GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Liability A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Liquidity The availability of cash in the near future after taking account of financial commitments [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Understandability Information provided in financial statements has the quality of understandability when is comprehensible to users who have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence.
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Sale and leaseback transaction The sale of an asset and the leasing back of the same asset. The lease payment and the sale price are usually interdependent because they are negotiated as a package. Solvency The availability of cash over the longer term to meet [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Realisable value The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal. Recognition The process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Parent An entity that has one or more subsidiaries. Profit The residual amount that remains after expenses (including capital maintenance adjustments, where appropriate) have been deducted from income. Any amount over and above that required to maintain the capital at the beginning of the [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Operating activities The principal revenue-producing activities of an entity and other activities that are not investing or financing activities. Operating cycle The time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Ordinary share An equity instrument that is [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Net realisable value The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Net realisable value refers to the net amount that an entity expects to realise from the [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Matching of costs with revenues A process in which expenses are recognised in the income statement on the basis of a direct association between the costs incurred and the earning of specific items of income. This process involves the simultaneous or combined recognition of revenues and expenses [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Matching of costs with revenues A process in which expenses are recognised in the income statement on the basis of a direct association between the costs incurred and the earning of specific items of income. This process involves the simultaneous or combined recognition of revenues and [...]
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GLOSSARY of Accounting Terms RETURN TO GLOSSARY INDEX Liability A present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Liquidity The availability of cash in the near future after taking account of financial commitments [...]
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