Absorption Costing
A costing method that includes all manufacturing costs — fixed and variable — in the cost of each unit produced.
Accelerated Depreciation
A depreciation method that recognizes higher expense in the early years of an asset's life and lower expense in later years.
Accounting Equation
The fundamental rule that total assets equal total liabilities plus total equity on every balance sheet.
Accounting Period
A defined span of time used to prepare financial statements and report business results.
AR Aging
A report that categorizes outstanding accounts receivable by the length of time each invoice has been unpaid, used to identify collection issues.
Accounts Payable
Money a company owes to its suppliers and vendors for goods or services received but not yet paid for.
Accounts Receivable
Money owed to a company by customers who have purchased goods or services on credit but have not yet paid.
Accrual Accounting
Recording revenue and expenses when earned or incurred, regardless of when cash is received or paid.
Accruals Basis
An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.
Accrued Liabilities
Expenses a company has incurred but not yet paid, recorded as current obligations on the balance sheet.
Accrued Revenue
Revenue earned but not yet received or recorded as cash.
Accrued Wages
Employee compensation that has been earned during an accounting period but has not yet been paid as of the period-end date.
Accumulated Deficit
A negative retained earnings balance indicating that cumulative net losses have exceeded cumulative profits since a company's founding.
Accumulated Depreciation
The total depreciation expense recognized on an asset since it was placed in service, shown as a contra asset on the balance sheet.
ABC Costing
A costing method that assigns overhead costs to products based on the specific activities that consume resources.
Additional Paid-In Capital
The amount investors paid for shares above their par value, recorded in the equity section of the balance sheet.
Adjusting Entries
Journal entries recorded at period-end to align revenues and expenses with the correct accounting period.
Allowance for Doubtful Accounts
A contra-asset estimating the portion of receivables that will not be collected.
Annual Report
A comprehensive yearly publication summarizing a public company's financial performance and strategy for shareholders.
Asset
Any resource with economic value owned or controlled by an individual or business.
Audit Committee
A board subcommittee overseeing financial reporting, internal controls, and external audits.
Audit Trail
A sequential record of financial transactions and system events used to verify the accuracy of accounting records.
Financial Audit
An independent examination of a company's financial statements to verify their accuracy and compliance with accounting standards.
Auditor Opinion
The formal conclusion issued by an independent auditor on whether a company's financial statements are presented fairly in accordance with GAAP.
Bad Debt Expense
The cost recognized when accounts receivable are deemed uncollectible, matched to the period revenue was earned.
Balance Sheet
A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time.
Bank Reconciliation
The process of matching a company's internal cash records to its bank statement.
Bank Statement
A monthly or periodic document issued by a bank listing all transactions, beginning and ending balances, and fees for an account during a specific period.
Book Value
The net asset value of a company as reported on its balance sheet: total assets minus total liabilities.
Break-Even Analysis
A financial tool that identifies the sales volume at which total revenues equal total costs, yielding zero profit or loss.
Burn Rate
The rate at which a company spends its cash reserves, typically expressed as a monthly figure, used to assess financial sustainability.
By-Product
A secondary output of a manufacturing process that has minor sales value compared to the main product and is produced incidentally, not by design.
CapEx
Funds used by a company to acquire, maintain, or improve physical assets such as property, equipment, or technology.
Capital Lease
A lease that transfers substantially all ownership risks to the lessee, requiring the asset and liability to be recorded on the balance sheet.
Capitalize vs. Expense
The accounting decision to record a cost as a long-term asset (capitalize) or charge it immediately to the income statement (expense).
Cash Basis Accounting
An accounting method that records revenues when cash is received and expenses when cash is paid, regardless of when they are earned or incurred.
Cash Flow Statement
A financial statement tracking cash inflows and outflows from operating, investing, and financing activities.
Chart of Accounts
An organized list of all accounts in a company's general ledger, categorized by type and assigned unique codes.
Closing Entries
Journal entries that zero out temporary accounts and transfer balances to retained earnings at period-end.
Common-Size Statement
A financial statement that expresses each line item as a percentage of a base figure, enabling comparison across companies and time periods.
Comparability Principle
The accounting requirement to use consistent methods so financial statements can be meaningfully compared across periods and companies.
Comprehensive Income
The total change in a company's equity during a period from all sources except transactions with shareholders, combining net income and other comprehensive income.
Conservatism Principle
An accounting guideline that directs companies to record losses and liabilities as soon as they are probable, but to delay recognizing gains until they are realized.
