Accounting & Reporting

60 Accounting & Reporting terms, defined in plain English — part of the 1345-term Finicade finance glossary. Each one has its own page, and links to the free game that teaches it.

Accounts Payable: Accounts payable is what you owe suppliers for goods and services already received.
Accounts Receivable: Accounts receivable is money customers owe you for goods already delivered — revenue recognised but not yet collected.
Accrued Expense: An accrued expense is a cost incurred but not yet paid or invoiced — wages earned in the last week of the month, interest building on a loan, utilities used.
Allowance for Doubtful Accounts: The allowance for doubtful accounts is an estimate of receivables that will never be collected, deducted from the asset and charged to expense in advance.
Amortization of Intangibles: Amortisation of intangibles spreads the cost of patents, customer lists and acquired software over their useful lives — depreciation for intangibles.
Bank Reconciliation: A bank reconciliation matches your ledger's cash balance to the bank statement, explaining every difference — outstanding cheques, deposits in transit, fees.
Break-Even Analysis: Break-even analysis finds the sales volume at which total revenue covers total cost.
Capex vs Opex: Capex buys assets that last beyond a year and is spread across the income statement through depreciation; opex hits profit immediately.
Cash Conversion Cycle: The cash conversion cycle measures how many days cash is tied up between paying suppliers and collecting from customers.
Consolidation: Consolidation combines a parent and its subsidiaries into one set of accounts, eliminating intra-group transactions to present a single entity.
Contribution Margin: Contribution margin is revenue minus variable costs — what each additional sale contributes towards fixed costs and profit.
Cost of Goods Sold: Cost of goods sold is the direct cost of producing what you actually sold in the period — materials, direct labour, manufacturing overhead.
Current Ratio: The current ratio divides current assets by current liabilities — a rough test of whether a company can cover the next year's obligations.
Days Sales Outstanding: Days sales outstanding is the average number of days it takes to collect after a sale.
Debits and Credits: Debits and credits are the two sides of every accounting entry, and they don't mean good and bad.
Debt-to-Equity Ratio: Debt-to-equity compares borrowed capital to owners' capital — the standard leverage measure.
Deferred Revenue: Deferred revenue is cash collected before the service is delivered, recorded as a liability until it's earned.
Deferred Tax: Deferred tax arises because accounting profit and taxable profit differ in timing — accelerated depreciation, provisions, losses carried forward.
Diluted EPS: Diluted EPS assumes every option, convertible and unvested share award turns into stock, spreading earnings across the larger count.
Double-Entry Bookkeeping: Double-entry bookkeeping records every transaction twice — once as a debit and once as a credit — so the books always balance.
Fair Value: Fair value is the price an asset would fetch in an orderly transaction between willing parties today.
Fixed vs Variable Costs: Fixed costs don't change with output — rent, salaries, insurance — while variable costs scale with each unit produced.
Form 10-K: The 10-K is the comprehensive annual report US public companies file with the SEC — audited statements, risk factors, MD&A and legal proceedings.
Form 10-Q: The 10-Q is the quarterly filing US public companies make, with condensed and unaudited financial statements.
General Ledger: The general ledger is the master record holding every account a business uses and every transaction posted to them.
Going Concern: Going concern is the assumption a business will keep operating for at least a year, which is what allows assets to be valued at use, not fire-sale prices.
Gross Margin: Gross margin is revenue minus cost of goods sold, as a percentage of revenue — what's left to cover everything else.
Impairment: An impairment writes an asset down when its carrying value exceeds what it can recover.
Interest Coverage Ratio: Interest coverage divides operating income by interest expense, showing how many times over a company can pay its interest bill.
Inventory: Inventory is goods held for sale plus the raw materials and work in progress behind them.
Inventory Turnover: Inventory turnover is how many times stock is sold and replaced in a year.
Journal Entry: A journal entry is a single record of a transaction with its debits, credits and explanation.
Lease Accounting: Modern lease accounting puts nearly all leases on the balance sheet as a right-of-use asset and a matching liability, ending off-balance-sheet rent.
LIFO vs FIFO: FIFO assumes the oldest inventory sells first; LIFO assumes the newest does.
Management Discussion & Analysis: MD&A is management's own narrative explanation of results, trends, liquidity and known uncertainties.
Matching Principle: The matching principle requires expenses to be recorded in the same period as the revenue they helped produce.
Materiality: Materiality is the threshold above which an error or omission could change a reasonable user's decision.
Net Income: Net income is what remains after every expense, interest and tax — the bottom line, and the input to earnings per share.
Net Profit Margin: Net profit margin is net income as a percentage of revenue — what actually survives after every cost, interest and tax.
Non-Controlling Interest: Non-controlling interest is the portion of a subsidiary that the parent doesn't own, but must still consolidate in full.
Non-GAAP Earnings: Non-GAAP earnings are management adjusted profit, excluding items they call non-recurring or non-cash: restructuring, impairments, stock compensation.
Notes to the Financial Statements: The notes explain the numbers: accounting policies, assumptions, commitments, contingencies, and the detail behind every summarised line.
Off-Balance-Sheet: Off-balance-sheet arrangements keep obligations out of reported liabilities through structures the accounting rules don't require consolidating.
Operating Income (EBIT): Operating income is profit from core operations, before interest and tax.
Operating Leverage: Operating leverage is how much profit amplifies a change in revenue, driven by the share of costs that are fixed.
Operating Margin: Operating margin is operating income divided by revenue — profitability after all the costs of running the business but before interest and tax.
Overhead: Overhead is cost that can't be traced directly to a single product — administration, rent, IT, management.
Payroll: Payroll is the process of paying employees and remitting the taxes withheld from them.
Prepaid Expense: A prepaid expense is cash paid before the benefit is received — annual insurance, rent in advance — booked as an asset and expensed over time.
Quick Ratio: The quick ratio is the current ratio with inventory stripped out, on the view that stock is the current asset least likely to convert to cash quickly.
Retained Earnings: Retained earnings are the cumulative profits a company has kept rather than paid out as dividends.
Return on Assets: Return on assets measures profit generated per unit of assets, capturing how efficiently a company uses what it owns regardless of how it's financed.
Return on Invested Capital: ROIC measures after-tax operating profit against the capital actually invested in the business, debt and equity together.
Revenue: Revenue is the value of goods and services sold in a period, recognised when earned rather than when paid.
Revenue Recognition: Revenue recognition is the set of rules deciding when a sale counts as revenue — broadly, when control of the good or service transfers to the customer.
Segment Reporting: Segment reporting breaks results down by business line or geography, as management itself views them.
Shareholders' Equity: Shareholders' equity is assets minus liabilities — the owners' residual claim, and the balancing figure of the balance sheet.
Treasury Stock: Treasury stock is a company's own shares that it has repurchased and holds rather than cancelled.
Trial Balance: A trial balance lists every ledger account with its balance, to check that total debits equal total credits before statements are prepared.
Write-Off: A write-off removes an asset's value from the books once it's clear the value isn't there — an uncollectable invoice, obsolete inventory, a failed project.

← All 1345 glossary terms