Glossary
Clear, precise definitions for the terms finance, accounting, and treasury teams use to run reconciliation, close, and cash operations.
Accrued expenses are costs a business has incurred but has not yet paid, often before the supplier invoice has been received or recorded. Under accrual accounting, the business recognizes the expense in the period it belongs to and records a liability for the unpaid amount.
Bank reconciliation is an accounting control that compares a company's internal cash records against the bank statement for the same period, so any transaction that appears in one but not the other can be found, explained, and corrected before the books are closed.
Cash application is the accounts receivable process of assigning a customer payment that has already been received to the open invoice or invoices it is intended to settle. The process establishes how much of each receivable has been paid and identifies any amount that still requires review.
Cash equivalents are short-term, highly liquid investments that can be readily converted into known amounts of cash and carry an insignificant risk of changes in value. The criteria in IAS 7 must work together, so a liquid investment is not automatically a cash equivalent.
A debit memo is an accounting adjustment document whose effect depends on who issues it. Most commonly, a seller issues a debit memo to increase a customer's amount due and the seller's accounts receivable for an additional charge or correction linked to an earlier transaction. In some accounts payable workflows, a buyer issues a debit memo to record a credit that reduces the amount payable to a supplier.
Deferred revenue, also called unearned revenue, is a liability for customer consideration received before related goods or services are delivered. It represents remaining performance, not earned revenue or profit. In formal contract-liability accounting, the liability can also arise when payment becomes unconditionally due before performance, so cash receipt is not the only possible trigger.
Financial reconciliation is the controlled process of comparing financial data from two or more sources, investigating and resolving differences, and documenting the resulting balance or status. The goal is a supported conclusion about what the numbers represent at a defined date or period.
A general ledger is the central accounting record that contains an organization's accounts, transactions, and running balances. Journal entries and other approved source postings flow into the affected ledger accounts, where the classified amounts support the trial balance and financial statements.
General ledger reconciliation is the control of comparing a GL account balance and activity for a defined period with the corresponding subledger or supporting records. The reconciliation explains differences with evidence and separates errors requiring correction from valid reconciling items.
Yes. Accounts receivable is a financial asset because it represents an unconditional right to consideration from a customer. It often arises after a credit sale and exists before cash is collected. Its presentation as current or noncurrent and its net carrying value are separate accounting assessments.
A journal entry is the first formal record of a financial transaction in accounting, a dated entry showing which accounts a business transaction affects and the debit and credit amounts posted to each, before those amounts are summarized in the general ledger.
Month-end close is the accounting process used to review and finalize a company's records for a completed monthly reporting period. It brings recorded activity, account reconciliations, supported adjustments, review, and financial statements together so the period can be reported under the organization's close policy.
Payment terms are the agreed conditions that specify how and when a buyer must pay a seller. They can define the amount and currency, the event that starts the payment period, the due date or number of days allowed, accepted payment methods, installments, and any conditional early-payment discount. A payment term sets the obligation; it does not prove that cash was received or applied.
Prepaid expenses are payments made before the related good or service is received or consumed. Until the benefit is used, the unexpired amount is generally tracked as an asset; the consumed portion is recognized as expense over the applicable period, subject to the entity's accounting framework and policy.
Prepaid insurance is the part of a paid insurance premium that relates to coverage still available at the reporting date. It is recorded as an asset, then recognized as insurance expense as the coverage is used, reducing the prepaid balance.
Reclassification in accounting moves an amount already recorded to a different account, category or accounting distribution so the record reflects the supported classification. It corrects where an amount is reported; its effect on expense, profit or other totals depends on the accounts involved.
Reconciliation is the process of comparing two records of the same financial or business activity, identifying differences, and determining whether each difference reflects timing, missing information, an error, or a valid adjustment. The records may agree after supported adjustments, while documented outstanding differences can remain open for follow-up.
Record to report (R2R) is the accounting operating process that captures business transactions, records and validates them, closes the books, and turns the resulting balances into financial and management reports. It connects day-to-day entries with the information stakeholders use to understand performance and financial position.
Remittance is money sent to another party to pay an obligation. In finance operations, a remittance record may also carry identifiers that explain what the payment covers. The payment instruction, remittance advice, bank confirmation, and later application to invoices are separate records or stages; none should be assumed from another.
A subledger is a detailed accounting record for a defined account, process or group of counterparties. Its transactions roll up to a related control account in the general ledger, which presents the summarized balance.
A suspense account is a temporary general-ledger account for an amount whose final classification is unresolved. It keeps the item visible while the accounting team investigates the evidence, then moves the amount to the supported account once the uncertainty is resolved.
Variance analysis in accounting is the process of comparing an actual financial result with a named baseline, such as a budget, forecast, or prior period, then investigating and documenting why the difference occurred. It measures the gap, separates supported drivers, and determines whether follow-up is needed.
Why this glossary
Finance, accounting, and treasury teams work faster when everyone uses the same definitions for close, matching, and control processes.