Your tax season survival guide for 2019 is here!
Your tax season survival guide for 2019 is here!

QXAS Inc glossary



A

An account is something to which transactions are allocated. In bookkeeping, an account is referred to the ledger pages on which different kinds of assets, liabilities, expenses, and incomes are represented.

Accounts payable is the money owed to vendors who have offered you a type of service.

Accounts receivable is the money that your customers haven’t paid you for a service you provided them.

An accountant is a person who practices accounting. His or her job includes keeping or inspecting financial accounts.

An accounting period is a part of the financial year. Usually, each calendar month is considered to be a separate accounting period.

An accounting year is a period for which a company prepares accounts.

Accrual is a cost that you haven’t been billed for but does have the benefit of being charged.

Accrued expenses are the cost of services received but not yet paid.

Aged creditors report shows a detailed view of the amount you owe to, or are owed by vendors up to a specific date.

Aged debtors report shows a detailed view of the amount your customers owe you or your company.

Amortization is the process of spreading payments across multiple periods. The term is primarily used to separate amortization of loans, and amortization of assets.

An annual report presents a comprehensive view of a company’s activities in the preceding financial year.

An annuity is a series of payments made at equal intervals of time.

An appropriation account is an extension of the profit and loss statement.

Articles of Association is a document defining the purpose of a company with the responsibilities of its members clearly defined.

Assets are defined as the resources owned by a company that has a measurable economic value and can be expressed in dollars.

An audit is a process of inspecting a company’s accounts by an independent body.

An auditor is a person who is appointed by a company to perform an audit.

B

Bad debt is an amount owed to you but is unlikely to be paid.

A balance sheet is a detailed report that shows how much a company owes and owes in a given period.

Bank reconciliation is the process of matching figures from the numbers in a bank statement to the accounting records.

A bank loan is a means of capital which provides medium or long-term finance to a company.

Bankruptcy is a term used for a company or an individual that is not in the position to pay off their outstanding debts.

Bookkeeping is the systematic way of recording financial transactions in a company.

A budget is the expected financial activity for a company account.

B2B refers to the commerce between two companies.

B2B refers to the commerce between a company and an individual customer.

C

Capital is a term used to describe financial assets.

A capital asset includes property of any kind, movable or immovable, tangible or intangible, fixed or circulating; a company owns.

Capital expenditure is the money spent by a company to acquire or to maintain fixed assets.

Capital gain is a profit that made from the sale of an investment or a property.

A capital reserve is an amount of money set aside for a specific purpose or a long-term project or to mitigate a capital loss.

Capitalization is a capital provision for a company.

Cash is money in notes and coins.

Cash accounting is the method of accounting, available to most small-size companies, in which payment receipts are recorded in the period in which they are paid.

Cash book is a ledger in which payments and receipts of money are recorded.

A cash dividend is the amount of money paid to shareholders from the company’s accumulated profits.

Cash basis is the process of recording transactions for expenses and revenues when the corresponding cash has been paid or is received.

Cash flow is the money coming in, and going out of a company. The sum of money is usually measured over a period, such as every quarter or every six months.

Cash receipt is the money received by a company for its services.

A CFP is a person who helps companies meet their long-term business objectives. A CFP is awarded to those professionals that have completed the CFP Board’s initial and in-process certification requirements.

Cash ratio is the ratio of the liquid assets to the current liabilities of a company.

CPA is a designation given to an accountant by AICPA for meeting their education and experience requirements and passing the Uniform CPA exam.

A chart of accounts offers a detailed listing of all the accounts in an accounting system.

A checkbook comprises printed ready-to-use checks.

A closing balance is an amount in an account at the end of a period.

Closing stock is an amount in the inventory that a company has at the end of a financial period.

A contingent liability is a potential liability that could occur at an uncertain future event.

Convertible preferred stock can be converted into a fixed number of common shares, usually any time after a pre-decided date.

A corporation tax is a direct tax imposed by a jurisdiction on the income or capital of corporations.

Cost accounting is the process of examining the cost structure of a company.

A credit agreement is a legal contract that outlines the terms associated with a loan.

A credit balance is an amount found at the bottom right-hand side of a general ledger.

A credit card is a plastic card issued by a bank that allows the holder to buy goods or services on credit.

A creditor is a person who your company owes money to.

A current account is an active bank account from which money can withdrawn without any prior notice.

A current liability is an amount of money owed by your company which needs to be paid within a year.

A current asset is a kind of asset that’s owned by your company and is expected to convert into cash in a year.

