An accommodation bill is a type of bill of exchange signed by an individual who acts as a guarantor, ensuring the bill’s payment in case the acceptor fails to pay at maturity. These bills are often called windbills or windmills.
Accumulated depreciation represents the total depreciation expense that has been recorded against a fixed asset since its acquisition or establishment on the balance sheet.
ACT stands for both Association of Corporate Treasurers and Advance Corporation Tax in the realm of accounting, each holding significant importance in different contexts.
Antedating refers to assigning a date to a document that is earlier than the actual date it was created. This practice can have legal and procedural implications and is often compared to post-dating.
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.
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.
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.
A 'bill' refers to both a bill of exchange and a sales invoice. In accounting, it represents a demand for payment for goods or services provided.
Carriage Inwards, also known as Freight Inwards, refers to the delivery costs incurred by a business when purchasing goods. If these costs are associated with fixed assets, they can be capitalized and included in the cost of the asset on the balance sheet.
Carried forward (c/f) is an accounting practice of bringing the balance of an account from one accounting period over to the next.
The clearing cycle is the process by which a payment made by cheque or other methods through the banking system is transferred from the payer's to the payee's account. Different stages of clearance determine when the funds are available for use.
An account used to record commissions received by an organization in a double-entry accounting system.
A consignor is any person or organization that sends goods to a consignee or a principal who sells goods on consignment through an agent, usually in a foreign country.
A cost, income, or performance standard based on current operating conditions and established for use over a short period of time in accounting and finance.
A debit note is a document sent by an organization to a person, indicating the recipient's indebtedness to the organization for the amount shown. Debit notes are less common than invoices and are used in specific scenarios such as inter-company transfers other than the sale of goods or services.
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.
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 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.
Depreciation refers to the reduction in the value of an asset over time, often due to wear and tear. This accounting process allows businesses to allocate the cost of a tangible asset over its useful life.
The direct labour hour rate refers to the rate of pay per hour assigned to operators engaged in direct labour or an absorption rate used in absorption costing. It is computed by dividing the total labor cost by the total direct labor hours worked.
A comprehensive overview of the accounting term 'dishonour,' referring to the failure to pay a cheque, accept or pay a bill of exchange, or honour any other financial obligation.
Dividends Payable are dividends that have been declared by a company but not yet paid. They appear as an appropriation in the profit and loss account and as a current liability in the balance sheet.
An expense account is crucial for recording the costs incurred by an organization, documenting specific expenditure headings before transferring totals to the profit and loss account. It can also refer to the allocated funds certain staff members can use for necessary expenditures.
General expenses are those expenditures by an organization that cannot be conveniently categorized into any other specific cost classifications, encompassing a wide variety of costs essential for business operations.
Gross amount refers to the total amount of something before any deductions are made for costs, taxes, or losses. For instance, gross revenues do not take into consideration factors such as taxes, depreciation, and other costs.
An election to treat a production herd as a capital asset. The election is irrevocable and must be made within two years from the end of the first year of assessment or company accounting period for which the tax liability will be affected by the purchase of the herd.
The output of a process in which there is more than one product and all the products have similar or equal economic importance.
Net Realizable Value (NRV) is a key metric in inventory accounting that measures the estimated amount a business expects to receive from the sale of inventory, minus any estimated costs to complete the sale.
Non-Controlling Interest (NCI) is a term in International Financial Reporting Standards (IFRS) used to describe the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent company.
An onerous contract is a contract in which the unavoidable costs of fulfilling the obligations exceed the expected economic benefits, potentially requiring compensation to the other party if the terms are not met.
OMV refers to the value of an asset or property in the open market, where a willing buyer and a willing seller, both knowledgeable about the item, complete a transaction without undue pressure.
Operating expenses are the costs and operating revenues are the income incurred and generated by an organization in the normal course of business, excluding any extraordinary items.
Overheads, also known as burden in the USA, refer to the ongoing business expenses not directly attributed to creating a product or service. Understanding overheads is crucial for accurate financial reporting and cost management.
A term describing a bill of exchange in which the payee is named and on which there are no restrictions or endorsements, thus allowing it to be paid to the endorsee.
In absorption costing, percentage on direct labour cost serves as a crucial method for allocating production overheads to cost units, ensuring accurate accounting and cost management.
Realizable assets, often referred to as liquid assets, are assets that can be quickly converted into cash with minimal impact on their value.
An accounting term related to overhead costs that have been recovered or anticipated to be recovered through cost allocation.
A transaction that is generally of a short-term nature and is only expected to benefit the current period. Revenue transactions appear in the profit and loss account of the period.
Scrap value, also referred to as salvage value, is the estimated residual value of an asset at the end of its useful life. This is the amount the owner expects to obtain from the sale of the asset following its complete depreciation.
Tangible assets are physical items that hold value and can be seen and touched, used by businesses to generate revenue.
Tax liability refers to the total amount of tax debt owed by an individual, organization, or corporation to a tax authority. It includes both current taxes due and any unpaid taxes from prior periods.
Under the UK taxation system, a tax month runs from the 6th day of one month to the 5th day of the following month. This ensures that there are 12 complete tax months in the fiscal year.
The date on which a transaction in the money market took place.
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.
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.
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.
Windfall gains and losses refer to unexpected increases or decreases in value arising from actual or prospective receipts that differ from initial predictions or due to changes in net present value of the receipts.
The act of reducing the value of an asset or a debt to zero in a balance sheet, often due to obsolescence, expiration, or uncollectibility.