Consistency Principle
An accounting rule requiring companies to use the same accounting methods and policies from period to period unless a justified change is made and disclosed.
Consolidated Statements
Combined financial reports of a parent company and its subsidiaries, presenting them as a single entity.
Consolidation
The process of combining financial statements of a parent company and its subsidiaries into a single set of financial statements.
Contingent Liability
A potential obligation arising from a past event whose outcome depends on a future uncertain event, such as a pending lawsuit.
Contra Account
An account that carries a balance opposite to its paired account, reducing it to show the net carrying value.
Contra Liability
A balance sheet account with a debit balance that reduces a related liability account to its carrying value.
Contribution Margin
Revenue minus variable costs, representing the amount each unit sold contributes toward covering fixed costs and generating profit.
Corporation
A legal entity separate from its owners that can own property, enter contracts, and issue stock to raise capital.
Cost Accounting
A branch of accounting focused on capturing and analyzing the costs of production to support internal management decisions.
Cost Center
A department that incurs costs but does not directly generate revenue, evaluated on expense control.
Cost Driver
Any factor that causes a change in the cost of a business activity or operation.
COGM
The total cost of goods completed during an accounting period, including direct materials, direct labor, and manufacturing overhead.
COGS
The direct costs attributable to producing the goods or services a company sells during a period.
Cost of Revenue
The total direct costs incurred to deliver a product or service, used primarily by service and technology companies.
CVP Analysis
A planning tool that examines the relationship between costs, sales volume, and profit to determine break-even points and profit targets.
CPA
A licensed accounting professional who has passed the CPA Exam and met state education and experience requirements, qualified to perform audits and attest functions.
Credit Note
A commercial document issued by a seller to reduce the amount owed by a buyer, typically following a return, error, or overpayment.
Current Assets
Resources expected to be converted to cash or consumed within one year, listed at the top of the balance sheet.
Current Liabilities
Financial obligations due within one year, shown on the balance sheet below current assets.
CPLTD
The amount of a company's long-term debt that must be repaid within the next 12 months, reported as a current liability on the balance sheet.
Debit Note
A commercial document issued by a buyer to a seller requesting a reduction in the amount owed on an invoice.
Debt Covenant
A contractual condition in a loan agreement requiring the borrower to maintain specific financial ratios or behaviors.
Deferred Compensation
A portion of an employee's earnings set aside to be paid at a future date, typically at retirement, providing a tax deferral benefit.
Deferred Revenue
Cash received from customers before a company has delivered the corresponding goods or services.
Deferred Tax Asset
A balance sheet asset representing future tax savings from temporary timing differences.
Deferred Tax Liability
A balance sheet obligation representing taxes owed in the future because book income exceeds taxable income today.
Deferred Tax
The future tax consequence of temporary differences between a company's book income and its taxable income.
Depreciation Methods
The systematic approaches used to allocate the cost of a long-term asset over its useful life.
Depreciation Recapture
The IRS process of taxing the gain on a sold depreciable asset as ordinary income, to the extent of prior depreciation deductions taken.
Depreciation
The systematic allocation of a tangible asset's cost over its useful life as an accounting expense.
Diluted Shares
The total number of shares outstanding including all potentially dilutive securities, used to calculate diluted EPS.
Direct Costs
Costs that can be directly traced to the production of a specific product or service, such as raw materials and direct labor.
Direct Labor
Wages paid to workers who are directly involved in converting raw materials into finished products and whose effort can be traced to specific units.
Direct Write-Off Method
An accounting method that recognizes bad debt expense only when a specific receivable is confirmed to be uncollectible.
Discontinued Operations
A business segment or component that has been sold, abandoned, or classified as held for sale, reported separately from continuing operations in financial statements.
Double-Declining Balance
An accelerated depreciation method that applies twice the straight-line rate to the asset's remaining book value.
Double-Entry Bookkeeping
An accounting system where every transaction is recorded in at least two accounts, keeping total debits equal to total credits.
EBT
A company's profit after all operating and interest expenses, but before income tax is deducted.
Earnings Management
The use of accounting discretion to influence reported financial results, either within or outside GAAP rules.
Earnings Quality
A measure of how accurately and sustainably a company's reported net income reflects its true economic performance.
Economic Entity Assumption
The accounting principle that a business's financial records must be kept completely separate from the owner's personal finances.
EOQ
The optimal order size that minimizes total inventory costs by balancing ordering costs against holding costs.
Effective Tax Rate
The actual percentage of pre-tax income a company pays in income taxes, as opposed to the statutory tax rate.
