Seen as the voluntary surrender of a property without the naming of a successor. Applicable to owned and leased properties. If left unnamed, the property will revert to individuals who have held a prior interest.


Traditionally applies to tax levies, special assessments and service charges. Abatements represent the complete if not partial cancellation of a levy enforced by a government unit.

Abnormal returns

Is the difference between actual returns and those that are expected, for example, ‘normal return’.

Absolute Advantage

The ability of an entity or country to produce more of a given product using a given amount of resources than another entity or country.

Account ageing

Refers to tracking past customer and supplier accounts due in relation to debtors (accounts receivable) and creditors (accounts payable) using data taken from when charges were first recorded.

Accounting entity assumption

Here the company is treated as a separate legal entity to the owner.

Accounting principles

Refers to the basic principles and concepts of accounting standards and guidelines adopted in the preparation of financial statements and used to determine, for example, the measurement of assets and recognition of revenue. The key principles are going concern, consistency, prudence, and accruals.

Accounts payable

Amounts owed by an organisation/individual for goods/services received from suppliers.

Accounts preparation

An annual summation of transactions undertaken by a business, including what has been bought and sold.

Accounts receivable

Amounts due to an organisation/individual for goods/services supplied to customers.


1. The growth of assets through the utilisation of mergers, acquisitions and company expansion. 2. The difference between the face value of a bond and the price of the bond when bought at a discount.


Recognition of income/costs incurred during an accounting period not received/paid.

Accrual concepts

All income and charges relating to the financial year to which the accounts relate shall be taken into account, regardless of the date of payment or receipt.

Accrued assets

Revenues from assets that have been earned but not received.

Accumulated Dividend

Dividend due to holders of cumulative preference shares which has not yet been paid.

Acid Test

Current assets minus stocks divided by current liabilities. Shows whether a company would be able to pay its debts if it needed to satisfy creditors but had no time to sell any of its assets.


Term referring to one company taking a controlling interest in another, either by agreement or hostile.

Active Market

Term denoting that there is a high degree of liquidity in a stock market.


Business professional who deals with the financial impact of risk and uncertainty; Expert in statistics who calculates insurance risks and premiums.


An insolvency procedure in which a company in severe trouble, with the potential for recovery, is put into the charge of a court-appointed administrator.

AE (Annual Exemption)

The level of capital gain a UK taxpayer is entitled to make before paying capital gains tax.

AER (Annual Equivalent Rate)

Interest rate on loans or savings indicating the rate if interest was compounded and paid once a year.


A written statement signed on oath and witnessed by a commissioner for oaths.

AGM (Annual General Meeting)

An annual meeting called by the directors of a company, which shareholders are invited to attend, to discuss matters such as the audited accounts and dividend payments.

AIA (Annual Investment Allowance)

Tax allowance brought in to replace first year allowances. Currently set at £50,000 for a 12 month period and allowing qualifying capital expenditure incurred by a business up to this amount to be set-off against profits chargeable to corporation tax. Any expenditure above the restriction will be subject to further writing down allowances where applicable.

AIM (Alternative Investment Market)

Market created for small, young and growing companies, operated by the London Stock Exchange with less stringent admission criteria than for the main market.


The distribution of shares to applicants in a new issue.

Allowable Expenses

Expenses incurred by a person/company which can be offset against income to reduce the personal/company tax liability.


Is the merger of several companies, whereby the surviving entity incorporates the merged companies into its base.


Depreciation of an intangible asset such as a patent over its lifetime.

Annual report

Also known as statutory accounts, limited companies are legally obliged to send shareholders an annual report and accounts which typically contains five statements: directors report; auditors report; profit and loss account; balance sheet; and cash flow statement. The report must also be submitted to Companies House (in abbreviated format where possible) and HM Revenue & Customs.


A statistical technique that enables figures covering less than a 12 month period to be expanded to a year. To be completely successful, seasonal variations need to be taken into consideration.


A terminating stream of fixed payments over a specified period of time.

APR (Annual Percentage Rate)

Where interest on loans or savings is expressed as other than a yearly rate the APR is the equivalent rate over a year.


Practice of exploiting price differentials usually between two different, but closely related, financial instruments by purchasing at the lower price and selling at the higher price. The disparity between prices often occurs between similar instruments traded in different markets.


Overdue debt or payment occurring at the end of a period.

Articles of Association

The document that lists the regulations that govern the running of a company.

Asset stripping

The practice of acquiring a company and then selling parts of it in order to realise enough cash to match the entire acquisition cost.

Asset turnover

Annual sales divided by net assets employed in the business. This measures a company’s efficiency at using its assets to generate sales or revenue.


The transfer of ownership of an item from one organisation/individual to another.

At par

The sale of a security at a price equal to its face value.


A statutory assurance engagement in which the objective is to express an opinion on a set of financial statements as to whether they are prepared, in all material respects, in accordance with an applicable financial reporting framework and therefore whether they give a true and fair view and the financial performance and position of a business during and at the end of the accounting period in question.


Auditors are required to certify that the accounts produced by their client companies have been prepared in accordance with accounting standards and represent a true and fair view of the company.

Auditors report

States whether the accounts prepared by management reflect a true and fair view of affairs and meet the legal and regulatory requirements.

AVCs (Additional Voluntary Contributions)

Relates to additional payments made into your main pension scheme. These can be paid either into your job pension or added to a separate scheme.