This page holds our Financial Expert™ Definitions of accounting jargon and terms. Cut through accounting jargon with our explainers. Each definition page is much more than an accounting definition. Beyond …
Year to Date (YTD) – Definition
Definition of year to date (accounting): The cumulative financial result from the start of the latest accounting year until the present day. What is Year to Date (YTD)? Year to …
Variable Cost – Definition
Definition of variable cost: an expense which increases or decreases proportionately to revenue. What is a variable cost? A variable cost is also known as a direct cost, because of …
Turnover – Definition
Definition of turnover (accounting): Income. Turnover is used interchangeably with revenue and gross income in the context of financial reporting. What is turnover? Turnover is an accounting term used most …
Quality of Earnings – Definition
Definition of quality of earnings: The extent to which the profits reported by a company are likely to recur as they are driven by the core operating activities of the …
Profit – Definition
Definition of profit (investing): a financial gain, measured as the difference between the income and the costs of a particular investment or activity. What is profit? Profit is measured as: …
Overheads – Definition
Definition of overheads: A business cost which is not directly linked to production or the provision of a service. What are overheads? Overhead is a name given to the collection …
Overdraft – Definition
Definition of overdraft: A short term borrowing facilility, with a pre-agreed borrowing limit, which is repayable on demand What is an overdraft? An overdraft is a short term, unsecured bank …
Onerous Contract – Definition
Definition of onerous contract: An agreement which commits a business to obligations which will generate losses. What is a onerous contract? No business wishes to be party to an onerous …
Liability – Definition
Definition of liability (accounting): A present obligation arising from past events. What is a liability? A liability is something a business will need to settle or pay in the future. …
Journal Entry – Definition
Definition of journal (accounting): An accounting record of a single transaction, in the ‘double entry’ accounting format. What is a journal? In simple English, a journal entry is an instruction …
Joint Venture – Definition
Definition of joint venture (business): A formal partnership between two independent organisations, which sees the partners share resources to achieve a common objective. Definition of joint venture (accounting): An arrangement …
International Financial Reporting Standards (IFRS) – Definition
Definition of International Financial Reporting Standards (IFRS): A widely used set of accounting and financial reporting rules which are applied by most public companies in the creation of their financial …
Income Statement – Definition
Definition of the income statement: A financial report which presents a company’s income and expenses for a financial period, in a prescribed format. What is the income statement? The income …
Holding Company – Definition
Definition of holding company: A legal entity with a primary purpose of owning an equity stake in other companies. What is a holding company? A holding company in the UK …
Gross Profit – Definition
Definition of gross profit: gross profit is a measure of profit calculated by deducting direct costs (also known as cost of goods sold) from revenue. What is gross profit? Gross …
Gross Margin – Definition
Definition of gross margin: A ratio expressing gross profit as a percentage of revenue. Gross margin is also known as gross profit margin. How to calculate gross margin Here’s an …
Goodwill – Definition
Definition of goodwill (accounting): Goodwill represents the excess price for an asset over and above the identifiable fair value of an asset. What is goodwill? Goodwill is quite a complex …
Generally Accepted Accounting Principles (GAAP) – Definition
Definition of generally accepted accounting principles (GAAP): A comprehensive set of accounting and reporting standards which govern how companies financial statements record, measure, and disclose their financial transactions. What are …
General Ledger – Definition
Definition of general ledger: The primary set of accounts used to store and summarise the transactions of a company. What is the general ledger? It’s easiest to see the general …
Financial Statements – Definition
Definition of financial statements: A periodic report which discloses the financial performance and financial position of a company, along with other necessary disclosures. What are financial statements? Financial statements are …
Equity – Definition
Definition of equity (finance): the element of a organisations total value which is attributable to its shareholders Definition of equity (accounting): the book value of assets minus liabilities. The net …
Deferred Consideration – Definition
Definition of deferred consideration: An element of a purchase price which is only settled in cash at much later date than the transaction. What does deferred consideration mean In the …
Debenture – Definition
Definition of debenture: A long term business loan which is ‘secured’ against the assets of the company. This is a UK definition. What does debenture mean In the UK, a …
Cost of Goods Sold (COGS) – Definition
Definition of cost of goods sold (COGs): Costs of a business which can be directly attributed to revenue generated during the same financial period. What does cost of goods sold …
Capital Expenditure – Definition
Definition of capital expenditure (accounting): An outlay of a company’s funds on the purchase of equipment, tooling, machinery or sometimes property. Capital expenditure is often shortened to ‘capex’ when spoken …
Capital – Definition
Definition of capital (economics): Capital in economics represents the wealth of tangible assets and other resources which can be put to use to provide goods and services. Definition of capital …
Budget – Definition
Definition of budget (business): A long term financial plan which shows how a company plans to achieve its objectives. A summary of the income and expenditure a company will spend …
Balance Sheet – Definition
Definition of the balance sheet: The balance sheet is a key report in the financial statements of a company. In a tabular format, the balance sheet sets out the assets …
Asset – Definition
Definition of asset: An asset is a contractual right to a future economic benefit. Informally, it can also refer to anything or anyone of value. What does asset mean? Said …