Glossary of Accounting Terms

Absorption costing A method of costing in which all fixed and variable production costs are charged to products or services using an allocation base.
Accountability The process of satisfying stakeholders in the organization that managers have acted in the best interests of the stakeholders; a result of the stewardship function of managers, which takes place through accounting.
Accounting A collection of systems and processes used to record, report, and interpret business transactions.
Accounting period The period of time for which financial statements are produced—see also Financial year.
Accounting rate of return (ARR) A method of investment appraisal that measures the profit generated as a percentage of the investment—see Return on investment.
Accounting standards See Generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS)
Accounting Standards for Private Entities (ASPE) Standards that set out recognition, measurement, presentation, and disclosure requirements dealing with transactions and events that are important in general-purpose financial statements. Applicable to private companies only.
Accounting system A set of accounts that summarize the transactions of a business which have been recorded on source documents.
Accounts “Buckets” within the ledger, part of the accounting system. Each account contains similar transactions (line items) that are used for the production of financial ...

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