A current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations.

D

A debenture is a long-term security which yields a fixed rate of interest that is issued by a company and secured against assets.

Debit is the amount of money deducted from a person’s bank account.

Debit balance is the amount found at the bottom left-hand side of a general ledger.

A debit card is a plastic card issued by a bank that allows the holder to transfer the money electronically from their bank account while making a purchase.

Debt is a sum of money that is owed by a company or owed to a company.

A debtor is an entity or a person that owes money to another entity or person.

In accounting, deferral means not to immediately recognize certain expenses or revenues in the income statement until a more favorable or appropriate time.

A deferred income tax is a liability resulting from a difference in income recognition between a company’s accounting methods and the tax laws.

Deficit stands for the excess of liabilities or expenditure over assets or income in a given period.

Depletion is an accrual accounting concept that allocates the cost of natural resources to a company’s income statements from its balance sheet.

Depreciation is the reduction of the cost of a fixed asset in a specific period.

Discount is defined as a concession in the price of a product or service.

Disposable income is the amount of money with an individual or an entity to use, invest or save after the taxes have been paid.

A dividend is that sum of money that is paid to someone who owns a share in the company.

E

Earnings are the sum of money obtained after subtracting income from the cost of sales and expenses of a company in a given period.

EPS is that part of a company’s profit which is allocated to each outstanding share of common stock.

An employee benefit plan comprises a comprehensive view of the types of benefits that have been granted to the employees of a company.

An entrepreneur who sets up a company and takes up financial risks in the hope of making profits.

Equity stands for a company’s net worth. It is the value of a shareholder’s investment in a company.

An escrow is a legal agreement in which a third party holds an asset on behalf of two other parties who are in the process of completing a transaction concerning that asset.

An estate tax is a type of tax levied on the heir’s inherited estate portion if it exceeds the exclusion limit set by law.

An excise tax is a type of tax that is levied on goods at the time of manufacture and not at the time of sale.

An exemption is the state of being free from any liability or obligation imposed on a company or a person before.

Expenditure implies a payment done to buy an asset or to reduce liability.

An expense is a cost associated with running a company.

The expense ratio determines the relationship between expenses and sales. The ratio expressed is in percentage.

F

FIFO stands for “First In, First Out.” It’s a cost layering method used to determine the value of the cost of goods sold and ending inventory.

Finance is the management of money by companies or governments.

A finance lease is defined as a lease for purchasing a new asset. For instance, if you are leasing an asset and taking on the risks and rewards associated with it, then it is called a finance lease.

Financial accounting is the field of accounting concerning analysis and reporting of financial transactions related to a business.

Financial accounting standards give detailed guidance on dealing with specific accounting issues.

FASB is a private, non-profit organization responsible for establishing and improving GAAP within the USA in the public’s interest.

A financial statement offers a record of the financial activities of a company, individual or any other entity.

The financial year runs from 1st April of every year till 31st March of the following year.

A fixed cost is a cost that stays the same irrespective of the number of sales a company does.

Fixed capital is the capital invested in fixed assets.

Fixed assets are those assets that will be useful to a company over a period. Such assets cost more than the daily running expenses.

A fiscal year is a period used by companies for accounting and budgeting purposes. This period is also known as the “tax year.”

Foreclosure is a legal process by which the owner of an asset forfeits all rights of that asset.

Foreign exchange is the process of converting one currency into another.

FCF is the flow of cash available to all investors of a company.

Fraud can be broadly defined as an act of deception that involves financial transactions for personal or professional gains.

FOB is a term which indicates the risk of loss of a product to the buyer from the seller.

Full disclosure is a concept that requires a company to disclose necessary information about its operations to its investors and creditors so that they can make an informed decision about the company.

G

GAAP is a cluster of accounting standards, rules, and procedures defined by the accounting industry that is adopted by nearly all publicly traded U.S. companies.

GAAS is a list of guidelines for how audits ought to be conducted in any company across the USA. AICPA set these rules.

A master journal, a public journal comprises a record all of company transactions.

A general ledger contains a record of all transactions about a company’s assets, liabilities, expenses, and revenue.

Goodwill is defined as the established reputation of a company. It is a quantifiable asset but calculated as part of its value when sold.

Gross income is the total amount of income earned on an annual basis, from all sources, before paying taxes.

Gross loss is the total amount of money a company pays for expenses like payroll, leasing charges, equipment purchases and more to keep its operations going.

Gross margin is the difference between the cost of goods sold and revenue earned.

