Appropriation in accounting refers to the allocation of net profits of an organization in its accounts. This can include dividends to shareholders, transfers to reserves, and amounts for taxation.
Balance sheet reserves are amounts set aside in pension plans and other insurance contracts, expressed as liabilities on the company's balance sheet, to ensure future benefit payments to policy owners.
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.
Notes to the accounts, also known as notes to financial statements, provide detailed information and explanations that support and complement a company's financial statements. These notes help users understand and interpret the financial data and the company's overall performance and financial health.
A Profit and Loss Appropriation Account is a financial statement showing how the net profits or losses have been dealt with in a given period.
Shareholders' equity represents the owners' claim after subtracting total liabilities from total assets. It is a crucial metric for understanding a company’s financial health and includes components like share capital and reserves.
Undercapitalization refers to the state of a company that lacks sufficient capital or reserves for its operational needs, often due to rapid growth. This situation can result in a profitable company struggling to convert earnings into cash to pay its debts.
