounts Receivable Turnover ratio is a financial metric used to measure how effectively a company is managing and collecting its receivables.
The Accredited in Business Valuation (ABV) is a designation awarded by the American Institute of Certified Public Accountants (AICPA) to Certified Public Accountants (CPAs) who meet specific qualifications. The holders of this designation are known for their expertise in business valuation and are often referred to as CPA/ABV.
Under Rule 501 of Securities and Exchange Commission Regulation D, accredited investors are wealthy individuals or entities who do not count towards the 35-person limit in private limited partnerships, allowing substantial capital raising.
A senior professional designation offered by the American Society of Appraisers. The ASA designation is awarded upon meeting rigorous requirements that include extensive experience, education, and approved appraisal reports.
Accretion is an increase in the value of an asset as a result of a physical change, such as a growing crop, rather than due to a change in its market price. It describes the natural growth or incremental increase in the value of an asset.
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.
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.
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.
The accruals concept is a fundamental accounting principle that requires revenue and costs to be recognized as they are earned or incurred, rather than when money is received or paid. This concept ensures that income and expenses are matched with one another in the correct accounting period.
In accounting, to accrue means to record an expense or revenue in the company’s financial statements even if no cash transactions have taken place. Accrued items include revenues earned or expenses incurred but not yet received or paid.
Accrued benefits refer to the benefits that are due under a defined-benefit pension scheme in relation to the service rendered by an employee up to a specific date. These may be calculated based on current earnings or protected final earnings, and are governed by various regulatory standards depending on the jurisdiction.
An actuarial method used in accounting for pension costs that calculates the actuarial value of liabilities based on current and deferred pensioners' benefits as well as the benefits of current employees for services rendered up to a given date.
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.
Accrued depreciation refers to the total amount of depreciation that has been recorded for an asset up to a specific point in time, reflecting the reduction in value due to wear and tear, obsolescence, or other factors.
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 income, also known as accrued revenue, is income that has been earned during an accounting period but has not yet been received by the end of the period. It adheres to the accruals concept and is vital for accurate financial reporting.
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.
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 Accumulated Benefit Obligation (ABO) is a company's pension obligation that accounts for the current value of benefits earned by participants up to a given date, calculated using current salaries and service years, without considering future salary increases. This financial metric is critical in assessing the financial health and obligations of a company's defined benefit pension plan.
Accumulated depletion is a contra-asset account associated with depletable natural resources like mines. It reflects the total usage or reduction in value of these resources over time.
Accumulated depreciation represents the total depreciation expense that has been recorded against a fixed asset since its acquisition or establishment on the balance sheet.
An accumulated dividend is a dividend that has not been paid to a holder of cumulative preference shares and is carried forward to the next accounting period. It represents a liability to the company and must be disclosed under the Companies Act if in arrears.
A 15% penalty surcharge on earnings retained in a corporation to avoid the higher personal income taxes to which they would be subject if paid out as dividends to the owners.
The accumulated fund, or capital fund, is a reserve held by non-profit organizations like clubs or societies, reflecting a surplus of income over expenditure, or a deficit when expenditures exceed income. Its value can be determined by valuing the net assets of the organization.
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.
Accumulated profits, also known as accumulated earnings, represent the amount of net income that a company has retained over time, after paying out dividends, taxes, and setting aside reserves. This amount is reflected in the appropriation of profits account and can be carried forward to the next year’s accounts.
Accumulating compensated absences refer to employee benefits that an organization must account for, representing the amount accrued but not yet taken by employees.
Accumulating shares are additional ordinary shares issued to existing shareholders in lieu of a dividend. They serve as an alternative to annual income by fostering capital growth, thereby avoiding income tax but not capital gains tax.
An accumulation and maintenance trust is a type of discretionary trust designed to allow for the accumulation of income until certain beneficiaries reach a specified age, at which point the income is applied for their maintenance, education, or benefit.
The Acid Test, in financial terms, refers to a stringent measure of a company's short-term liquidity, which examines whether a business can cover its immediate liabilities without quickly selling its inventory.
The acid-test ratio, also known as the quick ratio, is a liquidity metric that assesses a company's ability to cover its short-term liabilities with its most liquid assets.
An acknowledgment in law is a declaration by the person who has signed a document that their signature is a voluntary act made before a duly authorized person, such as a notary public.
ACMA stands for Associate of the Chartered Institute of Management Accountants, a designation demonstrating proficiency in management accounting and strategic governance.
Acquired Goodwill refers to the goodwill purchased when an entity is acquired, distinguishing it from internally generated goodwill. It arises when the purchase cost exceeds the fair values of the identifiable assets and liabilities.
An acquisition occurs when one company takes over controlling interest in another company. This strategy is often employed to achieve specific business objectives such as expanding market share, gaining new technologies, or reducing competition.
An accounting process that involves allocating the purchase consideration's fair value between the underlying tangible and intangible net assets of a company being acquired.
The total amount required to purchase a property, including the price and all associated fees such as closing costs, attorney's fees, loan fees, appraisal costs, title insurance, and discount points.
Acquisition fraud involves deceptive practices during the buying or merging of companies, usually intended to influence valuation or conceal liabilities.
An acre is a unit of land measurement used primarily in the United States and Imperial customary systems, primarily to describe large plots of land.
Acreage refers to land measured in acres. It is commonly used in real estate and agriculture to denote property size.
An acronym is a word or name that is formed by joining the first letters (or the first few letters) of a series of words. For example, RAM is the acronym for Random-Access Memory.
Encompassing everything in a certain class or group; movement in the stock market that affects almost all stocks in the same direction.
ACSOI, a non-standard accounting metric in the USA, treats marketing and customer acquisition costs as capital expenditures rather than operating expenses, which can inflate a company's net profit in the current accounting period.
ACT stands for both Association of Corporate Treasurers and Advance Corporation Tax in the realm of accounting, each holding significant importance in different contexts.
The term 'Act of Bankruptcy' refers to actions or behavior indicating that a person or entity might be judged as bankrupt. Such behavior often includes transferring property titles to others with the intent to delay or defraud creditors and admitting bankruptcy.
An 'Act of God' refers to violent and catastrophic events caused by natural forces which could not have been prevented or avoided by human foresight or prudence. In legal terms, such events can excuse the performance of a contractual duty if that performance is rendered impossible.
The situation in which a number of persons act collectively in the affairs of an undertaking, whether on the basis of a formal agreement or an informal understanding.
The Active Corps of Executives (ACE) is a program designed to assist small businesses by providing free and confidential mentoring, as well as business-development resources through experienced business professionals.
Active Desktop is a feature introduced by Microsoft that allows users to place 'active content' from the Internet directly on their desktop. This enables constant updates of web information without the need to start a browser.
In taxation, active income refers to earnings derived from active involvement in work and trade, including salaries, wages, and commissions. It is distinct from portfolio and passive income, which come from investments and activities in which the taxpayer does not materially participate.
