Professional skepticism
Professional skepticism is an auditor’s critical mindset that involves questioning evidence and remaining alert to conditions that may indicate misstatement.
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.
Proffessional Invoice
A professional invoice is issued for professional services (e.g., legal, medical, accounting) and typically details fees, scope, and terms.
OpenProffessional Services
Professional services are services provided by qualified professionals (e.g., doctors, lawyers, accountants) usually in return for professional fees.
OpenProfit And Loss Statement (P&L)
A Profit and Loss Statement (P&L), also called an Income Statement, reports revenues and expenses for a period to arrive at net profit or loss.
Openprofit center
A profit center is a department or unit responsible for generating profit, with performance measured by revenues and costs under its control.
Openpromissory note
A promissory note is a written promise to pay a specified amount, either on demand or at a future date, often with interest.
OpenProperty, Plant and Equipment (PPE)
Property, Plant and Equipment (PPE) are tangible long-term assets used in operations (e.g., buildings, vehicles, equipment) and are depreciated over their useful lives.
OpenProspectus
A prospectus is an offering document that provides key disclosures to investors about a securities issuance, including risks and financial information.
OpenProvision
A provision is a liability of uncertain timing or amount recognized when there is a present obligation and a reliable estimate can be made.
OpenProvision
A provision is a liability of uncertain timing or amount. It is recorded when the company has a present obligation and a reliable estimate can be made.
OpenProvision for Warranty
A warranty provision is recognized when products are sold with warranty obligations and reliable estimation is possible; it reflects expected future repair/replacement costs.
OpenProxy
A proxy is an authorization allowing another person to vote a shareholder’s shares on their behalf.
OpenPTI
PTI stands for Pre-Tax Income, which is profit before income tax expense.
OpenPurchase Order
A purchase order (PO) is a buyer’s formal document to a seller specifying items, quantities, prices, and terms; acceptance forms a binding contract.
OpenPurchaser
A purchaser is the person or entity that buys goods or services; in accounting they are commonly tracked as customers when buying from the company.
OpenPurchases
Purchases is a temporary account used mainly in the periodic inventory system to record purchases of merchandise for resale and determine cost of goods sold.
Openpurchases discounts
Purchases discounts are reductions allowed by suppliers for early payment; in periodic inventory they reduce net purchases.
OpenQualified opinion
A qualified opinion is issued when misstatements are material but not pervasive.
OpenQuick Assets
Quick assets are the most liquid current assets, typically cash, marketable securities, and accounts receivable (current assets excluding inventories).
Openquick ratio
The quick ratio (acid-test) measures short-term liquidity using only quick assets (excluding inventory); it indicates ability to pay current liabilities quickly.
OpenReal-Time Reporting
Real-time reporting is a compliance requirement where tax or financial transaction data is transmitted to authorities immediately or shortly after the transaction occurs (rather than periodic returns ...
OpenReasonable assurance
Reasonable assurance is a high level of confidence obtained by the auditor that financial statements are free from material misstatement, though not absolute certainty.
OpenRecoverable amount
The higher of fair value less costs to sell and value in use.
OpenRegTech
RegTech uses technology to enhance compliance with laws and regulations through automation and real-time monitoring.
OpenRelated parties
Related parties are individuals or entities with a relationship that can influence transactions or decisions, requiring disclosure under applicable standards.
Openrelevance
Relevance is a qualitative characteristic of useful financial information—information that can influence decisions through predictive or confirmatory value and timeliness.
Openrelevant cost
Relevant cost is a future cost that differs between alternatives and therefore affects decision-making; sunk costs are not relevant.
Openrelevant range
Relevant range is the normal activity level within which cost behavior assumptions (e.g., fixed costs remaining constant) are valid.
Openreliability
Reliability (faithful representation) means information is complete, neutral, and free from error to the extent possible, and can be verified.
OpenRemote Auditing
Remote Auditing is performing audit work without being physically onsite by using secure technology for evidence collection, interviews, walkthroughs, and document review, while ensuring data security...
OpenRent Earned
Rent earned is rental income recognized for the period under accrual accounting, whether or not cash has been received.
Openrent expense
Rent expense is the cost of using rented space recognized for the period under accrual accounting; prepaid rent is recorded as an asset until used.
Openrent revenue/income
Rent revenue (income) is the rental income earned during the reporting period regardless of when cash is collected from the tenant.
Openrepairs
Repairs expense is the cost of restoring an asset to its previous condition; it is expensed in the period incurred (not an improvement).
Openrepairs and maintenance expense
Repairs and maintenance expense covers routine costs to keep an asset operating or restore it; major improvements that extend useful life are typically capitalized.
OpenRepayment conditions
Repayment conditions (payment terms) define how and when payment is made, such as advance percentages or payment within a stated number of days.
OpenRepayment in advance
Repayment in advance is a payment made before the supply of goods or services; it is typically recorded as an advance to supplier or advance from customer.
Openreplacement
Replacement refers to restoring an asset (partly or fully) to its original condition; certain replacement costs may be capitalized depending on circumstances.
OpenREPLACEMENT VALUE
Replacement value is an estimated value based on the cost to replace assets at current prices. It differs from liquidation value and is often higher than book value.
Openreplenish
Replenish (petty cash) means restoring petty cash on hand back to its fixed imprest amount by reimbursing expenses supported by vouchers.
OpenREPO
REPO (repurchase agreement) is a transaction where securities are sold with an agreement to repurchase them later at a specified price and date.
OpenReportable Condition
A reportable condition is a significant deficiency in internal control identified by the auditor that should be communicated to those charged with governance.
OpenReportable Segment
A reportable segment is an operating/geographical segment that must be disclosed separately under the applicable segment reporting standard because it meets specific reporting thresholds.
OpenReporting Entity
A reporting entity is the legal entity (or group) for which financial statements are prepared and presented.
OpenReporting Period
Reporting period is the time interval covered by a set of financial statements (commonly 12 months), and may vary in special cases subject to applicable rules.
OpenRepresentation expenses
Representation expenses are costs for entertainment or representational activities (e.g., receptions, banquets) incurred to support business relationships.
OpenRequisition
A requisition is an internal written request to purchase goods or services; once approved it is typically used to create a purchase order.
Openresidual value
Residual value is the estimated amount an entity expects to obtain from disposing of an asset at the end of its useful life, after deducting disposal costs.
Openretained earnings
Retained earnings are accumulated profits kept in the business after dividends and other distributions.
OpenRetained Earnings
Retained earnings represent accumulated profits that are reinvested in the business instead of being distributed to owners.
Open