Equity Method
An accounting approach used when an investor has significant influence over an investee, recognizing a proportional share of the investee's net income.
Equity
The residual ownership interest in an asset after all liabilities have been deducted.
Equivalent Units
A measure converting partially completed units into a fully completed unit equivalent for cost allocation.
Expense Recognition
The accounting principle governing when expenses are recorded in financial statements.
Extraordinary Items
Unusual and infrequent gains or losses that were formerly reported separately on the income statement under GAAP.
Fair Value Accounting
An accounting framework that measures assets and liabilities at their current market value rather than original cost.
Fair Value Hierarchy
A three-level classification system ranking the reliability of inputs used to measure the fair value of assets and liabilities.
FASB
The Financial Accounting Standards Board, the private-sector body responsible for establishing US Generally Accepted Accounting Principles (GAAP).
FIFO vs LIFO
Inventory costing methods that determine which unit costs flow to cost of goods sold: FIFO assumes oldest units sell first, LIFO assumes newest units sell first.
Financial Accounting
The process of recording, summarizing, and reporting a company's financial transactions to external stakeholders using standardized GAAP or IFRS rules.
Financial Modeling
The process of building a mathematical representation of a company's financial performance to support analysis and decision-making.
Financial Statements
The four core reports — income statement, balance sheet, cash flow statement, and statement of changes in equity — that summarize a company's financial performance and position.
Fiscal Quarter
One of four three-month reporting periods that divide a company's fiscal year.
Fiscal Year
A 12-month accounting period used by a company for financial reporting purposes, which may differ from the calendar year.
Fixed Assets
Long-term tangible assets used in business operations, such as buildings and equipment, that are not expected to be converted to cash within one year.
Fixed Overhead
Indirect manufacturing costs that remain constant regardless of production output levels.
Financial Footnotes
Disclosures attached to financial statements that explain accounting policies, estimates, commitments, and other details not visible in the main figures.
Forensic Accounting
The application of accounting, auditing, and investigative skills to detect financial fraud, resolve disputes, and provide litigation support.
Full Disclosure Principle
An accounting rule requiring companies to disclose all information that could materially affect users' understanding of financial statements.
GAAP
Generally Accepted Accounting Principles — the standardized set of rules for financial reporting used by U.S. public companies.
General Ledger
The master record of all financial transactions of a company, organized by account and used to prepare financial statements.
Going Concern
The assumption that a company will continue operating for the foreseeable future, at least the next 12 months.
Goodwill Impairment
A non-cash charge recognizing that acquired goodwill is worth less than its book value.
Goodwill
An intangible asset recorded when a company acquires another for more than the fair value of its net identifiable assets.
Gross Profit
Revenue minus the cost of goods sold; the profit a company makes before operating expenses, interest, and taxes.
Hedge Accounting
An accounting method that allows gains and losses on a hedging instrument to be recognized in the same period as the risk being hedged, reducing earnings volatility.
Historical Cost
The original purchase price of an asset, used as its recorded value on the balance sheet regardless of subsequent market value changes.
Horizontal Analysis
A financial statement analysis technique that compares each line item across multiple periods to identify trends and growth rates.
IFRS
A globally adopted set of accounting standards developed by the IASB, used in over 140 countries outside the United States.
Impairment
A reduction in the carrying value of an asset on the balance sheet when its recoverable amount falls below its book value.
Imputed Interest
Interest income that the IRS requires to be recognized on below-market or interest-free loans, even if no actual interest was paid.
Income Statement
A financial statement summarizing a company's revenues, expenses, and profit over a specific period.
Income Tax Expense
The total tax charge recognized on a company's income statement, including both taxes currently due and deferred tax effects.
Indirect Costs
Costs that cannot be directly traced to a single product or service and must be allocated across multiple outputs using a cost driver.
Intangible Assets
Non-physical assets with economic value, such as patents, trademarks, brand names, customer lists, and software.
Intercompany Transaction
A financial transaction between entities within the same parent company or corporate group.
Interest Expense
The cost incurred by a company for borrowed funds, recorded on the income statement before taxes.
Interim Financials
Financial reports covering a period shorter than a full fiscal year, most commonly quarterly (Q1, Q2, Q3) reports.
Internal Controls
Processes and procedures a company implements to ensure the accuracy of financial reporting, prevent fraud, and comply with laws.
Inventory Write-Down
A reduction in the carrying value of inventory when its market value or net realizable value falls below its recorded cost.
