SPOILAGE
Spoilage is the loss or waste in production. Normal spoilage is expected and included in product cost, while abnormal spoilage is avoidable and expensed when incurred.
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.
Standard Cost
Standard cost is a predetermined cost used as a benchmark for materials, labor, and overhead, and variances are analyzed by comparing actual to standard.
OpenStanding Order
The account holder sets the amount and schedule and may arrange an end date. It differs from direct debit, where an authorized payee initiates collection. Setting up a standing order does not prove th...
OpenStatement of Cash Flows
The statement of cash flows explains cash inflows and outflows classified into operating, investing, and financing activities for the reporting period.
OpenStatement of Changes in Owner's Equity
The statement of changes in owner’s equity shows movements in equity components during the period (capital, reserves, retained earnings, etc.).
Openstatement of stockholders' equity
The statement of stockholders’ equity summarizes changes in equity accounts during the period, including share capital, reserves, and retained earnings.
Openstatic budget
A static budget is prepared for a single level of activity and does not change with actual volume; it is used mainly for planning and variance analysis.
Openstock dividend
A stock dividend is a distribution of additional shares to existing shareholders, increasing shares outstanding while generally reducing market price per share proportionally.
OpenStop Payment Order
The instruction identifies the cheque and requires confirmation of its status with the bank. Requesting or confirming a payment stop does not, by itself, cancel the underlying debt or establish that a...
OpenStranded Plant
Stranded plant refers to costs invested in equipment or facilities that cannot be recovered or reversed, similar to a sunk cost.
OpenStrategic Asset
In relation to the assets held by a legal economic entity, means an asset or group of assets that the economic entity needs to retain if the entity is to maintain the entity's capacity to achieve or p...
OpenStrategic Goal
It is the goal that the organization aims to achieve that develops from strategic issues. They transform strategic issues into specific performance objectives that impact the entire organization. It c...
OpenStrategic initiatives
A strategic initiative is a project or action that is carefully defined and designed to achieve your project objectives, helping to bring your strategy to fruition. A robust strategic initiative is cl...
OpenStrategic institutions
Institutional strategies are patterns of organizational action concerned with the formation and transformation of institutions, fields and the rules and standards that control those structures.
OpenStrategic performance management
Provides a detailed blueprint for turning a company's vision into reality by breaking down what an entity needs to achieve into real, measurable actions. It is a methodology for measuring, monitoring ...
OpenStrategic Planning
Strategic planning is a process in which an organization's leaders define their vision for the future and define their organization's goals and objectives. The process involves determining the sequenc...
OpenStrategic Systems Audit
Strategic Systems Audit focuses on the auditing procedures that test the assertions at entity-level based on the holistic understanding of the client business environment and business dynamics.
OpenStraw Man
A straw man is a prototype solution to a problem, built on incomplete information and on ideas that have not been fully thought through. Even in this rough state, it helps ensure everyone involved has...
OpenSubscription Accounting
Subscription Accounting covers how subscription-based revenues and related costs are recognized over time, including contract terms, performance obligations, deferrals, renewals, churn, and metrics us...
OpenSubsequent events
Subsequent events are events occurring after the reporting period that may require adjustment or disclosure in the financial statements.
OpenSubsequent Events
Material event that occurs after the end of the accounting period and before the publication of a Financial Statements of entity. Such events are disclosed in the notes to the financial statements. Al...
OpenSubsidiary
A subsidiary is an entity controlled by a parent. Control typically involves power over relevant activities, exposure to variable returns, and ability to affect those returns.
Opensubsidiary ledger
A record of the details to support a general ledger account. The general ledger account is often referred to as the control account. For example, the accounts receivable subsidiary ledger provides the...
OpenSubstance over form
Substance over form is an accounting principle that requires transactions to be recorded based on their economic reality rather than their legal structure.
OpenSubstantive analytical procedures
Analytical procedures used as substantive tests to detect misstatements.
OpenSubstantive procedures
Substantive procedures are audit tests designed to detect material misstatements at the assertion level.
Opensum-of-the-years' digits (SYD) method of depreciation
A form of accelerated depreciation which means that in the early years of an asset's life there is more depreciation expense than under the straight-line method. However, in the later years of the ass...
Opensum-of-the-years-digits method
Accelerated depreciation method where the depreciable base is spread over the asset life, with each year's portion being a unique but declining fraction tied to the overall asset life.
OpenSundry account
An account where miscellaneous items are recorded, e.g., Sundry Receivable represent miscellaneous receivables.
OpenSundry Creditors
Refers to companies or individuals to which money is owed.
OpenSundry Debtor
Amounts due for goods sold or services rendered or in respect of contractual obligations. Also termed: debtor, trade debtor, and accounts receivable.
OpenSundry Shareholders
A group of miscellaneous shareholders.
Opensunk cost
A historical cost in the past; it is already spent and you cannot change it. Decisions involve only the present and the future, so sunk costs should not be considered for decision-making.
OpenSuperannuation
The act of discharging someone because of age (especially to cause someone to retire from service on a pension); or a monthly payment made to someone who is retired from work.
OpenSuperannuation Fund
Pension fund.
OpenSupplemental financial statements
Reports containing more detailed information than is shown in the primary financial statements.
OpenSupplier credit
An agreement between a supplier and a buyer that provides credit up to a certain limit, sometimes with guarantees. Example: a credit line of 500,000 for three months, to be settled before the end of t...
OpenSupplier Financing
Supplier financing is when a supplier grants the company a negotiated commercial credit line, allowing 90 to 120 days to pay for goods (often with interest/charges).
OpenSupplier of financial intermediation services
A company working in financial services for other companies (financial intermediation).
OpenSupplies
Supplies means buying items from a supplier. Supplies may be merchandise (inventory) or may be treated as expenses, depending on accounting policy and recognition principles.
Opensupplies expense
Supplies expense refers to the cost of supplies consumed during the period. If supplies are not consumed, they may be recorded as inventory/prepaid until used.
OpenSupply
Supplies means buying items from a supplier. Supplies may be merchandise (inventory) or may be treated as expenses, depending on recognition principles.
OpenSupporting documents
Supporting documents are documents that support an opinion or evidence for a point, such as documents supporting the audit process and providing technical evidence.
OpenSurcharge
An additional charge added to a basic charge.
OpenSurplus
More than is needed or used; in finance it may refer to surplus profits, surplus capital, etc.
OpenSurTaxes
Additional taxes on something already taxed, such as a higher rate of tax on incomes above a certain level.
Opensuspense account
An account in accounting software used temporarily to hold amounts until they are correctly identified and classified.
OpenSuspense Account
A Suspense Account is a temporary holding account used when the correct classification is unknown at the time of posting; balances should be investigated and cleared promptly to the proper accounts.
OpenSuspense Account
A suspense account is a temporary holding account used when a transaction cannot be immediately classified or the correct ledger account is unclear. Amounts are recorded here only until investigation ...
OpenSwift Code
SWIFT or BIC codes are international bank identifiers used for sending money across countries and for some official purposes.
Open