●Glossary

Finance terms, explained plainly.

Consolidation, the close, receivables, payables, treasury and the standards under IFRS, US GAAP, Ind AS and SFRS(I), in a sentence or two each.

Account reconciliation: Comparing a balance sheet account with its supporting detail, such as a sub-ledger, bank statement or confirmation, and explaining any difference, with preparer and reviewer sign-off. Related →
Amortised cost: A measurement basis for financial liabilities such as borrowings, where interest is recognised using the effective interest rate over the life of the instrument. Related →
ASU 2024-03: A FASB update requiring disaggregation of specified income statement expense captions in the notes, for annual periods beginning after 15 December 2026. Related →

Balance confirmation: A request to a customer, vendor or bank to confirm the balance they hold with you, used as audit evidence and to find differences early. Related →
Bank reconciliation statement (BRS): A statement that reconciles the balance per the bank statement with the balance per the books, listing deposits in transit, unpresented cheques and other items. Related →

Capital work in progress (CWIP): Costs incurred on assets that are not yet ready for use. Schedule III requires CWIP ageing to be disclosed. Related →
Cash application: Matching incoming customer payments to the invoices they settle, using bank lines and remittance advice. Related →
Covenant headroom: The distance between a covenant measure, such as net debt to EBITDA, and its limit. Often expressed as a percentage or as how far EBITDA could fall before a breach. Related →

Days payable outstanding (DPO): Average number of days taken to pay suppliers: payables divided by purchases, multiplied by days in the period. Related →
Days sales outstanding (DSO): Average number of days taken to collect from customers: receivables divided by revenue, multiplied by days in the period. Related →
Debt service coverage ratio (DSCR): Cash available for debt service divided by principal and interest due. A common lender covenant. Related →
Deduction: A short payment by a customer, for example for a claimed shortage, pricing difference or promotion, which needs validation and resolution. Related →
Diluted EPS: Earnings per share adjusted for the effect of all dilutive potential equity shares, such as options and convertibles, under IAS 33, ASC 260 and their equivalents. Related →

Effective interest: The share of a subsidiary a group owns through the full chain of holdings. Drives the NCI calculation. Related →
Elimination: Removing intercompany balances, transactions and unrealised profits so the consolidated statements show the group as a single entity. Related →

Flux analysis: Reviewing movements in balances and results against a prior period or budget, and explaining those past a threshold. Related →
Foreign currency translation reserve (FCTR): The equity reserve holding exchange differences from translating foreign operations into the presentation currency. Related →

IFRS 16 and lease standards: IFRS 16, Ind AS 116 and SFRS(I) 16 require lessees to recognise right-of-use assets and lease liabilities for most leases. US GAAP's ASC 842 also brings leases on balance sheet but keeps a separate operating lease model. Related →
IFRS 18: The IFRS standard replacing IAS 1 from 1 January 2027, introducing five categories in profit and loss, two new subtotals and disclosure of management-defined performance measures. Ind AS 118 (India, expected from 1 April 2027, pending MCA notification) and SFRS(I) 18 (Singapore, from 1 January 2027) follow it. Related →
Ind AS: Indian Accounting Standards, converged with IFRS and notified under the Companies Act, 2013. Related →
IFRS: International Financial Reporting Standards issued by the IASB and required or permitted in more than 140 jurisdictions. Related →
Intercompany netting: Offsetting receivables and payables between group entities so only the net amount is settled. Related →

Multi-GAAP adjustment layer: A separate set of adjustments that converts an entity's local-framework figures to the group framework, without changing the local ledger. Related →
Main business activity: Under IFRS 18 and its equivalents, whether an entity's main business is investing in assets or providing finance to customers, which affects how some income and expenses are classified. Related →
Management-defined performance measure (MPM): A subtotal of income and expenses used in public communications outside the financial statements, which IFRS 18 requires to be disclosed and reconciled. Related →

Non-controlling interest (NCI): The equity in a subsidiary not attributable, directly or indirectly, to the parent. Related →

Operating profit: A new subtotal required by IFRS 18 and its equivalents: income and expenses classified in the operating category. Related →

Regulation S-X: The SEC rules setting the form and content of financial statements filed by US registrants. Related →
Right-of-use asset: The lessee's asset representing its right to use a leased asset over the lease term under IFRS 16, ASC 842 and their equivalents. Related →

SFRS(I): Singapore Financial Reporting Standards (International), identical to IFRS, used by Singapore-listed and many other Singapore companies. Related →
Schedule III: The schedule to the Companies Act, 2013 that prescribes the format of financial statements for companies in India. Related →

Three-way match: Matching a supplier invoice to the purchase order and the goods receipt before it is approved for payment. Related →
Top-side adjustment: A journal posted at consolidation level rather than in an entity's books, typically for group-only adjustments. Related →

US GAAP: Generally accepted accounting principles in the United States, set by the FASB and codified in the Accounting Standards Codification (ASC). Related →

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