Accountancy Jargon
- ABC – activity-based costing. A costing system that identifies the various activities performed in a firm.
- Asset – anything owned by an individual or a business that has commercial or exchange value.
- Audit – inspection of the accounting records and procedures of a business, government unit, or other reporting entity by a trained accountant for the purpose of verifying the accuracy and completeness of the records.
- Balance sheet – an itemised statement that lists the total assets and the total liabilities of a given business to portray its net worth at a given moment of time.
- Balanced scorecard – a strategic management system based upon measuring key performance indicators across all aspects and areas of an enterprise: financial; customer; internal process; and learning and growth.
- ‘Big Four’ – usually refers to the largest accounting firms: Deloitte; Ernst & Young; KPMG; and PricewaterhouseCoopers LLP (PwC).
- Book-keeping – the recording of business transactions.
- Break-even analysis – an analysis method used to determine the number of jobs or products that need to be sold to reach a break-even point in a business.
- Capital expenditure – the amount used during a particular period to acquire or improve long-term assets such as property, plant or equipment.
- CCAB – Consultative Committee of Accountancy Bodies. Comprises the six major accountancy professional bodies in the UK. Provides a forum for discussion of matters affecting the profession as a whole and enables the profession to speak with a unified voice to government.
- CEO – chief executive officer.
- Cost accounting – a managerial accounting activity designed to help managers identify, measure and control operating costs.
- External audit – an audit conducted by an individual of a firm that is independent of the company being audited.
- Financial accounting – the area of accounting concerned with reporting financial information to interested external parties.
- Financial analysis – analysis of a company’s financial statement, usually by accountants or financial analysts.
- Fixed cost – cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense.
- GAAP (generally accepted accounting principles) - Most countries have their own GAAPs, although in Europe and many other parts of the world, countries are adopting the international financial reporting standards
- Internal audit – an independent appraisal function established within an organisation to examine and evaluate its activities as a service to the organisation.
- Overheads – the costs associated with providing and maintaining a manufacturing or working environment.
- Trial balance – a listing of the accounts in your general ledger and their balances as at a specified date.
- Variance analysis – the process of examining in detail each variance between actual and budgeted/expected/standard costs to determine the reasons why budgeted results were not met (eg, sales prices being too low).
- Year-end – end of the financial year.
- Zero-based budget – where the expenses or costs of the prior year are not taken into consideration when establishing expense or budgetary levels looking forward.