GLOSSARY

1. Pay an account: Accounting Glossary Letter A Pay an account It is understood to make a credit in an
account make a note in the credit of the same. 

2. Pay Credit. Set in the current accounts the items that correspond to Credit. Pay what is owed.
3. Society of people: Any company owned by two or more people associated voluntarily.
4. Creditor: The part of a credit operation that sells a service or merchandise and obtains a receivable
item.
5. Activity: A set of tasks performed by one or more workers that make up the work of an entity.
6. Portfolio: Set of values, commercial effects or orders available to a commercial or industrial company.
Holding company is a company that holds stakes in transferable securities. The Head Office and the
investment companies are holding companies.
7. Cost center: It is a minimum unit or subdivision in the accounting record process in which expenses
are accumulated in the productive activity of the company in order to facilitate the measurement of the
resources used and the economic results obtained.
8. Check expired: A check must be presented for payment within a reasonable period after its issuance or
the issuer will therefore be released from liability for the loss caused by the delay.
9. Management check. It is the one issued by a bank against its funds, it can be nominative or to the order.
10. Exchange activity: Generic name that is used to include in a definition all the activities subject to
regulation in the present procedure.
11. Control Activities: These are procedures that help to ensure that the policies of the management are
carried out, and must be related to the risks determined and assumed by the management; The control
activities are carried out at all levels of the organization and in each of the stages of management, based
on the preparation of a risk map, knowing the risks controls are set to prevent or minimize them.
12. Financing Activities: Transactions such as loans, cancellation of loans, raising capital, or distribution
to owners.
13. Capital assets: Shares, bonds and real estate not used in the business or commercial activity.
14. Small box: A fund that contains a small amount of cash that is used to pay minor expenses.
15. Safe: Wardrobe or armored room, equipped with security lock, used to store money, securities, etc.

16. Accounting Control: Internal Control Procedure that is directly related to the protection of assets or
the reliability of accounting records.

17. Cost of Fixed Assets: The cost of fixed assets is equal to their purchase price plus freight expenses,
transportation insurance, installation and assembly, test function and any other cost necessary to make
the fixed asset ready for use. The interest that may be caused by deferred payments will be accounted as
expenses and not part of the acquisition cost.
18. Cost of goods sold or Cost of sales: The cost of inventory that the business has sold to customers; in
most commercial businesses it is the largest individual expense. Calculation that appears separately in
the income statement to show the cost of goods sold during the period.
19. Cash register: Equipment used in commerce to facilitate calculation operations to the person in charge
of collections and control the amounts collected.
20. Capital: In the economic sense it is equivalent to capital goods, that is, to the set of goods of
production (physical quantity rather than monetary value) accumulated, or wealth represented by the
surplus of production over consumption.
21. Investment Activities: Transactions involving acquisitions or sales of investments or fixed assets. The
cash aspects of these transactions are shown in the investment activities section of a cash flow
statement. The aspects that do not make use of cash from these transactions are disclosed in a report
that supports this financial statement.

22. Loan: Contract by which a person (lender) delivers a thing to another person (borrower) to make use of
it, forcing the latter to return that thing after having used it.
23. Loss: A decrease in the owner's equity that is not the result of an expense or the delivery of profits to
the business owner.
24. Operating Activities: Transactions that intervene in the determination of net income, with the
exception of gains or losses related to financing or investment activities. The category includes
transactions such as the sale of goods and services, and the execution of costs and expenses. The impact
on the cash of these transactions is reflected in the operating activities section of a cash flow statement.
25. Long-term assets: An asset other than current assets. Accounts whose term expires in a term greater
than 12 months.
26. Net Assets: The total of all assets except goodwill minus liabilities.

27. Debt: Debt, obligation to pay something. Annotation registered in the debit of an account.
28. Adjustments from prior periods: A correction of a significant error in the earnings reported in the
financial statements of a previous year. The adjustments for prior periods are recorded directly in the
retained earnings account and are not included in the income statement of the current period.

