Glossary
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Comparative Balance Sheet
— A balance
sheet showing financial results for multiple
years for easy comparison.
Compound Journal Entries
— Journal
entries affect three or more accounts.
Conceptual Framework
—The basis to
determine how business transactions should
be measured and reported.
Conservatism
— Selection of the least
optimistic option whenever an accountant
needs to exercise their own interpretation or
judgment in applying an accounting standard.
Consistency
— Preparing reports following
the same standards and guidance from period
to period.
Contra Account
— Contra means opposite.
A contra account is linked to another account
and records decreases in the value of that
account. It behaves in a manner opposite to
the way a regular asset account behaves.
Control Account
— A control account keeps
track of the grand total of the amounts in the
subledger.
Corporation
— A business that is registered
with the provincial or federal government as
a separate legal entity from its owners, the
shareholders.
Cost Constraint
—The value of reported
information compared to the costs to produce
the financial statements. If the value of the
information does not outweigh the costs, the
company should not prepare it.
Cost of Goods Sold (COGS)
— Cost of
goods sold is the value of all the goods sold
and is subtracted from sales revenue to
determine gross profit.
Credit
— A credit means an entry on the
right side of the account, and it may cause the
account to increase or decrease, depending on
the type of account.
Current Assets
— Current assets are those
that are likely to be converted into cash or
used up within the next 12 months through
the day-to-day operations of the business.
Current Liabilities
— Current liabilities are
amounts due to be paid within the next 12
months.
Current Ratio
—The current ratio measures
a company’s ability to pay off short-term
debt.The formula is: Current Ratio = Current
Assets ÷ Current Liabilities.
Customer Deposit
— A customer that
pays a business for services before they are
performed.
D
Days Inventory on Hand Ratio
—
Calculates how many days that inventory will
last given the current rate of sales.
Debit
— A debit means an entry on the
left side of the account and it may cause the
account to increase or decrease, depending on
the type of account.
Debt-to-Equity Ratio
— Assess the balance
of debt and equity in a business.
Depreciation
— Allocating the cost of a
long-term asset over its useful life.
Disclosure
— Disclosure states that any
and all information that affects the full
understanding of a company’s financial
statements must be included with the
financial statements.
