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| Jargon Buster |
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| Accounting reform |
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| Accounting reform is change
to accounting rules that goes beyond the enforcement
of standard accounting practices and the elimination
of "creative accounting". It is advocated
by those who consider the present standards
and practices of the profession wholly inadequate
to the task of measuring and reporting the
activity, success, and failure of modern enterprise,
including government. "Accounting", says Baruch
Lev, a notable proponent of such reform, "is
about accountability". He notes that the present
regime of accounting rules dates back about
500 years to Renaissance Italian practices.
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| Accounting software |
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| Accounting software is computer
software that records and processes accounting
transactions such as accounts payable, accounts
receivable, payroll and trial balance. It
may be developed in-house by the company or
organization using it, may be purchased from
a third party, or may be a combination of
a third-party application software package
with local modifications. It varies greatly
in its complexity and cost. |
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| Accounts payable |
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| Accounts payable is one of a
series of accounting transactions dealing
with the paying of suppliers to which one
owes money for goods and services. The average
household performs this task by writing checks
each month to such suppliers as the electric
company, telephone company, cable TV or satellite
dish service, the local newspaper, and so
on. |
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| Accounts receivable |
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| Accounts receivable is one of
a series of accounting transactions dealing
with the billing of customers which owe money
to a person, company or organization for goods
and services that have been provided to the
customer. This is typically done in a one
person organization by writing an invoice
and mailing or delivering it to each customer.
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| Accrual basis accounting |
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| Accrual-basis accounting
records financial events based on events that
change your net worth (the amount owed to
you less the amount you owe others). Standard
practice is to record expenses with the incomes
they are associated with. For example, your
landlord would record an income event on the
day your rent comes due (you owe it to him).
He records an expense event when the fee owed
to the rental agent comes due for your apartment
that month (he owes it to the agent). The
details of the actual cash flows and their
timing are tracked by bookkeeping. |
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| Amortization |
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| Amortization is the spreading
of expenses over future time periods of an
intangible balance sheet item such as a Leasing
(mortgage) or goodwill. |
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| Annuity |
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| In finance, an annuity is a
series of fixed payments, which might be over
a fixed number of years, over the lifetime
of an individual, or both. The most common
use of annuities is to provide a pension for
people in retirement. |
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| Asset |
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| In business and accounting an
asset is anything owned, whether in possession
or by right to take possession, by a person
or a group acting together, e.g. a company,
the value of which can be expressed in monetary
terms. Asset is listed on the balance sheet.
It has a normal balance of debit. Assets may
be classified in many ways. The principal
distinction normally made for business purposes
is between: fixed assets and current assets.
Other business subdivisions include intangible
assets, that is, those assets which, though
not visible, add to the earning power of the
business, e.g. goodwill, patents, copyrights,
etc. (also called invisible assets); liquid
assets, which are a subdivision of current
assets and also categories labelled trade
investments, quoted investments, etc. |
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| Assurance |
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| Assurance has been defined by
the American Institute of Certified Public
Accountants (AICPA) as 'Independent Professional
Services that improve information quality
or it context'. Such services are very broad
and could include assessments of internet
security and quality of health facilities. |
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| Balance sheet |
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| In formal bookkeeping and accounting,
a balance sheet is a statement of the financial
value (or "worth") of a business or other
organisation (or person) at a particular date,
usually at the end of its "fiscal year," as
distinct from a profit and loss statement
(or "P&L"), which records income and expenditures
over some period. Therefore a balance sheet
is often described as a "snapshot" of the
company's financial condition at that time.
The balance sheet has two parts: assets on
the left-hand ("debit") side or at the top
and liabilities on the right-hand ("credit")
side or at the bottom. The assets of the company
-- money ("in hand" or owed to it), investments
(including securities and real estate), and
other property -- are equal to the claims
for payments of the persons or organisations
owed -- the creditors, lenders, and shareholders.
This standard format for balance sheets is
derived from the principle of double-entry
book keeping. |
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