Financial Dictionary

Accounting & Finance Terms (English)

401 (K) PLAN

A 401(k) plan is a U.S. defined contribution retirement plan that allows employees to contribute part of their salary (often with employer matching). Contributions may receive tax advantages depending...

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940 Form

IRS Form 940 is the annual employer return for federal unemployment tax (FUTA) in the United States. Employers use it to report and pay FUTA tax, subject to credits and rules.

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941 Form

IRS Form 941 is a quarterly employer tax return in the U.S. used to report federal income tax withheld and payroll taxes (such as Social Security and Medicare) for employees.

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ABA

ABA is a professional credential in the U.S. related to accounting and advisory services for individuals and small/medium businesses. It differs from CPA in licensing scope and audit authority.

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Abatement

Abatement is a reduction or full cancellation of an amount due, commonly referring to tax, penalty, or interest relief granted under specific conditions.

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Above The Line

“Above the line” often refers to deductions or items that are included in calculating a subtotal before a key line (e.g., adjusted gross income in some tax contexts). In financial reporting, it can al...

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ACAT

ACAT (Accreditation Council for Accountancy and Taxation) is a U.S. organization that grants certain accounting and tax credentials and supports continuing professional education and ethical standards...

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ACB

ACB usually refers to Adjusted Cost Base, which represents the tax cost of an asset after adjustments such as additions, improvements, or certain deductions, used to determine taxable gains.

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Accountable Plan

An accountable plan is a reimbursement arrangement where employees must substantiate expenses and return any excess advances, allowing proper tax treatment of business expenses.

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Accounting income

Accounting income is profit measured using accrual accounting, recognizing revenues when earned and expenses when incurred, which may differ from taxable income or cash profit.

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accounting timing difference

The accounting timing difference is the effect that a deferred accounting event would have on the financial statements if it were taken into account, for example, releasing a deferred tax asset to the...

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Arm’s length principle

Transactions between related parties must be priced as if they were independent.

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Bank Debit Advice

The debit may relate to a transfer, bank fee, loan repayment or another transaction. The advice describes the bank’s action; the accountant must identify the underlying purpose. A bank debit generally...

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Below the line

“Below the line” in accounting commonly refers to items recorded outside the main operating results or directly in equity/balance sheet accounts rather than through the income statement. Usage varies ...

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Beneficial owner

A beneficial owner is the natural person who ultimately owns or controls an entity, even if the ownership is indirect or exercised through other means, and is a key concept in anti-money laundering an...

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Black Markets

A black market is an unofficial/illegal market where prohibited goods/services are traded or where transactions avoid regulation and taxes. Prices may be distorted due to risk and scarcity.

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bottom line

The bottom line refers to net income after all expenses and taxes, representing the final profitability of a business.

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Cafeteria Plan

A cafeteria plan is an employee benefit plan that allows staff to choose from a variety of pre-tax benefits. You can contribute a portion of your gross income before any taxes are calculated and deduc...

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Capital Charge

is a monetary amount, calculated by multiplying the money the business has tied up in capital, by the weighted average cost of capital (WACC). Capital charge is deducted from net operating profit afte...

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Capital Gain

Capital gains arise from selling non-inventory assets at a price higher than their purchase cost.

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CIBT

is an acronym for Cash Income Before Taxes.

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Corporate Tax

Corporate tax is calculated based on taxable income after allowable adjustments and requires compliance with registration, filing, and payment obligations.

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Corporate tax

Corporate tax is a tax imposed on the taxable profits of businesses and other taxable entities under the relevant tax law.

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CPAs (Certified Public Accountants)

CPAs are licensed professional accountants who pass the CPA exam and meet education/experience requirements; they often provide audit, assurance, tax, and advisory services.

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Deferred Tax

Deferred tax represents future tax effects of temporary differences between accounting carrying amounts and tax bases, resulting in deferred tax assets or liabilities.

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Deferred tax

Deferred tax is income tax payable or recoverable in future periods arising from temporary differences and carryforwards.

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Deferred tax asset

Income tax recoverable in future periods.

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Deferred tax liability

Income tax payable in future periods.

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Digital Tax

Digital tax refers to taxes designed to capture value created through digital services and online business models (e.g., platforms, advertising, marketplaces). These rules often focus on where users a...

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E-invoicing

E-invoicing is issuing, transmitting, receiving, and storing invoices in a structured electronic format (often integrated with ERP/accounting systems). It improves compliance, reduces manual errors, e...

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Escrow

Escrow is money held by a third party in a separate account for a specific purpose (e.g., taxes, property transactions) and released only when agreed conditions are met.

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Exempt Supply

Exempt supplies typically restrict input VAT recovery related to those supplies, and special apportionment rules may apply.

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FRS 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...

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Gross Profit

Gross profit indicates how efficiently a business produces or sells goods before operating expenses, finance costs, and taxes.

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IAS 12 - Income Taxes

IAS 12 explains accounting for current and deferred income taxes. Deferred tax arises from temporary differences and is measured based on expected tax rates when differences reverse.

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Input tax

Input tax represents VAT paid on business purchases that can be reclaimed or offset against output tax, subject to tax regulations.

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Input VAT

Recoverable input VAT reduces the VAT payable, but recovery may be restricted for certain expenses or where supplies are exempt.

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Net Income

Net Income is the residual profit after deducting all operating expenses, non-operating expenses, taxes, and losses from total revenues and gains.

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net loss

Net Loss occurs when total expenses and losses exceed total revenues and gains during an accounting period.

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net pay

Net Pay is the amount an employee receives after deducting taxes, social contributions, insurance, and other authorized withholdings from gross pay.

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Net Profit

Net profit reflects overall profitability for the period and is used for performance evaluation, dividends, and retained earnings decisions.

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Net Profit

Net profit is the final profit after deducting all expenses, including operating costs, interest, and taxes. It represents the company's financial performance during the period.

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Output tax

Output tax is the VAT charged by a business on its taxable supplies of goods or services and is payable to the tax authority.

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Output VAT

Output VAT is collected on taxable sales and must be reported and remitted to the tax authority after offsetting recoverable input VAT.

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Permanent establishment (PE)

A fixed place of business through which an enterprise operates.

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Petty Cash

Petty cash is a small, fixed fund kept on site to pay minor day-to-day expenses (e.g., taxi, stationery, small repairs). It is controlled using vouchers/receipts and periodic counts so that every cash...

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Profit 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.

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PTI

PTI stands for Pre-Tax Income, which is profit before income tax expense.

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Real-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 ...

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Reporting 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.

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