29. Audit: Control technique, aimed at assessing the internal control and observance of the Generally
Accepted Professional Accounting Principles, comprises an independent examination of the accounting
records and other evidence related to a company to support the impartial expert opinion on the
reliability of the statements financial
30. Trial or test balance: A list of all major accounts with their balances. Table of two columns where the
names and debit and credit balances of all the accounts of the major appear.
31. Bank: Institutions engaged in monetary relations: monetary circulation; credit relationships; financial
registration and control; loans, payments and collections, etc. A bank is defined as "any national
monetary company, other than a trust company, that is authorized to discount and negotiate promissory
notes, drafts, bills of exchange and other debit documents; receive deposits of money and commercial
effects; lend money with real or personal guarantee; and buying and selling gold and silver in bars,
foreign currencies or bills of exchange. "
32. General Balance or State of Situation: Detailed State, also known as Financial Statement, State of
Assets and Liabilities, State of Resources and Obligations, State of Situation or simply State, showing
the nature and amount of the Assets, Liabilities, and Capital (net assets) of a business, on a given date.
From an accounting point of view, the balance sheet is a list of the balances of the real accounts taken
from the general ledger after the closing of the nominal accounts. It is an instant photograph of the
operations of a business, showing the benefits that correspond to the different classes of owners in the
value of net or liquid assets. It is a document that shows the financial situation of a Public or Private
Sector entity, on a specific date.

33. Owner's accounting capital: The right that the owner of a business has over its assets. It is also known
as Capital.
34. Working Capital: Current assets less current liabilities. A measure of the ability to pay debts in the
short term.
35. Fixed Capital: It consists of the Investment in Fixed Assets and the Pre-Operation Expenses
36. Paid Capital. The securities invested in a public limited company by its shareholders.
37. Capitalize: Transform interests into capital, in turn producer of interests. Use an income transforming it
into a means of production.
38. Blank check: Signed check without indication of the sum.
39. Check in circulation: A check issued by the company and recorded on its books but not yet paid by the
bank.

40. Check without funds: Check that can not be paid for lack of sufficient funds. A "hot" check, when the
drawer's bank account does not have enough money to pay that check.
41. Account closure: Step in the accounting cycle at the end of the period that prepares the accounts to
record the operations of the next period. The closing of the accounts consists of entering in the journal
and moving the closing entries to zero to establish the balances of the accounts of income, expenses
(nominal) and in the case of businesses of a single owner, it also includes withdrawals of the owner.
42. Buy: (Fixed Assets) Is the acquisition of a fixed asset for which an obligation to pay originates.
Purchases of fixed assets are made using the procedure established with regard to the Investment
Authorization Requests.
43. Shopping: The cost of goods that a company purchases to resell them to customers in the normal
course of business.
44. Net purchases: Purchases less discounts and sales returns.

45. Consignment: Transfer of goods by the owner (consignor) to another business (consignee) that sells
them on behalf of the owner, by charging fees (commissions).
46. Contract: Legal instrument that protects and regulates the obligations that must be fulfilled between
the legal or natural persons that sign it. Agreement between two or more persons that can be legally
required and through which the parties acquire rights for certain actions.
47. Administrative Control: Internal Control Procedure that has no direct relationship with the reliability
of the accounting records. Organization plan, methods and procedures that help managers achieve
operational efficiency and compliance with company policies.

48. Accounting Control: Internal Control Procedure that is directly related to the protection of assets or
the reliability of accounting records.

49. Cost of fixed assets: The cost of fixed assets is equal to their purchase price plus freight expenses,
transportation insurance, installation and assembly, test function and any other cost necessary to make
the fixed asset ready for use.
50. Cost of goods sold or Cost of sales: The cost of inventory that the business has sold to customers; in
most commercial businesses it is the largest individual expense. Calculation that appears separately in
the income statement to show the cost of goods sold during the period.