Inventory
The goods a company holds for sale or the raw materials and work-in-progress used to produce those goods.
Job-Order Costing
A cost accounting method that tracks direct materials, direct labor, and overhead separately for each unique job, batch, or custom order.
Joint Cost
The cost of a production process that simultaneously yields two or more separate products, incurred before the products can be individually identified.
Joint Venture
A business arrangement where two or more parties create a separate entity to pursue a shared objective.
Journal Entry
The fundamental record in double-entry bookkeeping that logs a financial transaction as debits and credits to specific accounts.
Lease Accounting
The GAAP framework for recording lease agreements on financial statements, governed by ASC 842 for US companies.
Lease Liability
The present value of future lease payments that a lessee is obligated to make, recognized on the balance sheet.
Liability
A financial obligation or debt owed by an individual or business to another party.
LLC
A business structure that combines the liability protection of a corporation with the tax flexibility of a partnership.
Long-Term Debt
Borrowed funds that are due beyond one year, recorded as a non-current liability on the balance sheet.
Lower of Cost or Market
An inventory rule requiring write-down when market value falls below original cost.
Management Accounting
The practice of generating financial information for internal management use to support planning, decision-making, and control.
MD&A
The section of an annual report where management explains financial results, risks, and outlook in their own words.
Manufacturing Overhead
All indirect production costs that cannot be traced directly to a specific product, including factory rent, utilities, depreciation, and indirect labor.
Mark-to-Market
The practice of revaluing an asset or liability to its current market price at the end of each reporting period.
Matching Principle
An accounting rule requiring expenses to be recognized in the same period as the revenue they helped generate.
Material Weakness
A deficiency in a company's internal controls over financial reporting significant enough that there is a reasonable possibility of a material misstatement going undetected.
Materiality
The threshold above which an omission or misstatement in financial statements could influence the decisions of a reasonable investor.
Minority Interest
The equity stake in a subsidiary not owned by the parent company, also called non-controlling interest.
Mixed Cost
A cost that contains both a fixed component that remains constant regardless of activity and a variable component that changes in proportion to volume.
Monetary Unit Assumption
The accounting assumption that all financial transactions are recorded in a stable, single monetary unit such as the US dollar.
Multi-Step Income Statement
An income statement format that separates operating and non-operating results into distinct subtotals for gross profit, operating income, and net income.
Net Assets
Total assets minus total liabilities, equivalent to shareholders' equity on the balance sheet.
Net Income
A company's total profit after subtracting all expenses, taxes, and costs from revenue — the bottom line.
NIM
A bank profitability metric measuring the difference between interest income earned and interest paid, relative to assets.
Net Operating Loss
A tax designation arising when a company's allowable deductions exceed its taxable gross income, creating a loss that can offset future taxable income.
Net Realizable Value
The estimated selling price of an asset minus costs to complete and sell it.
Non-Cash Expenses
Accounting charges that reduce net income but do not require an actual cash outflow in the period recognized.
Non-Current Assets
Long-term resources expected to provide economic value beyond one year, including property, equipment, and intangibles.
Non-GAAP
Financial metrics that exclude certain items required by GAAP, presented alongside official figures to show adjusted performance.
Non-Operating Income
Revenue and gains arising from activities outside a company's core business operations.
Normal Spoilage
The expected, unavoidable waste or defective units that arise from a production process under efficient operating conditions.
Notes Payable
A formal written promise to repay a specific amount of money by a set date, recorded as a liability on the balance sheet.
Notes Receivable
Formal written promises from debtors to repay a specified principal amount plus interest by a specified date, classified as assets on the balance sheet.
Off-Balance-Sheet
Financing arrangements that allow a company to keep assets or liabilities off its main balance sheet, reducing apparent leverage.
Operating Cash Flow
Cash generated by a company's core business operations, before accounting for investing or financing activities.
Operating Cycle
The average time it takes a company to convert raw materials into cash from sales, flowing through inventory, production, and receivables.
Operating Expenses
The ongoing costs of running a business that are not directly tied to producing goods, including SG&A and R&D.
Operating Income
Profit earned from core business operations, after deducting operating expenses but before interest and taxes.
Operating Lease
A short-term rental agreement where the lessee uses an asset without assuming ownership risks.
Operating Segment
A reportable component of a company whose financial results are reviewed separately by management.
OCI
Gains and losses excluded from net income that flow directly to equity, such as currency translation adjustments.
Overhead Absorption
The allocation of indirect manufacturing costs to products using a predetermined overhead rate.
