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Glossary

Accounting & Finance

ACCAThe Association of Chartered Certified Accountants
Accounts payableMoney owed by a company
Accounts receivableMoney owed to a company
AmortizationReduction in value, writing down the capital value of an Intangible asset over a period of time in a companys accounts
Assets1. Things which belong to a company, and which have a value; assets can be tangible or intangible, current, fixed, etc.;
2. Liabilities plus owners equity
Bad DebtDebt which will not be paid (usually because the debtor has gone out of business) and which has to be written off in the accounts
Balance Sheet (B.S.)Statement of the financial position of a company at a particular time, such as the end of the financial year or the end of a quarter, showing the companys assets and liabilities
BondContract document promising to repay money borrowed by a company or by the government at a certain date, and paying interest at regular intervals
BorrowingTaking money from someone for a time, possibly paying interest for it, and repaying it at the end of the period
Business planDocument drawn up to show how a business is planned to work, with cash flow forecasts, sales forecasts, etc. (often used when trying to raise a loan, or when setting up a new business)
CashMoney in coins or notes
Cash Flow (CF)Cash which comes into a company from sales (Cash Inflow) or the money which goes out in purchases or overhead expenditure (Cash Outflow)
Cash Flow StatementReport which shows Cash Inflows and Cash Outflows during a given period
Cash InflowReceipts of cash or checks
Cash OutflowExpenditure in cash or checks
Common stockOrdinary shares in a company, giving shareholders a right to vote at meetings and to receive dividends
CostAmount of money which has to be paid for something
CurrencyMoney in coins and notes which is used in a particular country
DebtMoney borrowed by a company to finance its activities
Deferred taxesTaxes which can be explained by the different treatment of certain transactions in the accounts and the tax computation
DepreciationReduction in value, writing down the capital value of a Fixed asset over a period of time in a companys accounts
Discount rate1. Rate at which the face value of a bill of exchange is reduced when payment is made before its maturity date
2. Percentage used in a discounting calculation, e.g. to find the present value of future income
Discounted cash flow (DCF)Calculating the forecast return on capital investment by discounting future cash flows from the investment, usually at a rate equivalent to the companys minimum required rate of return
DividendPart of companys profits paid to shareholders
DraftSee Note
EarningsSee Profit
EBITEarnings Before Interest and Taxes
EBITDAEarnings Before Interest, Taxes, Depreciation, and Amortization
EquityThe value of a company which is the property of its ordinary shareholders (the companys assets less its liabilities, not including the ordinary share capital)
Equity capitalA companys capital which is invested by holders of ordinary shares giving them the right to unlimited returns (as opposed to preference shareholders who are only entitled to a fixed maximum return)
Exchange ratePrice at which one currency is exchanged for another
Financial Accounting Standards Board (FASB)The body which regulates accounting standards in the USA
FIFOFirst-In, First-Out
Fixed assetsProperty or machinery which a company owns and uses, but which the company does not buy or sell as part of its regular trade, including the companys investments in shares of other companies
ForecastDescription or calculation of what will probably happen in the future
GAAPGenerally Accepted Accounting Principles
GoodwillGood reputation of a business, which can be included in a companys intangible asset value; goodwill can include the trading reputation, the value of a "good site", etc.
IFRSInternational Financial Reporting Standards
Income1. Money received by an accounting entity from its normal trading (i.e. not including the sale of fixed assets, which produces capital revenue)
2. Profit (i.e. revenue less expenses) earned by an accounting entity from its normal trading (excluding capital gains)
Income StatementSee Profit & Loss Statement
Intangible assets (Intangibles)Assets, such as copyrights, patents, Goodwill, etc., which exist and have a value, but cannot be seen
Interest1. Payment made by a borrower for the use of money, calculated as a percentage of the capital borrowed
2. Money paid as income on investments or loans
Internal Rate of Return (IRR)The Discount rate at which the cost of investment and its future Cash Inflows are exactly equal
International Accounting Standards (IAS)Accounting standards which are applied internationally
InventoryStock or goods in a warehouse or in a shop
Investments1. Placing of money so that it will increase in value and produce an income (either in an asset, such as a building, or by purchasing shares, placing money on deposit, etc.)
2. Shares, bonds, deposits bought with invested money
LeaseWritten contract for letting or renting a building or a piece of land or a piece of equipment for a period against payment of a fee
LiabilitiesResponsibility for a payment (such as the repayment of a loan)
LIFOLast-In, First-Out
LoanSee Borrowing
LIBORLondon InterBank Offered Rate
ManagementDirecting or running a business
MappingReconciliation of RAS and GAAP accounts
Net incomeTotal earnings of a business after tax and other deductions
Net present value (NPV)Present Value less Investments needed
NIFONext-In, First-Out
NotePaper showing that money has been borrowed
Operating expensesCosts of production, selling and administration incurred during normal trading
Overhead costsCosts of materials, salaries and other expenses (including selling, administration and finance costs) which are not directly related to the making of a product
PayablesMoney which is due to be paid
Preferred stockShares which receive their dividend before all other shares, and which are repaid first (at face value) if the company is in liquidation
Present value (PV)1. The value now of a specified sum of money to be received in the future, if invested at current interest rates
2. Price which a share must reach in the future to be the equivalent of todays price, taking inflation into account
ProfitMoney gained from a sale which is more than the money spent
Profit & Loss Statement (P&L)Statement of a companys expenditure and income over a period of time, almost always one calendar year, showing whether the company has made a profit or loss
Profit Before Interest and Taxes (PBIT)See Earnings Before Interest and Taxes
ReceivablesMoney which is owed to a company
Russian Accounting Principles (RAP)See Russian Accounting Standard
Russian Accounting Standard (RAS)Russian Accounting Principles, legally stipulated in Russian Accounting Regulations (in Russian - PBU); the RAP and RAS abbreviations are not in general use
SaleAct of selling, act of giving an item or doing a service in exchange for money, or for the promise that money will be paid
SecuritiesInvestments in stocks, shares and money market instruments
Securities & Exchange Commission (SEC)The official body which regulates the securities markets in the USA
SharesSee Stock 2
Statement of EarningsSee Profit & Loss Statement
Statement of Shareholders' EquityStatement of a companys capital which is owned by its ordinary shareholders over a period of time
Statement of Stockholders' EquitySee Statement of Shareholders' Equity
Stock1. Quantity of goods for sale or materials for production in hand
2. Investments in a company, represented by share or fixed interest securities
TaxMoney taken by the government or by an official body to pay for government services
ValuationEstimate of how much something is worth
Value (V)Amount of money which something is worth
Value Added Tax (VAT)Tax imposed as a percentage of the net invoice value of goods and services


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