Gross profit is the difference between the cost of sales and income earned.

Gross sales are the total amount of sales done in a given period without any deductions within the figure.

H

A historical cost is an accounting value in which the price of an asset on the balance sheet is based on the original cost when bought by the company.

I

Income is defined as the amount of money received for work or through investments regularly.

The income statement is a financial statement reporting a company’s financial performance over a pre-defined accounting period.

Inflation is defined as the general increase in prices over a period of time.

Insolvency is defined as the situation wherein the liabilities of a company exceed its assets.

Insurance is a contract stating that a company is entitled to receive reimbursement or financial protection in case of any pre-defined disaster or mishap.

Interest is the sum of money paid a particular rate on the delay of a repayment of a debt or the use of money lent.

Internal audit is an activity undertaken for independent assurance that a company’s internal control processes, risk management, and governance are operating flawlessly.

IRS is the governing body in the USA tasked with the enforcement of income tax laws and collection of federal income taxes.

Inventory is defined as the complete list of goods in stock or items available with a company at a point in time.

Investment is the purchase of goods or services, not to be consumed today, but for future use to create wealth.

J

A joint venture happens when two or more people come together to form a temporary partnership to achieve the same aim.

L

A lease is a contract in which one party conveys property or services to another for a defined period, in return for a periodic payment.

LIFO stands for “Last In, First Out.” It’s a cost layering method used to determine the value of the cost of goods purchased last but sold first.

Lease acquisition cost is a type of expenditure incurred by those parties that are entering a lease agreement.

A ledger is a book containing a record of all financial accounts.

A leveraged buyout is a process of acquiring another business using borrowed money to meet that acquisition cost.

A liability is defined as a company’s legal, financial obligations or debts that arise during business operations. A liability has a credit balance typically.

A liquid asset is a type of asset that can be converted into cash in a short period without causing any loss in value.

Liquidation means to wind up a company by selling its un-pledged assets for cash to pay off its unsecured creditors.

A loan is an amount of borrowed money that is typically paid back with interest.

M

Macroeconomics is the study of the behavior and performance of an economy as a whole.

Management accounting includes the preparation of management reports to obtain accurate information on the finances of a company to make daily and short-term decisions.

A margin is a difference between the loan amount of a broker and the total value of securities held by an investor.

Marginal cost is the cost of one additional unit of output.

Market price is the economic price for which a product or service is offered in the marketplace.

Market share denotes a company’s percentage of an industry’s total sales.

Market value is the estimated value of an asset depending upon how much a buyer will be willing to pay the seller.

Microeconomics is the study of the behavior of firms, individuals and households in decision making and resource allocation processes.

Monopoly is a situation wherein a company has an exclusive hold on the supply of a product or service in the marketplace.

N

NASDAQ is an American stock exchange which comprises over 3,300 companies from multiple industries such as financial services, communications, transportation, media and more.

Net profit occurs when the total revenue earned exceeds the expenses incurred in a period.

Net income is the total amount of income earned on an annual basis, from all sources, after factoring deductions and taxes from the gross income.

Net loss occurs when the expenses exceed the total revenue earned in a period.

Net sales are the total amount of sales done in a given period after any deductions included in the figure.

O

Operating expense is an expenditure incurred by a company as a result of running its normal, day-to-day operations.

Opportunity cost is a benefit or value of something that must be given up to acquire something else.

Outsourcing is the practice of hiring another company to deliver services and handle operations previously done by the company’s employees.

Overhead is that cost incurred to run a company which can’t be directly attributed to a specific activity.

P

The Pareto Principle, known as the 80/20 rule, that states 80% of our output comes from 20% of our efforts. This rule helps identify and prioritize activities to boost productivity and success of an individual or a company.

A penalty is an amount of money that a court of law or an entity decides, that has to be paid as a punishment for an offense. The penalty amount is usually agreed upon in advance.

A partnership is a form of business where two or more individuals own a company and are equally responsible for managing its operations, and incomes or losses it generates.

Physical inventory is a process of counting the entire inventory of a company – physically.

Preference shares are shares that entitle the shareholder to a fixed dividend.

Prepaid expenses are those expenses that have already been in advance. They are recorded as a current asset in a company’s balance sheet.

Preliminary expenses are expenses incurred by a company long before its incorporation. Such costs include statutory fees, project report, company logo, etc.

V

Venture capital is a type of equity provided to early-stage or small-scale companies.

W

Working capital is a form of money used by a business to carry out daily trading operations.

