A
Accounts payable (AP)
Money owed by a business to its suppliers or vendors for goods and services received but not yet paid for. Recorded as a current liability on the balance sheet.
Read more →Accounts receivable (AR)
Money owed to a business by its customers for goods or services delivered but not yet paid. Recorded as a current asset on the balance sheet.
Read more →Accrual accounting
An accounting method that records revenue and expenses when they are earned or incurred, not when cash actually changes hands. Required under IFRS and GAAP for most entities.
Read more →Amortisation
The systematic allocation of the cost of an intangible asset over its useful life. Similar in concept to depreciation for tangible assets.
Read more →Audit
An independent examination of financial statements and records to ensure accuracy, compliance with accounting standards, and a true and fair view of an entity's financial position.
Read more →B
Balance sheet
A financial statement that reports a company's assets, liabilities, and equity at a specific point in time. Also called the statement of financial position under IFRS.
Read more →Bookkeeping
The systematic recording of financial transactions in the accounting system. The foundation on which financial statements are prepared.
Read more →Budget
A financial plan for a defined period, typically a year, estimating expected revenues, expenses, and cash flows. Used for planning, control, and performance evaluation.
Read more →C
Cash flow
The net amount of cash and cash equivalents moving into and out of a business. Presented in the statement of cash flows under operating, investing, and financing activities.
Read more →Chart of accounts (COA)
A structured list of all accounts used in the general ledger, organised by categories such as assets, liabilities, equity, revenue, and expenses. The foundation of the accounting system.
Read more →Consolidation
The process of combining the financial statements of a parent company and its subsidiaries into a single set of financial statements, eliminating intercompany transactions.
Read more →Cost of goods sold (COGS)
The direct costs attributable to producing goods sold by a company, including materials, labour, and manufacturing overhead. Deducted from revenue to arrive at gross profit.
Read more →D
Discounted cash flow (DCF)
A valuation method that estimates the value of an investment based on its expected future cash flows, discounted to present value using an appropriate discount rate.
Read more →Depreciation
The systematic allocation of the cost of a tangible fixed asset over its useful life. Common methods include straight-line and reducing balance.
Read more →Double-entry bookkeeping
The fundamental accounting system where every transaction affects at least two accounts, with equal debits and credits. Ensures the accounting equation (Assets = Liabilities + Equity) always balances.
Read more →E
EBITDA
Earnings before interest, taxes, depreciation, and amortisation. A widely used measure of operating performance and profitability, though not defined under IFRS.
Read more →Equity
The residual interest in the assets of an entity after deducting all liabilities. Also called shareholders' equity or net assets. Calculated as total assets minus total liabilities.
Read more →Enterprise resource planning (ERP)
Integrated software systems that manage core business processes including accounting, finance, procurement, inventory, and HR across an organisation, typically with a single shared database.
Read more →F
Financial statements
Formal records of an entity's financial activities, typically comprising the statement of profit or loss, statement of financial position (balance sheet), statement of cash flows, and notes.
Read more →Financial planning & analysis (FP&A)
The function within a finance department responsible for budgeting, forecasting, variance analysis, and providing forward-looking insights to support strategic decision-making.
Read more →G
GAAP
Generally Accepted Accounting Principles. The standard framework of guidelines for financial accounting and reporting. In the US, the FASB sets US GAAP. Other countries have their own GAAP or adopt IFRS.
Read more →General ledger (GL)
The central, complete set of accounts that records all financial transactions of an entity. The GL is the primary data source for preparing financial statements.
Read more →Gross profit
Revenue minus the cost of goods sold (COGS). A measure of how efficiently a business produces and sells its products before considering operating expenses.
Read more →H
Hedge accounting
A specialised accounting treatment under IFRS 9 that aligns the timing of profit or loss recognition for hedging instruments and hedged items, reducing volatility in financial statements.
Read more →I
IFRS
International Financial Reporting Standards. A set of accounting standards developed by the International Accounting Standards Board (IASB), used by over 140 jurisdictions worldwide for financial reporting.
Read more →IFRS 18
The new IFRS standard effective 2027 that replaces IAS 1, introducing structured categories in the income statement, defined operating profit subtotals, and requirements for management-defined performance measures.
Read more →Impairment
A permanent reduction in the recoverable value of an asset below its carrying amount on the balance sheet. Under IFRS, assets must be tested for impairment indicators at each reporting date.
Read more →Income statement
A financial statement that reports revenues, expenses, and profit or loss over a reporting period. Also called the profit and loss statement or statement of profit or loss under IFRS.
Read more →J
Journal entry
A record of a financial transaction in the accounting system, showing the accounts debited and credited with equal amounts. Journal entries are posted to the general ledger.
Read more →K
Key performance indicator (KPI)
A measurable value that tracks the performance of a business against its strategic and operational objectives. Common finance KPIs include gross margin, EBITDA margin, and working capital ratio.
Read more →L
Liability
A present obligation of an entity arising from past events, expected to result in an outflow of economic resources. Classified as current or non-current on the balance sheet.
Read more →Liquidity
The ability of a business to meet its short-term financial obligations using its current assets. Measured by ratios such as the current ratio and quick ratio.
Read more →M
Margin
A measure of profitability calculated as the difference between revenue and costs, expressed as a percentage of revenue. Common margins include gross, operating, and net profit margins.
Read more →Multi-currency accounting
An accounting capability that supports transactions, reporting, and consolidation in multiple currencies, including functional currency determination, foreign exchange translation, and revaluation.
Read more →N
Net profit
The residual amount after deducting all expenses, including operating costs, interest, taxes, and non-operating items, from total revenue. Also called net income or the bottom line.
Read more →Net present value (NPV)
The difference between the present value of future cash inflows and the present value of cash outflows. A positive NPV indicates that an investment is expected to generate value above its cost.
Read more →O
Operating expenses (OPEX)
Expenses incurred in the normal course of business operations that are not directly tied to production. Includes selling, general, and administrative expenses (SG&A).
Read more →P
Provision
A liability of uncertain timing or amount recognised under IFRS when an entity has a present obligation from a past event, it is probable that an outflow will occur, and the amount can be reliably estimated.
Read more →Q
Quick ratio
A liquidity measure calculated as current assets minus inventory divided by current liabilities. Also called the acid-test ratio, it measures a company's ability to meet short-term obligations.
Read more →R
Revenue recognition
The principle determining when and how revenue is recorded. Under IFRS 15 and ASC 606, revenue is recognised when control of goods or services is transferred to the customer.
Read more →Return on investment (ROI)
A profitability metric that measures the gain or loss generated on an investment relative to its cost. Calculated as net profit divided by the cost of investment, usually expressed as a percentage.
Read more →S
Statement of cash flows
A financial statement that reports the cash generated and used during a period, categorised into operating, investing, and financing activities. Required under IFRS and GAAP.
Read more →Sarbanes-Oxley Act (SOX)
US federal law enacted in 2002 that set new requirements for corporate governance, internal controls, and financial reporting, including management certification of financial statements and internal control assessments.
Read more →T
Trial balance
A statement listing all general ledger accounts and their balances at a point in time, used to verify that total debits equal total credits before preparing financial statements.
Read more →U
Working capital
Current assets minus current liabilities. A measure of a company's operational efficiency and short-term financial health. Positive working capital indicates the company can meet its short-term obligations.
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