Overhead Rate
The ratio used to allocate indirect manufacturing costs to products based on a chosen activity driver such as labor hours or machine hours.
Overhead
Indirect costs of running a business that cannot be traced to a specific product, such as rent, utilities, and administrative salaries.
Par Value
The nominal face value assigned to a share of stock or a bond as stated in the corporate charter or bond indenture.
Partnership
A business owned by two or more individuals who share profits, losses, management responsibilities, and liability.
Pension Accounting
The accounting standards and methods governing how companies recognize and disclose defined benefit pension obligations and plan assets.
Percentage-of-Completion
A revenue recognition method that records income proportionally as a long-term contract progresses toward completion.
Percentage of Sales Method
A method of estimating bad debt expense by applying a historical percentage to total credit sales each period.
Performance Obligation
A promise in a contract to transfer a distinct good or service to a customer.
Period Cost
Costs that are expensed in the period they are incurred rather than being capitalized into inventory, including selling, general, and administrative expenses.
Perpetual Inventory
An inventory tracking method that continuously updates stock balances after every purchase, sale, or return in real time.
Petty Cash
A small cash fund maintained by businesses to pay for minor day-to-day expenses without going through formal payment processes.
Prepaid Expenses
Payments made in advance for goods or services to be received in a future period, recorded as current assets on the balance sheet.
Prepaid Insurance
An asset representing insurance premiums paid in advance, recognized as expense ratably over the coverage period.
Prime Cost
The sum of direct materials and direct labor costs — the two cost components that can be directly traced to a specific unit of production.
Prior Period Adjustment
A correction to a previously issued financial statement for a material accounting error.
Pro Forma
Financial statements or projections that exclude certain items or incorporate hypothetical assumptions to present a different view of performance.
Process Costing
A cost accounting method that averages total production costs over equivalent units produced in continuous, high-volume manufacturing of identical products.
Product Cost
The total manufacturing costs assigned to a unit of output, including direct materials, direct labor, and manufacturing overhead.
Profit Center
A business unit or department responsible for both generating revenue and controlling its own costs.
Promissory Note
A signed written promise by one party to pay a specified sum to another party on a designated date, usually with interest.
PP&E
Long-term tangible assets used in business operations, recorded on the balance sheet at cost less accumulated depreciation.
Purchase Accounting
Acquisition accounting that records acquired assets and liabilities at fair value, recognizing goodwill for any excess price.
Purchase Price Allocation
The process of assigning an acquisition price to the identifiable assets and liabilities of an acquired company at fair value, with any excess recorded as goodwill.
Qualified Opinion
An audit opinion indicating that financial statements are fairly presented except for a specific, limited exception noted by the auditor.
Quick Assets
The most liquid current assets—cash, marketable securities, and net receivables—used to measure a company's ability to meet short-term obligations.
Raw Materials
Unprocessed inputs purchased by manufacturers that will be converted into finished products through the production process.
R&D Expense
The costs a company incurs to develop new products, technologies, or services, expensed as incurred under GAAP.
Realization Principle
The accounting rule that revenue should be recognized only when earned and collection is reasonably assured.
Realized vs. Unrealized Gains
The distinction between gains from assets already sold (realized, taxable) and gains on assets still held (unrealized, not yet taxable).
Reconciliation
The process of comparing two sets of records or figures to ensure they are consistent and identify any discrepancies.
Related-Party Transactions
Business dealings between entities with a pre-existing relationship, requiring disclosure due to potential conflicts of interest.
Responsibility Center
An organizational unit — such as a department or division — whose manager is held accountable for specific financial outcomes like costs, revenues, or profits.
Restatement
The revision of previously published financial statements to correct errors, fraud, or misapplication of accounting standards.
Restricted Cash
Cash and cash equivalents that are not freely available for general use because they are reserved for a specific purpose.
Retained Earnings
The cumulative net income a company has kept rather than distributed to shareholders as dividends.
Revenue Recognition
The accounting principle that determines when and how revenue is recorded, governed by the five-step model under ASC 606.
Run Rate
An extrapolation of recent revenue data to estimate a company's full-year revenue as if current trends continued.
Revenue
The total income a company generates from its business activities before deducting any expenses.
Reversing Entries
Optional journal entries at the start of a new period that reverse prior-period accruals to simplify bookkeeping.
ROU Asset
An asset representing a lessee's right to use leased property over the lease term, recognized on the balance sheet under ASC 842 and IFRS 16.