A write-off is the concept of canceling a worthless asset or a bad debt from the account.

A

An account is something to which transactions are allocated. In bookkeeping, an account is referred to the ledger pages on which different kinds of assets, liabilities, expenses, and incomes are represented.

Accounts payable is the money owed to vendors who have offered you a type of service.

Accounts receivable is the money that your customers haven’t paid you for a service you provided them.

An accountant is a person who practices accounting. His or her job includes keeping or inspecting financial accounts.

An accounting period is a part of the financial year. Usually, each calendar month is considered to be a separate accounting period.

An accounting year is a period for which a company prepares accounts.

Accrual is a cost that you haven’t been billed for but does have the benefit of being charged.

Accrued expenses are the cost of services received but not yet paid.

Aged creditors report shows a detailed view of the amount you owe to, or are owed by vendors up to a specific date.

Aged debtors report shows a detailed view of the amount your customers owe you or your company.

Amortization is the process of spreading payments across multiple periods. The term is primarily used to separate amortization of loans, and amortization of assets.

An annual report presents a comprehensive view of a company’s activities in the preceding financial year.

An annuity is a series of payments made at equal intervals of time.

An appropriation account is an extension of the profit and loss statement.

Articles of Association is a document defining the purpose of a company with the responsibilities of its members clearly defined.

Assets are defined as the resources owned by a company that has a measurable economic value and can be expressed in dollars.

An audit is a process of inspecting a company’s accounts by an independent body.

An auditor is a person who is appointed by a company to perform an audit.

B

Bad debt is an amount owed to you but is unlikely to be paid.

A balance sheet is a detailed report that shows how much a company owes and owes in a given period.

Bank reconciliation is the process of matching figures from the numbers in a bank statement to the accounting records.

A bank loan is a means of capital which provides medium or long-term finance to a company.

Bankruptcy is a term used for a company or an individual that is not in the position to pay off their outstanding debts.

Bookkeeping is the systematic way of recording financial transactions in a company.

A budget is the expected financial activity for a company account.

B2B refers to the commerce between two companies.

B2B refers to the commerce between a company and an individual customer.

C

Capital is a term used to describe financial assets.

A capital asset includes property of any kind, movable or immovable, tangible or intangible, fixed or circulating; a company owns.

Capital expenditure is the money spent by a company to acquire or to maintain fixed assets.

Capital gain is a profit that made from the sale of an investment or a property.

A capital reserve is an amount of money set aside for a specific purpose or a long-term project or to mitigate a capital loss.

Capitalization is a capital provision for a company.

Cash is money in notes and coins.

Cash accounting is the method of accounting, available to most small-size companies, in which payment receipts are recorded in the period in which they are paid.

Cash book is a ledger in which payments and receipts of money are recorded.

A cash dividend is the amount of money paid to shareholders from the company’s accumulated profits.

Cash basis is the process of recording transactions for expenses and revenues when the corresponding cash has been paid or is received.

Cash flow is the money coming in, and going out of a company. The sum of money is usually measured over a period, such as every quarter or every six months.

Cash receipt is the money received by a company for its services.

A CFP is a person who helps companies meet their long-term business objectives. A CFP is awarded to those professionals that have completed the CFP Board’s initial and in-process certification requirements.

Cash ratio is the ratio of the liquid assets to the current liabilities of a company.

CPA is a designation given to an accountant by AICPA for meeting their education and experience requirements and passing the Uniform CPA exam.

A chart of accounts offers a detailed listing of all the accounts in an accounting system.

A checkbook comprises printed ready-to-use checks.

A closing balance is an amount in an account at the end of a period.

Closing stock is an amount in the inventory that a company has at the end of a financial period.

A contingent liability is a potential liability that could occur at an uncertain future event.

Convertible preferred stock can be converted into a fixed number of common shares, usually any time after a pre-decided date.

A corporation tax is a direct tax imposed by a jurisdiction on the income or capital of corporations.

Cost accounting is the process of examining the cost structure of a company.

A credit agreement is a legal contract that outlines the terms associated with a loan.

A credit balance is an amount found at the bottom right-hand side of a general ledger.

A credit card is a plastic card issued by a bank that allows the holder to buy goods or services on credit.

A creditor is a person who your company owes money to.

A current account is an active bank account from which money can withdrawn without any prior notice.

A current liability is an amount of money owed by your company which needs to be paid within a year.

A current asset is a kind of asset that’s owned by your company and is expected to convert into cash in a year.

A current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations.

