Glossary
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N
Nature
— A classification method by
grouping similar items based on broad
categories like combining all revenues
together.
Net Book Value
— Original value of the
asset less the total depreciation that has been
recognized.
Net Income
— Net income occurs when
revenue exceeds expenses for the period and
will increase equity.
Net Loss
— A net loss occurs when expenses
exceed revenue for the period and will
decrease equity.
Net Pay
—The amount of pay actually
received by the employee.This is less
than gross pay because of several payroll
deductions.
Net Profit Margin
—The profitability of a
company after all expenses have been paid.
Net profit margin is expressed as a percentage
of sales.
Net Realizable Value (NRV)
— Net
realizable value is the price that a company
can realistically expect to sell the item for, less
any costs incurred to make the item ready for
sale, such as repair costs.
Net Worth
— Net worth is what is left if you
cash out (i.e. successfully sell all your assets
and get the value equivalent to the recorded
amount) and pay everything you owe.
Neutrality
—This states that financial
information must be free from bias.
Non-Sufficient Funds (NSF)
— A payment
cheque made to the company by a customer
who does not have sufficient funds in their
bank account to cover the amount of the
cheque.
Normal Balance
— Indicates a positive
balance for the account.
Not-For-Profit Organization
—
Organizations aim to improve society in
some way with no intention of making a
profit.
O
Operating Activities
— A section on
the cash flow statement that shows cash
movement within a business based on day-to-
day activities.
Operations Management
—This is the
ability of the company to manage its assets,
such as inventory.
Owner’s Capital Account
—The owner’s
capital account is used to record the amount
of the owner’s equity including owner’s
contributions.
Owner’s Contribution
—The amount of
cash or assets invested in the business by the
owner.
Owner’s Drawings
—The owner’s drawings
account is used to record the amount of the
owner’s cash withdrawn by the owner from
the business to pay for personal items.
Owner’s Equity
— Equity is the net worth
of a business, after all assets have been
sold and all liabilities have been paid. In
a proprietary business (owned by a single
person), it is referred to as owner’s equity.
