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Welcome to our Glossary section! We are very happy to see you here! This is the place where we will do our best to include as many terms from the accounting and financial world as possible so that we fully respond to your research and business needs.

Our team will constantly work on the content so that we make sure that you always stay satisfied with the information you obtain. We have sorted the terms alphabetically so that it is convenient for you to navigate through the section. In addition, we have integrated a special division dedicated to curious terms from the stock market. We hope you find them as much enjoyable as we do.

Sb Team wishes you a pleasant and fruitful navigation through our Glossary section!

Assets Profitability: This index in percentages shows the profit or the loss that every asset has brought to the company.

Active management of the company’s investment portfolio: In case of active management of the company’s investment portfolio, the investor is seeking for a profitability by doing frequent selling and buying of shares, which mission is to be able to indicate levels of the shares’ price, which is good for them to sell or buy. Usually the people who are structuring this kind of portfolio, are looking for a riskier shares which have bigger potential for going more expensive, but also going cheaper.

Autonomous expenditures: Expenses which are independent of the level of the income (they are not its function)

Administered prices: A term for pricing in which the prices are kept unchanged for a long period of time

Accelerator: Change in the investment demand as a result of changes into the level of the real GDP. The increase of investments when all other conditions are the same naturally leads to an increase into the GDP, which increase again leads to greater levels of investments.

Annuity: An asset which periodically (for example monthly) brings to its owner fixed amounts of money.

Annuity loan: A loan which is redeemed for a certain period of time trough periodical fixed installments. A good example for such loan is the mortgage.

Adverse selection: A case of information asymmetry in which for a certain financial transaction it is most probable to be selected the least favourable partner.

Assets: Resources acquired and controlled by the company. By utilizing these resources the company expects to receive future economic profit. According to their function and purpose the assets can be long-term and short-term.

Accounts payable: An accounting entry that represents an entity’s obligation to pay off a short-term debt to its creditors. The accounts payable entry can be found on the balance sheet under the heading current liabilities.

Accounts receivable: Money owed to a business by its clients and shown on its Balance Sheet as an asset. It is also known as “debtors”.

Asset: A resource with economic value that a certain company owns or controls and expects to get profit out of it. The assets of the company are represented in the balance sheet.

Accrual: An individual entry recording, which represents either revenue or expense, but for which there is still no cash transaction made.

Accrual accounting: Accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.

Accounting equation: The accounting equation is: Assets = Liabilities + Shareholders’ Equity. This equation represents that all the company’s assets are financed either by borrowed resources or by the company’s shareholders’ own money. Any purchase or sale by an accounting equity has an equal effect on both sides of the equation. The accounting equation is also eligible the other way around: Liabilities = Assets – Shareholder Equity and Shareholder Equity = Assets – Liabilities.

Accounting policy: A combination of principles, assumptions, concepts, rules and procedures, established by a certain company for the purpose of reporting its activity and representing the information into the financial statements.

Acquisition: A business process in which one of the companies (the acquiring) acquires control over the net assets and activities of the other company (the acquired) in exchange for transmission of the assets and the liabilities or issuing of shares

Affiliates: These are persons or companies which are in position of controlling or influencing one another in making decisions of financial-economic character.

Associate: A party which participates in a mixed company and shares the joint control (see joint control) over the company’s activity.

Advance payment: Amounts received by the contractor or by the employee before accomplishing the respective work or before the due salary date.

Accounting result: The profit or loss for a certain period before the tax deduction.

Acquisition price: The amount of the paid cash or cash equivalents or the fair value of other resource for the acquisition of a certain asset.

Active market: A market in which there are the following conditions: the units which are being traded are homogeneous, there are willing buyers and sellers, the market prices are publically available.

Anti Money Laundering (AML): A set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.

Absolute advantage: The ability of one person, company or country to produce a certain good or to execute a certain service when having less expenses, compared to all the other producers.

Autonomous demand: This part of the general demand which is not influenced by the income levels or the levels of the GDP.

Accelerated amortization: A method for indicating the amortization with which during the first year of the asset’s life a bigger amortization deductions are made compared to the later years deductions. During the initial years the profit is lower than if the linear amortization method is used.

Asymmetric information: Information which all the market’s participants have no equal access to.
Accounting profit: It is calculated as the difference between the income and the expenses for a certain reporting period minus the interest and taxes on the profit.

Audit report: The audit report represents the professional opinion and observations of the auditor about the correctness of the information in the financial statements. The audit report is being enclosed with the financial statement of the audited company.