D

A debenture is a long-term security which yields a fixed rate of interest that is issued by a company and secured against assets.

Debit is the amount of money deducted from a person’s bank account.

Debit balance is the amount found at the bottom left-hand side of a general ledger.

A debit card is a plastic card issued by a bank that allows the holder to transfer the money electronically from their bank account while making a purchase.

Debt is a sum of money that is owed by a company or owed to a company.

A debtor is an entity or a person that owes money to another entity or person.

In accounting, deferral means not to immediately recognize certain expenses or revenues in the income statement until a more favorable or appropriate time.

A deferred income tax is a liability resulting from a difference in income recognition between a company’s accounting methods and the tax laws.

Deficit stands for the excess of liabilities or expenditure over assets or income in a given period.

Depletion is an accrual accounting concept that allocates the cost of natural resources to a company’s income statements from its balance sheet.

Depreciation is the reduction of the cost of a fixed asset in a specific period.

Discount is defined as a concession in the price of a product or service.

Disposable income is the amount of money with an individual or an entity to use, invest or save after the taxes have been paid.

A dividend is that sum of money that is paid to someone who owns a share in the company.

E

Earnings are the sum of money obtained after subtracting income from the cost of sales and expenses of a company in a given period.

EPS is that part of a company’s profit which is allocated to each outstanding share of common stock.

An employee benefit plan comprises a comprehensive view of the types of benefits that have been granted to the employees of a company.

An entrepreneur who sets up a company and takes up financial risks in the hope of making profits.

Equity stands for a company’s net worth. It is the value of a shareholder’s investment in a company.

An escrow is a legal agreement in which a third party holds an asset on behalf of two other parties who are in the process of completing a transaction concerning that asset.

An estate tax is a type of tax levied on the heir’s inherited estate portion if it exceeds the exclusion limit set by law.

An excise tax is a type of tax that is levied on goods at the time of manufacture and not at the time of sale.

An exemption is the state of being free from any liability or obligation imposed on a company or a person before.

Expenditure implies a payment done to buy an asset or to reduce liability.

An expense is a cost associated with running a company.

The expense ratio determines the relationship between expenses and sales. The ratio expressed is in percentage.

F

FIFO stands for “First In, First Out.” It’s a cost layering method used to determine the value of the cost of goods sold and ending inventory.

Finance is the management of money by companies or governments.

A finance lease is defined as a lease for purchasing a new asset. For instance, if you are leasing an asset and taking on the risks and rewards associated with it, then it is called a finance lease.

Financial accounting is the field of accounting concerning analysis and reporting of financial transactions related to a business.

Financial accounting standards give detailed guidance on dealing with specific accounting issues.

FASB is a private, non-profit organization responsible for establishing and improving GAAP within the USA in the public’s interest.

A financial statement offers a record of the financial activities of a company, individual or any other entity.

The financial year runs from 1st April of every year till 31st March of the following year.

A fixed cost is a cost that stays the same irrespective of the number of sales a company does.

Fixed capital is the capital invested in fixed assets.

Fixed assets are those assets that will be useful to a company over a period. Such assets cost more than the daily running expenses.

A fiscal year is a period used by companies for accounting and budgeting purposes. This period is also known as the “tax year.”

Foreclosure is a legal process by which the owner of an asset forfeits all rights of that asset.

Foreign exchange is the process of converting one currency into another.

FCF is the flow of cash available to all investors of a company.

Fraud can be broadly defined as an act of deception that involves financial transactions for personal or professional gains.

FOB is a term which indicates the risk of loss of a product to the buyer from the seller.

Full disclosure is a concept that requires a company to disclose necessary information about its operations to its investors and creditors so that they can make an informed decision about the company.

G

GAAP is a cluster of accounting standards, rules, and procedures defined by the accounting industry that is adopted by nearly all publicly traded U.S. companies.

GAAS is a list of guidelines for how audits ought to be conducted in any company across the USA. AICPA set these rules.

A master journal, a public journal comprises a record all of company transactions.

A general ledger contains a record of all transactions about a company’s assets, liabilities, expenses, and revenue.

Goodwill is defined as the established reputation of a company. It is a quantifiable asset but calculated as part of its value when sold.

Gross income is the total amount of income earned on an annual basis, from all sources, before paying taxes.

Gross loss is the total amount of money a company pays for expenses like payroll, leasing charges, equipment purchases and more to keep its operations going.

Gross margin is the difference between the cost of goods sold and revenue earned.

Gross profit is the difference between the cost of sales and income earned.