51. Organization Costs: Costs incurred for the formation of a corporation.

52. Fixed Costs: Are those that remain unchanged even if the level of services rendered or production
increases or decreases. They do not have proportional relation with the quantity of articles produced or
services rendered. Example: salary of administrative personnel and protection measures.
53. Control Account: General ledger account that is supported by detailed information of the largest
auxiliary or submajor, its balance is equal to the sum of the balances of a group of related accounts in
its largest auxiliary
54. Accounts receivable: An asset, a promise to receive cash from clients to whom the business has sold
goods or provided a service, documented in writing by means of an invoice issued.
55. Accounts Payable: A liability, an obligation to send cash for the purchase of a merchandise or the use
of a service, documented in writing by means of an invoice received.
56. Debit: A value settled on the left side of an account called debit. Accounting term that means an
increase in the asset or a decrease in the liability or equity. In balance of payments accounting, a debit
is an import item (or equivalent).
57. Deficit: Accumulated losses incurred in a corporation. A negative value of retained earnings. It
constitutes an excess of liabilities over assets; the opposite of capital or net assets.
58. Deposits: Balances due to depositors of a bank; the funds credited to the depositors' accounts. Deposits
can be classified broadly into general, specific and special
59. Depreciation: Accounting term that denotes the decrease in the value of a Tangible Fixed Asset due to
(1) physical deterioration or natural wear and tear; (2) time itself gradually wears out a capital good,
regardless of whether it is used or not; and (3) improvements in technology can reduce the value of
existing ones, since they are obsolete.
60. Capital Disbursement: A cost incurred to acquire a long-lived asset. A disbursement that will benefit
several accounting periods.
61. Operating disbursement: Any disbursement that will benefit only the current accounting period.
62. Dividends: A distribution of the cash of a limited company to its shareholders.
63. Dividend in Shares: A distribution of additional shares to common shareholders in proportion to the
number of shares held.
64. Currency: Freely convertible currency or other financial instruments that allow a country to pay what
it owes to its creditors.
65. Workers' debts: All those payment obligations contracted by workers, officials and managers of the
organization with it.
66. Account Statement: Continuous record of daily annotations, showing in detail all debits and credits,
and the balance at the end of the period, usually one month, that a commercial bank, broker and other
business renders to its clients.
67. Bank account statement: Document of a particular bank account that shows the initial and final
balance and relates the operations of the period that affected the account.
68. Statement of Cash Flow: Financial statement designed to provide information about the cash payment
income, investment activities and financing activities of a company. It is useful in the evaluation of the
solvency of the company.
69. Statement of Profits and Losses, Income Statement, Income Statement or Statement of
Performance: It is a summarized form of showing the variations of capital in a given exercise.
Relation of all income, costs, expenses or losses occurred in a financial year in order to establish the
profit or loss.
70. Expense: They represent the total amount, in monetary terms, of the material, labor and financial
resources used during any period, in the whole business activity.
71. Income: Increase in the owner's equity that is earned by delivering goods or services to customers
72. Interest: «Price of money»; rent payment on money; charge made to the borrower by the lender for the
use of the money.
73. Accounting book: Material accounting instrument formed by a set of sheets ordered and systematically
arranged, in which the accounting entries are made. (The main accounting books are the newspaper and
the major.)
74. Liquidation: The process of breaking and discontinuation of a company, including the sale of assets,
payment to creditors, and distribution of remaining assets to the owners.
75. Payroll: The remuneration of employees, an important expense of many businesses. In fact it is a
record that relates the names of the employees during a given payment period, the values of payment,
time worked, gross wages, deductions for taxes and any other value withheld and the net payment.

76. Passive: An economic obligation (a debt) payable to a person or an organization outside the business
77. Liabilities: Set of obligations, debts that the organization has with other persons or entities, known as
creditors that represent the financing to the entity by third parties.
78. Cash Register: Special diary used to chronologically control the movement of cash in cash by
depositing in bank.
79. Gross profit: The excess of income from sales over the cost of the goods sold. It is also known as gross
margin.
80. Interest rate: The percentage rate that is multiplied by the amount of the principal to calculate the
amount of interest on a document.
81. Commercial company: The one that is subject to the commercial order, susceptible of being
considered "collective merchant" or social entrepreneur. Both in the field of civil law and commercial
law, a partnership agreement is understood as that in which two or more persons are obliged to share
goods or services in order to share the profits obtained.
82. Closed Corporation:.A company owned by a small group of shareholders. This type of action is not
traded on stock exchanges.
83. Balance: Difference between debit and credit totals of an account. Sum necessary to compare the totals
of the debits and credits of an account. A debit balance represents the excess of debits on the credits,
and a creditor, the excess of credits on the debits.
84. Society: Form of commercial organization in which two or more people associate in order to carry out
commercial or professional activities to obtain particular profits. It is a contractual relationship to which
capital and experience are contributed, and profits or losses are shared on agreed bases.