Return of Capital
Return of capital is a distribution to investors that is not a dividend from earnings; it reduces the investor’s invested capital.
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.
Return on assets (ROA)
Return on assets (ROA) measures profitability relative to total assets, commonly calculated as net income divided by average total assets.
OpenReturn On Capital Employed - ROCE
ROCE measures how efficiently capital employed generates profit, commonly calculated as operating profit (EBIT/PBIT) divided by (total assets minus current liabilities).
OpenRETURN ON INVESTED CAPITAL (ROIC)
ROIC measures the return generated on invested capital (debt and equity) used in operations; formulas vary by context but focus on after-tax operating profit relative to invested capital.
OpenReturn on Sales
Return on sales measures profitability per unit of sales, commonly calculated as pre-tax income (or operating profit) divided by total sales.
OpenSurTaxes
Additional taxes on something already taxed, such as a higher rate of tax on incomes above a certain level.
OpenTariff
Usually, a country's tax on imports. May sometimes refer to the rate of tax and is used interchangeably with the term duty.
OpenTariff Ad Valorem
A tariff determined as a percentage of the value of the goods.
OpenTax
A charge levied by a governmental unit on income, consumption, wealth, or other basis.
OpenTax base
The amount attributed to an asset or liability for tax purposes.
OpenTax base
The tax base is the amount of income on which tax will be calculated after tax adjustments according to tax laws, for a company or an individual.
OpenTax Court
A court competent to examine tax-related disputes where a jurisdiction allocates a court to tax matters.
Opentax depreciation
Depreciation used on a company's income tax return, usually different from depreciation in financial statements.
OpenTAX EFFECT METHOD
Tax effect method recognizes the tax effect in the year the relevant income is recorded, regardless of when tax is payable.
OpenTax Invoice
Tax invoices support VAT reporting and input VAT recovery and must include mandatory fields such as supplier details, VAT number, date, description, and VAT amount.
OpenTax loss carry forward/backward
A tax benefit that lets a company or individual deduct losses to reduce tax liability, by carrying losses forward/backward (where permitted).
OpenTax loss carryforward
Tax loss carryforward allows unused tax losses to be carried forward to offset taxable profits in future periods, subject to conditions and limits.
OpenTax Payable Method
A method where tax expense equals the provision for taxes payable for the period and deferred tax is not recognized.
OpenTax Period
Businesses must report VAT for each tax period according to the assigned filing frequency and maintain proper records covering that period.
OpenTax residency
The status determining in which jurisdiction a person or entity is taxable.
OpenTax Year
The annual period used to compute taxable income; may be a calendar year, fiscal year, or a short period for which a return is made.
OpenTaxable
Funds or transactions subject to taxation.
OpenTaxable income
Taxable income is the profit subject to tax after adjusting accounting profit for tax rules, exemptions, and allowable deductions.
OpenTaxable Income
Taxable income is the income reported to the government for calculating income tax after deductions allowed by law.
OpenTaxable Supply
Taxable supplies require proper tax invoicing and reporting, and they generally allow recovery of related input VAT, subject to conditions.
OpenTaxation
The process of imposing taxes (e.g., sales tax or income tax).
OpenTemporary difference
A temporary difference is the difference between the carrying amount of an asset or liability and its tax base, creating future taxable or deductible amounts.
OpenThe Invoice
It is an invoice issued by the seller to the buyer and contains a detailed list of what was sold, whether it is a good or service. The full information on the invoice should indicate the place of ship...
OpenTransfer pricing
Transfer pricing refers to pricing of transactions between related parties, requiring that prices follow the arm’s length principle for tax purposes.
OpenValue added tax
Value Added Tax (VAT) is an indirect consumption tax imposed on the incremental value added to goods and services at each stage of production and distribution.
OpenValue Added Tax (VAT)
VAT is applied to taxable supplies, collected from customers (output VAT), and recoverable on eligible purchases (input VAT), with the net payable/remittable to the tax authority.
OpenVAT Digital
VAT digital refers to managing VAT obligations using digital systems, including e-filing, digital record keeping, e-invoice integration, and automated reconciliations. It supports accurate VAT calcula...
OpenVAT Return
VAT returns require accurate sales and purchase records and reconciliation to accounting ledgers to ensure correct tax positions.
OpenWithholding tax
Tax withheld at source on certain payments.
OpenZero Rated
denotes goods on which the buyer pays no value-added tax although the seller can claim back any tax he/she has paid.
OpenZero Rated Sales
is when a sale is taxable at the rate of 0%, i.e. no sales tax. Some examples could be: basic groceries, prescription drugs or certain medical devices.
OpenZero-Rated Supply
Zero-rated supplies are still taxable and usually allow input VAT recovery, unlike exempt supplies.
Open