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Glossary
| Term EN | Definition | Exam Relevance |
|---|---|---|
| GAAP | Generally Accepted Accounting Principles — framework of concepts, conventions, and standards | Core definition |
| Accounting | Identifying, measuring, and communicating economic information (AAA, 1966) | Foundational |
| Business Entity Concept | Business treated separately from owner; owner's capital is treated as a liability of the business | Core concept |
| Going Concern | Assumption that the business will continue for at least 12 months; justifies historical-cost accounting | Core concept |
| Accrual Concept | Revenue recognised when earned; expenses recognised when incurred, not on a cash basis | Core concept |
| Matching Concept | Expenses matched to related revenue in the same accounting period | Accrual extension |
| Prudence / Conservatism | Anticipate losses early; defer recognition of uncertain gains | Core convention |
| Consistency | Use the same accounting methods across periods and disclose any changes | Core convention |
| Materiality | Only significant items require full accounting treatment | Core convention |
| Full Disclosure | All relevant information should be disclosed in statements or notes | Transparency principle |
| Historical Cost | Assets recorded at original acquisition cost | Measurement base |
| ICAI | India's accounting standard setter; established in 1949; 3.85 lakh+ members as of 2024 | India body |
| Ind AS | IFRS-converged Indian standards for listed and large unlisted companies (from April 2016) | Indian standard |
| IFRS | International standards issued by IASB (2001, London); adopted by 144 countries as of 2024 | Global standard |
| IASB | International Accounting Standards Board; issues IFRS from London | Standard issuer |
| NFRA | National Financial Reporting Authority; independent oversight body operational since October 2018 | Oversight body |
| Depreciation | Systematic allocation of asset cost over useful life; a non-cash expense | Accounting entry |
| SLM | Straight-Line Method: equal depreciation every year = (Cost − Scrap) ÷ Life | Depreciation method |
| WDV | Written Down Value Method: fixed percentage on reducing book value; higher early charge | Depreciation method |
| LCNRV | Inventory valued at the lower of cost or net realisable value (Ind AS 2) | Prudence application |
| Revenue Recognition | AS 9 uses transfer of risks and rewards; Ind AS 115 uses a five-step model | Core accounting |
| Deferred Tax | Timing difference between accounting income and taxable income (Ind AS 12 / AS 22) | Tax accounting |
| Capital Expenditure | Long-term benefit expenditure capitalised and depreciated over more than one year | Classification |
| Revenue Expenditure | Short-term benefit expenditure expensed to P&L in the current year | Classification |
| Goodwill | Premium paid over the fair value of net assets in a business acquisition | Intangible asset |