Alternative investment: Investments different from those with stocks or securities, such as investments in works of art, valuable coins and stamps, jewelry and gold. The alternative investments replace the traditional ones in times of high inflation.

Assets’ coverage: The coverage of a certain company’s obligations by the net value of its assets. This indicator demonstrates how many times the company’s liabilities are covered by its net assets.

Assets’ management: The art a biggest return on the financial assets which a company possesses and manages to be reached. This process includes finding the best balance the assets’ income and their risk.

Assignor: A side on a contract that transfers the right and obligation of the other side of the contract, usually called the contractor (see contractor) to perform and conclude a certain assignment.

Arbitrage: A profit realization through purchase of a certain asset at a lower price on one market and at the same time selling it on a different market at a higher price. The arbitrager is a creditor on the one market and a borrower on the other. The effect of the arbitrage is in the decrease of the price differences between the different markets.

Audit: An unbiased examination and evaluation of the financial statements of an organization. It can be done internally (by employees of the organization) or externally (by an outside firm).

Accommodation policy: A policy for increase in the jointly demand with the purpose of maintaining a high level of employment. The general demand can be increased by an expansionary fiscal and monetary policy.

Autarchy: An economy which satisfies its own needs on its own and is closed for external trading.

Accounting: The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit.

Accounting data: This is all the information and data contained in journals, ledgers and other records that support financial statements, e.g. spreadsheets. It can be in electronic form or on paper.

Accrued assets: These are assets from revenues earned but not yet received.

Accrued expenses: These are expenses incurred during an accounting period for which payment is postponed.

Asset earning power: This is a common profitability measure used to determine the profitability of a business by taking its total earnings before taxes and dividing that by total assets.

Association: An economic term – union (bank, industry, legal or other) of persons, countries, economic or other organisations and social-professional groups with common interests and sharing the same purpose and mission.

Ability to pay: A principle in the taxation, according to which the persons with equal income and equal affordability to pay taxes should be subjects of the same tax rates.

Active fiscal policy: A fiscal policy which is frequently used by governments. Instead of solely relying on automatic regulators for reaching the wanted level of the general demand on the market, the government undertakes various measures for changes into the taxation system and the government expenses.

Account: A financial report expressed in words and cash amounts.

Aggregate supply: The total quantity of goods and services in a national economy which the producers are able to produce and put on the market in every possible price level.

Annual General Meeting: The annual meeting of the shareholders of a certain company or corporation on which the financial statements are approved and the CEO is being selected or reselected.

Aport: Non-cash contribution, which an owner makes for his participation in the company’s capital. A subject of the aport can be rights over movables and real estates, rights over immaterial goods, receivables, securities and others.

Asset Stripping: Selling parts of a certain company which shortly before that has merged with another company. Every sale of assets leads to acquisition of assets in other companies. Through selling parts of a certain company’s capital financial resources are secured for acquisition of new assets.

Actual budget: A financial report of the government for the incomes coming from the taxation and the state expenses. It can be balanced, at surplus or at deficit.

Abortive benefits: Benefits which cannot reach their purpose and which do not contribute for an increase in the net profit because of the excessive tax burden over the profit.

Additional facilities: Additional credit measures introduced by the International Monetary Fund (see International Monetary Fund) for mitigation the difficulties of the payment balances of the member states.

Accounting profit: The accounting profit is the total income without the expenses for a certain production activity for a certain period of time. It should not be confused with “economic profit”.

Acceleration clause: A clause which is present in many mortgage agreements, according to which the principle and the interest are due immediately when a certain event occurs, for example violating the contract or several unpaid installments.

Administered pricing: A method for defining prices according to a certain formula, regardless of the influence of the demand and the supply on the market.

Adjustment speed: The time which is necessary for the price to adapt to the redundant demand or supply on a certain market. This factor needs to be taken into consideration when defining when studying the amount of the working salary, the production prices, the interest rates and the nominal currency rates.

Artificial barrier to entry: Entrance barrier for companies on the market or on a certain industry, raised by the government or by other companies and not by the natural market mechanisms.

Administrative act: An act issued by a state authority which is in compliance with its legally grounded competence and which creates rights and obligations of the addressees. It can be normative when it includes general rule for behavior and is concerning unlimited and undefined number of addressees; individual – when prescribes a certain behavior to a defined addressee. From the individual administrative act arise civil rights and obligations.