External events
External events are transactions between the business and outside parties (customers, suppliers, banks) that create objective evidence and usually trigger accounting recognition.
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.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It reflects current marke...
OpenFair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
OpenFair value hierarchy
A framework categorizing fair value measurements into Levels 1, 2, and 3.
OpenFASB Financial Accounting Standards Borad
FASB is the U.S. private-sector standard setter that issues and updates U.S. GAAP, providing guidance for financial reporting to improve comparability and transparency.
OpenFiixed Assets Turnover
Fixed asset turnover measures how efficiently a company generates sales from property, plant, and equipment; it is typically calculated as net sales divided by average fixed assets.
OpenFinancial asset at amortised cost
A financial asset held to collect contractual cash flows.
OpenFinancial asset at fair value through OCI
An asset measured at fair value with changes recognized in OCI.
OpenFinancial asset at fair value through P&L
An asset measured at fair value with changes recognized in profit or loss.
OpenFinancial Close
The process of finalizing all financial activities and preparing financial statements at the end of an accounting period.
OpenFinancial Close
Financial Close is the period-end process of completing postings, reconciliations, adjustments, and reviews to finalize the accounts and produce reliable financial statements within a defined timeline...
OpenFinancial guarantee contract
A contract requiring payments to reimburse the holder for a loss.
OpenFinancial Ratio
Ratios include profitability, liquidity, efficiency, and leverage measures and help compare results over time or against industry benchmarks.
OpenFinancial Statements
Financial statements are formal reports showing the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement.
OpenFinTech
FinTech refers to the application of technology to improve and automate the delivery of financial services.
OpenFixed Asset
A fixed asset is a long-term tangible asset used in business operations, such as buildings, machinery, and vehicles. It is depreciated over its useful life.
OpenFixed Assets
Fixed assets are long-term tangible assets used in operations (e.g., buildings, equipment) that provide benefits over multiple periods and are depreciated over their useful lives.
OpenFixed costs
Costs that remain constant regardless of activity level.
Openfixed expenses
Fixed expenses remain largely unchanged within a relevant range regardless of activity level (e.g., rent, salaries); they are key in break-even and budgeting analysis.
OpenForecast
Forecasts are updated more frequently than budgets to reflect changes in market conditions, performance trends, and business expectations.
OpenFraud risk
The risk of intentional misstatements in financial statements.
OpenFRS 11
FRS 11 focuses on impairment: comparing an asset’s carrying amount to its recoverable amount and recognizing a write-down when carrying amount exceeds recoverable value.
OpenFRS 19
FRS 19 addresses deferred tax accounting, requiring recognition of deferred tax on timing differences with detailed measurement and disclosure rules, with some exceptions based on intent and realizabi...
OpenFunctional Currency
Functional currency is the currency of the primary economic environment where the entity generates and spends cash, and it drives measurement of most transactions.
OpenFunctional currency
Functional currency is the currency of the primary economic environment in which the entity operates and generates cash flows.
OpenFund Accounting
Fund accounting segregates resources into separate funds according to purpose or restrictions, improving accountability in governments and nonprofits (e.g., capital projects fund, grants fund).
OpenFuture Value
Future value is the amount an investment will grow to at a future date given an interest/discount rate and compounding periods; it reflects the time value of money.
OpenGAAP
GAAP refers to Generally Accepted Accounting Principles—an established framework of accounting rules and reporting standards used to prepare consistent financial statements (e.g., U.S. GAAP).
OpenGeneral Ledger
The general ledger is the central record containing all accounts and postings from journals, forming the basis for trial balance and financial statements.
OpenGeneral Ledger
The general ledger contains all accounts used in the company's accounting system. It records all financial transactions after posting journal entries.
OpenGeneral Ledger
It summarizes postings from journals and provides account balances used to prepare trial balances and financial statements.
OpenGenerally Accepted Accounting Principles (GAAP)
Generally Accepted Accounting Principles (GAAP) are the authoritative accounting standards and conventions applied when preparing financial reports to ensure consistency, reliability, and comparabilit...
OpenGoing Concern
Going concern assumes the entity will continue operating in the normal course for the foreseeable future, so assets and liabilities are measured without assuming liquidation or forced sale.
OpenGoing Concern
Auditors assess whether there are events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern.
OpenGoing concern
Going concern is the assumption that an entity will continue operating for the foreseeable future without intention or need to liquidate.
OpenGoing concern assessment
An assessment of whether the entity is able to continue operating for the foreseeable future.
Opengoing concern assumption
The going concern assumption presumes the entity will continue operating for the foreseeable future; if doubts exist, management must assess and disclose material uncertainties.
Opengoodwill
Goodwill is the excess of purchase consideration over the fair value of identifiable net assets acquired; it is tested for impairment and reflects expected future benefits from the acquisition.
OpenGoodwill
Goodwill represents the excess paid in a business acquisition over the fair value of identifiable net assets. It reflects brand value, customer relationships, and reputation.
OpenGrantee
A grantee is the party that receives ownership or rights in property or assets from the grantor under a legal instrument or agreement.
OpenGrantor
A grantor is the party that transfers ownership or rights in property or assets under an agreement, deed, trust, or similar legal arrangement.
OpenGross Domestic Product (GDP)
GDP is the total value of goods and services produced within a country’s borders over a period; it measures economic output and is commonly used to assess growth and size of an economy.
Opengross profit
Gross profit equals net sales minus cost of goods sold; it reflects the profit generated from core trading activities before operating expenses and other costs.
OpenGross Profit
Gross profit is calculated by subtracting the cost of goods sold from revenue. It indicates how efficiently the company produces or purchases goods.
OpenGross Profit
Gross profit indicates how efficiently a business produces or sells goods before operating expenses, finance costs, and taxes.
OpenGross Sales
Gross sales are total sales before deductions such as returns, allowances, and discounts; analyzing the gap to net sales helps assess pricing and returns behavior.
OpenHedge accounting
A method to match gains and losses on hedging instruments with the hedged item.
Openhigh-low method
The high-low method estimates variable cost per unit and fixed cost using only the highest and lowest activity levels; it is quick but sensitive to outliers.
OpenHolding Company
A holding company is an entity that owns controlling interests in other companies, influencing decisions through voting power; it may consolidate subsidiaries and manage investments strategically.
OpenIAS 1 - Presentation of Financial Statements
IAS 1 sets overall requirements for fair presentation and minimum content of financial statements, covering going concern, accrual basis, materiality, and consistent presentation.
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