Accountant One who is skilled at keeping business records. Usually the name accountant refers to a highly trained professional, such as a CA, CGA or CMA, rather than one who keeps books.

Accounting The principles and practices for recording and analyzing financial information.

Accounts payable The outstanding bills of a firm; money that a firm owes to its suppliers for goods and services purchased for the operation of the business. Accounts payable are included on the balance sheet under current liabilities.

Accounts receivable The money that is owed to a firm by its customers for goods or services they have purchased from it. Accounts receivable are included on the balance sheet under current assets.

Accounts receivable aging A scheduling of accounts receivable accord-ing to the length of time they have been outstanding. This shows which accounts are not paid in a timely manner and may reveal any difficulty in collecting long overdue receivables. This may also be an important indicator of mounting cash flow problems.

Accrual accounting The accounting of expenses such as wages, taxes, insurance and interest, prior to their payment, on a periodical basis.

Acid test ratio Current cash and “near” cash assets (e.g., government bonds, current receivables, but excluding inventory) compared to current debts (bank loans, payables). The acid test shows how much and how quickly cash can be found if a company gets into trouble. Also referred to as quick ratio.

Advertising Techniques and activities involved in conveying information about a product or service, in order to persuade people to buy it.

Agent Someone who legally represents someone else, and can act in that person’s or company’s name.

Aging Measurement of the length of time in days that an account (payable or receivable) has been outstanding. Accounts are usually grouped into 30-, 60- and 90-plus-days categories. Not only can aged accounts be compared to the original terms, but they can show quickly whether a situation is improving or deteriorating.

Amortization A long-term expense calculated on a monthly or periodic cost basis.

Annual report A report made at the end of a fiscal year, presenting the financial transactions of the past year and their results.

Appreciate To increase in value.

Arbitration The resolution of a dispute between two parties by an impartial third party. Used in commercial disputes when direct negotiations fail. The arbitrator’s decision may or may not be final, depending on previous agreements. Each province has an Arbitration Act setting out procedures.

Arm’s length Refers to a transaction between two or more unrelated companies or individuals.

Arrears Payments that are in arrears are overdue.

Articles of Incorporation A legal document filed with the province and/or federally that sets forth the purposes and/or regulations for a corporation. These papers must be approved by the province and/or federally before a corporation legally exists and is allowed to do business.

Assessment The valuation of land and buildings, or any asset, for tax purposes.

Assets The valuable resources or property rights owned by an individual or business enterprise. Tangible assets include cash, inventory, land and buildings, and intangible assets include patents and goodwill.

Audit A check of an organization’s financial statements by someone whose independence of the organization and professional qualifications create faith in his or her judgment. An audit testifies to the honesty and accuracy of the organization’s records. It is performed by professionally qualified accountants.

Authorized capital The number of shares a corporation may sell, and their par value.