GLOSSARY OF

ACCOUNTING TERMS
Chapter 1

Celso Brito
Glossary of Terms - Chapter 1

▪ Corporate Finance: 1. the financial affairs of companies 2. one of the areas of the
discipline of finance. It deals with the operation of the firm (both the investment decision and
the financing decision) from that firm's point of view.

▪ Accounting: 1. the work of recording money paid, received, borrowed, or owed 2. the
process of gathering and preparing financial information about a business or other
organization in a form that provides accurate and useful records and enables decisions to be
made. 3. the process of identifying, classifying, measuring, recording and communicating in
monetary terms transactions and events of an economic entity that are of a financial
character.
Glossary of Terms - Chapter 1

▪ Account: 1. systematic arrangement showing the effect of transactions and other events on
a specific balance sheet or income statement item 2. a record of financial transactions over a
period of time, such as money paid, received, borrowed or owed.

▪ Working Capital: 1. capital in the form of cash, stocks, and debtors but not creditors, used
by a company in its day-to-day operations 2. the money required to run the business on a day
to day basis 3. current assets less current liabilities, properly called net working capital.
Glossary of Terms - Chapter 1

▪ Corporation: 1. business organized as a separate legal entity with ownership evidenced by

shares of stock 2. a large company 3. US a company which is incorporated in the United States.

▪ Profit: 1. money gained from a sale which is more than the money spent on making the item
sold or on providing the service offered

▪ Profit Margin: 1. ratio of income to sales 2. the percentage difference between the costs of
a product and the price you sell it for.
Glossary of Terms - Chapter 1

▪ Dealer: 1. a person or firm that buys or sells on their own account, not on behalf of clients

▪ Broker: 1. a dealer who acts as a middleman between a buyer and a seller

▪ Asset: 1. probable future economic benefits obtained by an entity as a result of past

transactions 2. something which belongs to a company or person, and which has a value 3.
what a business owns or is due 4. financial representations of economic resources owned by an
organization or individual
Glossary of Terms - Chapter 1

▪ Shares: 1. one of many equal parts into which a company’s capital is divided 2. documents
issued by a company to its owners (the shareholders) which state how many shares in the
company each shareholder has bought and what percentage of the company the shareholder
owns. Shares can also be called ‘Stock’

▪ Equity: 1. the residual amount after deducting an entity’s liabilities from its assets. The
amount that shareholders own in a corporation 2. assets minus liabilities 3. the right to receive
dividends from the profit of a company in which shares are owned
Glossary of Terms - Chapter 1

▪ Stockholder: 1. individual or business that owns shares in a corporation (see Shareholder)

▪ Shareholder: 1. the owner of shares in a company 2. the owners of a limited company or

corporation (see Stockholder)

▪ Stakeholder: 1. a person or body that is directly or indirectly involved with a company or

organization and has an interest in ensuring that it is successful 2. all parties that have an
interest, financial or otherwise, in a firm
 REFERENCES

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CSU Channel Islands Accounting Department. General Accounting and Budget Terminology. Retrieved March 13, from
https://www.csuci.edu/financial-services/documents/accounting-budget-terminology.pdf
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