Tax Glossary

A statement showing how the profit attributable to shareholders in a given fiscal year was achieved.

Turnover less cost of goods sold.

Gross profit as a percentage of turnover.

The total assets of a company before deducting any liabilities.

Method of accounting for stock whereby, if a company has identical items of stock which cost different amounts to buy or produce, the oldest stock is assumed to be used first.

The relative proportions of the funding for a company that are provided by debt and equity.

A lease where the lessee (i.e the user of the asset) has the vast majority of the risks and rewards of ownership of the asset, i.e. the lessee effectively owns the asset. For accounting purposes, finance leases are treated as if the lessee had actually bought the asset with a loan from the lessor.

Dividend declared at the end of a company’s fiscal year. Has to be approved by the shareholders and hence is not recognised in the accounts for that year.

A way of adjusting for the fact that, when a financial instrument is bought or sold at a premium or discount, the amount to be received or repaid at the end of the term is different from the amount paid or received today. In essence the adjustment amends the actual interest rate on the instrument …

Glossary: Effective interest rate method Read More »

An abbreviation of Earnings before Interest, Tax, Depreciation and Amortisation. The profit before taking account of the items listed.

Earnings divided by the average number of ordinary shares in issue during the accounting period.

(Prepayment) A payment made in advance of the receipt of goods or services (e.g a deposit).

Someone who owes money, goods or services.

Revalue an asset (upwards, downwards or down to zero) or, in the case of ‘write off’, to put any cost into the P&L (i.e. reduce retained profit) in the current year rather than capitalise it (also known as expensing).

Goods due for sale but still in the course of production at the balance sheet date.