Runway
The amount of time a company can continue operating before exhausting its cash reserves, given its current burn rate.
Salvage Value
The estimated residual value of an asset at the end of its useful life, used as the basis for depreciation calculations.
Segment Reporting
Disclosure of a company's financial performance broken down by distinct business units or geographic regions.
Semi-Variable Cost
A cost that has both a fixed base component and a variable component that increases with production or activity levels.
SG&A
The combined costs of selling products and running the back-office, including salaries, marketing, rent, and executive compensation.
Short-Term Debt
Borrowings due within one year, classified as current liabilities and used to fund short-term working capital needs.
Sole Proprietorship
A business owned and operated by a single individual with no legal distinction between the owner and the business.
Source Document
The original paper or electronic record that serves as evidence that a financial transaction occurred.
SOX Compliance
Adherence to the Sarbanes-Oxley Act of 2002, which mandates strict financial reporting standards for US public companies.
Standard Costing
A cost accounting method that sets predetermined 'standard' costs for materials and labor, then measures variance against actual costs incurred.
Retained Earnings Statement
A financial statement that reconciles the opening and closing retained earnings balance by showing net income earned and dividends declared.
Step Cost
A cost that remains constant within a range of activity but rises abruptly when output exceeds a defined threshold.
Stock-Based Compensation
Employee compensation paid in the form of equity awards such as stock options and restricted stock units, recorded as an expense under GAAP.
Stockholders' Equity
The residual interest in a company's assets after deducting all liabilities; what shareholders theoretically own.
Straight-Line Depreciation
A depreciation method that allocates the cost of an asset evenly over its useful life in equal annual amounts.
Subsequent Events
Significant events occurring after the balance sheet date but before financial statements are issued.
Subsidiary Ledger
A detailed set of accounts supporting a single control account in the general ledger.
Substance Over Form
The accounting principle requiring transactions to be recorded based on their economic reality rather than legal structure.
T-Account
A visual bookkeeping tool shaped like the letter T that displays debit entries on the left and credit entries on the right.
Tangible Assets
Physical, touchable assets with a definite monetary value, such as property, equipment, inventory, and cash.
Target Costing
A pricing-driven cost management approach where the acceptable cost of a product is determined by subtracting the desired profit margin from the market price.
Tax Basis
The cost of an asset for tax purposes, used to calculate the taxable gain or loss upon sale or other disposition.
Tax Provision
The estimated income tax expense recorded on a company's income statement for the reporting period.
Tax Shield
The reduction in taxable income — and therefore taxes paid — resulting from allowable deductions such as interest expense or depreciation.
Temporary Difference
A difference between an asset or liability's book value for financial reporting and its tax basis that will reverse over time.
TIE Ratio
A solvency ratio measuring how many times a company can cover its interest expense with operating earnings.
Treasury Stock
Shares a company has repurchased from the open market and holds rather than retiring or reissuing.
Trial Balance
A list of all general ledger account balances at a point in time, used to verify that total debits equal total credits before preparing financial statements.
Unearned Revenue
Cash received from customers before the related goods or services have been delivered.
Unit-of-Production Depreciation
A depreciation method that allocates an asset's cost based on its actual output or usage rather than elapsed time.
Unqualified Opinion
An auditor's clean opinion that financial statements present fairly in conformity with GAAP.
Unrealized Gain/Loss
The paper profit or loss on an investment that has not yet been sold, reflecting the difference between current market value and original cost.
Useful Life
The estimated period over which a depreciable asset is expected to provide economic benefits, used to calculate periodic depreciation expense.
Variable Cost
A cost that changes in direct proportion to production volume or sales activity, such as raw materials and direct labor.
Variable Costing
A cost accounting method that treats only variable manufacturing costs as product costs.
Variance Analysis
The process of comparing actual financial results to budgeted or standard amounts to identify the size, cause, and responsibility for deviations.
Vertical Analysis
A financial statement analysis technique that expresses each line item as a percentage of a base figure within the same period.
AVCO / WAC
An inventory valuation method that assigns the same average cost per unit to all goods available for sale, smoothing out price fluctuations.
Work in Progress
Partially completed goods still moving through the manufacturing process, representing inventory between raw materials and finished goods.
Working Capital
Current assets minus current liabilities, measuring a company's ability to meet short-term obligations.
Write-Down
A partial reduction in the carrying value of an asset to reflect impairment or decline in fair value below book value.
Write-Off
The complete removal of an asset from the balance sheet when it is determined to have no remaining recoverable value.