Gross sales are the total amount of sales done in a given period without any deductions within the figure.

H

A historical cost is an accounting value in which the price of an asset on the balance sheet is based on the original cost when bought by the company.

I

Income is defined as the amount of money received for work or through investments regularly.

The income statement is a financial statement reporting a company’s financial performance over a pre-defined accounting period.

Inflation is defined as the general increase in prices over a period of time.

Insolvency is defined as the situation wherein the liabilities of a company exceed its assets.

Insurance is a contract stating that a company is entitled to receive reimbursement or financial protection in case of any pre-defined disaster or mishap.

Interest is the sum of money paid a particular rate on the delay of a repayment of a debt or the use of money lent.

Internal audit is an activity undertaken for independent assurance that a company’s internal control processes, risk management, and governance are operating flawlessly.

IRS is the governing body in the USA tasked with the enforcement of income tax laws and collection of federal income taxes.

Inventory is defined as the complete list of goods in stock or items available with a company at a point in time.

Investment is the purchase of goods or services, not to be consumed today, but for future use to create wealth.

J

A joint venture happens when two or more people come together to form a temporary partnership to achieve the same aim.

L

A lease is a contract in which one party conveys property or services to another for a defined period, in return for a periodic payment.

LIFO stands for “Last In, First Out.” It’s a cost layering method used to determine the value of the cost of goods purchased last but sold first.

Lease acquisition cost is a type of expenditure incurred by those parties that are entering a lease agreement.

A ledger is a book containing a record of all financial accounts.

A leveraged buyout is a process of acquiring another business using borrowed money to meet that acquisition cost.

A liability is defined as a company’s legal, financial obligations or debts that arise during business operations. A liability has a credit balance typically.

A liquid asset is a type of asset that can be converted into cash in a short period without causing any loss in value.

Liquidation means to wind up a company by selling its un-pledged assets for cash to pay off its unsecured creditors.

A loan is an amount of borrowed money that is typically paid back with interest.

M

Macroeconomics is the study of the behavior and performance of an economy as a whole.

Management accounting includes the preparation of management reports to obtain accurate information on the finances of a company to make daily and short-term decisions.

A margin is a difference between the loan amount of a broker and the total value of securities held by an investor.

Marginal cost is the cost of one additional unit of output.

Market price is the economic price for which a product or service is offered in the marketplace.

Market share denotes a company’s percentage of an industry’s total sales.

Market value is the estimated value of an asset depending upon how much a buyer will be willing to pay the seller.

Microeconomics is the study of the behavior of firms, individuals and households in decision making and resource allocation processes.

Monopoly is a situation wherein a company has an exclusive hold on the supply of a product or service in the marketplace.

N

NASDAQ is an American stock exchange which comprises over 3,300 companies from multiple industries such as financial services, communications, transportation, media and more.

Net profit occurs when the total revenue earned exceeds the expenses incurred in a period.

Net income is the total amount of income earned on an annual basis, from all sources, after factoring deductions and taxes from the gross income.

Net loss occurs when the expenses exceed the total revenue earned in a period.

Net sales are the total amount of sales done in a given period after any deductions included in the figure.

O

Operating expense is an expenditure incurred by a company as a result of running its normal, day-to-day operations.

Opportunity cost is a benefit or value of something that must be given up to acquire something else.

Outsourcing is the practice of hiring another company to deliver services and handle operations previously done by the company’s employees.

Overhead is that cost incurred to run a company which can’t be directly attributed to a specific activity.

P

The Pareto Principle, known as the 80/20 rule, that states 80% of our output comes from 20% of our efforts. This rule helps identify and prioritize activities to boost productivity and success of an individual or a company.

A penalty is an amount of money that a court of law or an entity decides, that has to be paid as a punishment for an offense. The penalty amount is usually agreed upon in advance.

A partnership is a form of business where two or more individuals own a company and are equally responsible for managing its operations, and incomes or losses it generates.

Physical inventory is a process of counting the entire inventory of a company – physically.

Preference shares are shares that entitle the shareholder to a fixed dividend.

Prepaid expenses are those expenses that have already been in advance. They are recorded as a current asset in a company’s balance sheet.

Preliminary expenses are expenses incurred by a company long before its incorporation. Such costs include statutory fees, project report, company logo, etc.

V

Venture capital is a type of equity provided to early-stage or small-scale companies.

W

Working capital is a form of money used by a business to carry out daily trading operations.

A write-off is the concept of canceling a worthless asset or a bad debt from the account.