Financial Reporting Standard

Actuary
A professional who applies statistics and probability theory to advise on insurance risks, pricing of contracts, and administration of pension funds, regulated by the Institute and Faculty of Actuaries in the UK.
Associate (Associated Undertaking)
An associated undertaking, or associate, is a company that is not classified as a subsidiary but in which another company or group exercises significant influence. Accounting for associates is regulated by Section 14 of the Financial Reporting Standard Applicable in the UK and Republic of Ireland and International Accounting Standard 28 (IAS 28), Investments in Associates.
Capital Instruments
Understand the various means used by companies to raise finance including shares, debentures, loans, options, and warrants, and the important distinctions and regulations that govern them.
Consolidated Cash-Flow Statement
A consolidated cash-flow statement provides a comprehensive overview of cash inflows and outflows from a group of entities, combining individual cash-flow statements subject to various consolidation adjustments for accurate financial reporting.
Dangling Debit
Dangling debit is an accounting term describing a practice where companies wrote off goodwill to reserves, creating a goodwill account deducted from the total shareholders' funds; a practice discontinued under Financial Reporting Standard (FRS) 10.
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.
Direct Method
The Direct Method is an accounting approach for preparing a cash-flow statement by aggregating operating cash receipts and payments to demonstrate the net cash flow from operating activities.
Disproportionate Expense and Undue Delay in Accounting
The term 'disproportionate expense and undue delay' refers to circumstances in traditional UK accounting practices where an individual subsidiary undertaking might be excluded from consolidated financial statements due to excessive cost and time requirements to obtain the necessary information.
Dissimilar Activities
In traditional UK accounting practice, 'Dissimilar Activities' served as a reason for excluding a subsidiary undertaking from the consolidated financial statements of a group. It applied to situations where the activities of one undertaking differed significantly from others in the group, potentially compromising the obligation to present a true and fair view. However, current standards under both the Financial Reporting Standard (FRS) applicable in the UK and Ireland and International Accounting Standards (IAS 27) no longer allow exclusions on these grounds.
Exemptions from Preparing Consolidated Financial Statements
Under specific regulations such as the Companies Act and applicable financial reporting standards in the UK and the Republic of Ireland, certain parent companies may be exempt from preparing consolidated financial statements.
Financial Reporting Exposure Draft (FRED)
Financial Reporting Exposure Draft (FRED) is a document issued by the Financial Reporting Council (FRC) for discussion and debate prior to the issuance of a Financial Reporting Standard (FRS).
Financial Reporting Standard (FRS)
A comprehensive overview of the Financial Reporting Standard (FRS), a set of standards developed by the Accounting Standards Board and Financial Reporting Council to guide financial reporting practices in the UK and Republic of Ireland.
Held for Sale
Describes the grounds on which a subsidiary undertaking may be excluded from the consolidated financial statements of a group because the group's interest in the subsidiary is held exclusively with a view to subsequent resale.
Hyperinflation
A situation in which levels of inflation are so high that money becomes virtually worthless and monetary exchange breaks down. The appropriate accounting treatment is set out in Section 31 of the Financial Reporting Standard applicable in the UK and Republic of Ireland. UK listed companies must apply International Accounting Standard 29.
Income Statement
The income statement, also known as a profit and loss account, is a financial document that provides a summary of a company's revenues, expenses, and profits/losses over a specific period. Under both International Accounting Standards (IAS) and the Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102), the income statement plays a pivotal role in financial reporting.
Intangible Assets
Intangible assets represent non-physical assets that hold significant financial value for a company. This article explores their definition, examples, accounting treatment, and related standards.
Provisions
An amount set aside out of profits in the accounts of an organization for a known liability, even though the specific amount might not be known, or for the diminution in value of an asset.
Related Party
A related party is any person or entity that has a significant influence on a reporting entity, as defined in financial reporting standards. This influence does not necessarily equate to control. Proper identification and disclosure of related parties are crucial for financial transparency.
Temporal Method
A method of translating foreign currency transactions by utilizing the exchange rate on the transaction date. Generally used for items not classified as foreign currency monetary items or those not measured at fair value.
Total Comprehensive Income
Total comprehensive income is the sum of net profit shown in the profit and loss account (income statement) along with any other comprehensive income. Under the Financial Reporting Standard Applicable in the UK and Republic of Ireland (Section 5), it should be presented as part of a statement of comprehensive income (statement of total recognized gains and losses).

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.