Impairment loss
The excess of carrying amount over recoverable amount.
OpenFinancial Dictionary
Accounting & Finance Terms (English)
Accounting and Finance Terms Explained
Explore accounting, finance, auditing, taxation, and economics terms explained in clear English. Each entry provides a definition, a detailed explanation, practical uses, and examples where available.
Use the search box below to find a term by its name, definition, application, or related financial concept.
Impairment Loss
An impairment loss arises when an asset’s recoverable amount falls below its carrying amount; the carrying value is reduced and the loss is recognized in profit or loss.
OpenImprest System
The Imprest System is a petty cash control method where the fund is maintained at a fixed amount; replenishment equals documented expenses, making the remaining cash plus vouchers always match the aut...
OpenImprest System
The imprest system is a control method for petty cash where the fund is kept at a constant approved amount. Periodically, the custodian is reimbursed for the exact total of supported vouchers so that ...
OpenImputed cost
A cost assigned internally when no actual cash outflow occurs.
OpenIncome
Income represents inflows of economic benefits arising from ordinary activities such as sales of goods, rendering of services, or investment returns, resulting in increases in equity other than contri...
Openincome statement
The income statement reports an entity’s financial performance over a specific period by matching revenues with related expenses to determine net profit or loss.
Openindependent contractor
An independent contractor provides services under a contract without being subject to the employer’s control over how work is performed, unlike an employee relationship.
OpenInherent risk
Inherent risk refers to the susceptibility of an account balance or transaction to material misstatement before considering internal controls.
OpenInput tax
Input tax represents VAT paid on business purchases that can be reclaimed or offset against output tax, subject to tax regulations.
OpenInput VAT
Recoverable input VAT reduces the VAT payable, but recovery may be restricted for certain expenses or where supplies are exempt.
OpenInsolvency
Insolvency occurs when an entity is unable to meet its financial obligations as they fall due, indicating severe liquidity or financial distress.
Openinsolvent
An insolvent entity is one whose liabilities exceed its assets or that cannot pay debts when due, often leading to restructuring or liquidation.
OpenIntangible Asset
An intangible asset is a non-physical resource such as trademarks, software, patents, or goodwill. It provides long-term benefits and may be amortized.
OpenIntangible Assets
Intangible assets are identifiable non-monetary assets without physical substance that provide future economic benefits over multiple periods.
OpenInterest
Interest represents the cost of borrowing money or the return earned on lending or investing capital, typically expressed as a percentage.
OpenInternal Audit
Internal audit evaluates risk management, control, and governance processes and helps improve operations and compliance.
OpenInternal audit
Internal audit is an independent and objective assurance activity that evaluates internal controls, risk management, and governance processes.
OpenInternal auditor
An internal auditor evaluates internal controls, risk management, and governance processes to enhance operational efficiency and compliance.
OpenInternal Control
Internal control is the policies and procedures designed to provide reasonable assurance over reliable reporting, efficient operations, asset safeguarding, and compliance; it also reduces risk of erro...
OpenInternal Control
Controls include policies and procedures such as approvals, reconciliations, segregation of duties, access controls, and monitoring activities.
OpenInternal control system
Policies and procedures designed to ensure reliable reporting and safeguard assets.
OpenInternal events
Internal events affect the financial position of an entity without involving transactions with external parties, such as depreciation or internal transfers.
OpenInternational Financial Reporting Standards (IFRS)
IFRS are globally recognized accounting standards designed to ensure transparency, comparability, and consistency of financial statements.
OpenInventories
Inventories include assets held for sale, in production for sale, or to be consumed in the production process, measured at cost or net realizable value.
OpenInventory
Inventory represents goods held for sale, goods in production, or materials used in production. It is considered a current asset because it is expected to be sold or consumed within a short period. In...
OpenInventory
Inventory is measured at the lower of cost and net realizable value, and cost may be determined using methods such as FIFO or weighted average.
Openjob costing
Job costing accumulates costs for a specific job or project, allowing precise measurement of profitability for customized products or services.
OpenJoint costs
Costs incurred in the production of multiple products simultaneously.
OpenJoint Venture
A joint venture is a joint arrangement where parties have joint control and rights to net assets, with accounting typically using the equity method under IFRS.
OpenJoint Venture
A joint venture is a contractual arrangement where two or more parties share control, resources, risks, and returns of a specific project.
OpenJournal
The journal is the primary book of accounting where transactions are first recorded chronologically before being posted to ledger accounts.
OpenJournal Entry
A journal entry records the debit and credit effects of a business transaction and forms the foundation of the double-entry accounting system.
OpenJournal Entry
Each journal entry affects at least two accounts and follows the double-entry system where total debits equal total credits.
Openjunk bond
Junk bonds are high-risk debt instruments issued by entities with low credit ratings, offering higher yields to compensate for default risk.
OpenJust In Time - JIT
Just-In-Time is an inventory management system that minimizes storage costs by receiving materials only when needed for production.
Openkiting
Kiting is a fraudulent practice involving the manipulation of bank float to temporarily overstate cash balances.
Openland improvements
Land improvements are capital expenditures made to enhance land usability and are depreciated over their useful lives.
Openlease
A lease is a contractual agreement granting the right to use an asset for a specified period in exchange for periodic payments.
OpenLease liability
A lease liability is measured as the present value of remaining lease payments that the lessee is obligated to pay under the lease.
OpenLease modification
A change in the scope or consideration of a lease agreement.
OpenLegitimacy Theory
Legitimacy theory explains how organizations seek societal approval by aligning their activities with social norms and expectations.
OpenLessee
A lessee is the party that obtains the right to use an asset under a lease agreement in return for rental payments.
Openlessor
The lessor is the owner of the asset who grants usage rights to another party under a lease arrangement.
OpenLetter of Credit
A letter of credit is a bank guarantee ensuring payment to a seller upon compliance with specified documentary conditions.
OpenLevel 1 inputs
Quoted prices in active markets for identical assets or liabilities.
OpenLevel 2 inputs
Observable inputs other than quoted prices for identical items.
OpenLevel 3 inputs
Unobservable inputs used when observable data is unavailable.
OpenLiabilities
Liabilities represent present obligations arising from past events, the settlement of which is expected to result in an outflow of resources.
OpenLiability
A liability is a present obligation of the company arising from past events that will require the transfer of economic resources such as cash or other assets. Liabilities represent amounts the company...
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