Accounting Glossary


This is a Financial Glossary defining terms relating to the accounting profession.

Browse the glossary using this index

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A

ACCA

Association of Chartered Certified Accountants.

Account

A chronological (arranged in order of time of occurrence) list of debits and credits relating to a specified asset, liability, expense, or income of a business and forming part of the ledger an account in a ledger is a unique location for accumulating similar categories of transaction. Example: The account “Travel Expenses” would be used to summarize and add up all the expenditure relating to travel expenses in a given accounting period.

Account rendered

A statement of transactions made out by a creditor and presented to the debtor. After the debtor has examined the account and accepted it, an account rendered becomes an account stated.

Accountant

A person concerned with the maintenance and audit of business accounts and the preparation of consultant reports in tax and finance.

Accounting

The skill or practice of maintaining and auditing accounts and preparing reports on the assets, liabilities, income, expenses and financial position of a business.

Accounting conventions

An accounting procedure used informally. That is, an accounting convention has been neither endorsed nor prohibited by the standards bodies of accounting. In general, when an accounting standards body has neither
endorsed nor prohibited an accounting convention, it is because it has not needed to rule on the matter, especially if the convention is new. A ruling may formalize or forbid a convention, or it may make the convention obsolete.

Accounting period

The period of time reflected in financial statements. Usually, the accounting period is either the calendar year or a quarter. For example, companies listed on the Stock Exchange must report their financial state for the accounting period since their previous report. Most private companies you will deal with will have a 12-month accounting period, often from March 1st of one year to end of February the following year.

Accounting Process Chart

Get a copy of this chart to better understand this definition. This chart simply shows four main accounting activities in sequence.

  1. Source documents. These are created by business activities. Sales and supplier invoices for example.
  2. Books of Prime Entry. These are created once the source documents are entered into the company accounting records.
  3. Ledgers. These are created once the same source documents have been entered into the company records.
  4. Reports. These are now possible to create once the previous company financial transactions have been recorded. These reports include Trial Balances, Income Statements, Balance Sheets, Management Accounts, Annual Financial Statements and Specialized Reports and Analysis.

Accounting standard

An authoritative statement issued by a governing accounting body that specifies how a particular type or category of financial transaction and other accounting matter should be reflected in financial statements.

For example, in South Africa, all companies listed on the Johannesburg Stock Exchange are required comply with the International Financial Reporting Standards (IFRS). These accounting standards were issued by the International Accounting Standards Board (IASB).

The Accounting Standards Board is the governing accounting body in South Africa issuing accounting standards for the government and the public sector.

Accounts payable

Also known as creditors: The amounts of money due or owed to a supplier by the company.


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