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Glossary
| Term (EN) | Definition | Exam Relevance |
|---|---|---|
| Financial Statement | Formal record of financial activities (P&L, Balance Sheet, Cash Flow) | Core concept — asked in both years |
| Balance Sheet | Snapshot of assets, liabilities and equity on a specific date | Define in every accounting question |
| Cash Flow Statement | Statement showing cash inflows and outflows classified under 3 activities (AS-3) | Frequently asked — AS-3 reference essential |
| Operating Activities | Core business cash flows — receipts from customers, payments to suppliers | First activity in CFS |
| Investing Activities | Cash from purchase/sale of long-term assets and investments | Second activity in CFS |
| Financing Activities | Cash from raising/repaying capital — shares, loans, dividends | Third activity in CFS |
| Comparative Statement | Financial data of 2+ years compared side-by-side (absolute + % change) | One of 5 analysis techniques |
| Common-size Statement | Each item expressed as % of net sales or total assets | Enables cross-firm comparison |
| Trend Analysis | Base year = 100; subsequent years as index numbers | PYQ 2021 — two methods |
| Ratio Analysis | Mathematical ratios between financial figures for performance assessment | Most tested technique |
| Current Ratio | Current Assets ÷ Current Liabilities; ideal 2:1 | Liquidity measurement |
| Quick Ratio | (CA − Inventory − Prepaid) ÷ CL; ideal 1:1 | Stringent liquidity test |
| Gross Profit Ratio | (Gross Profit ÷ Net Sales) × 100 | Profitability indicator |
| Debt-Equity Ratio | Long-term Debt ÷ Shareholders' Equity; ideal ≤2:1 | Solvency/leverage indicator |
| ROE (Return on Equity) | (Net Profit ÷ Shareholders' Equity) × 100 | Investor profitability measure |
| Responsibility Accounting | System assigning accountability for costs/revenues to specific managers | PYQ 2021 — 4 types |
| Cost Centre | Responsibility centre where manager controls only costs | Type 1 of 4 centres |
| Revenue Centre | Responsibility centre where manager controls only revenues | Type 2 of 4 centres |
| Profit Centre | Responsibility centre where manager controls both revenues and costs | Type 3 of 4 centres |
| Investment Centre | Responsibility centre where manager controls profit and capital employed (ROI) | Type 4 of 4 centres |
| Social Accounting | Accounting for social costs and benefits alongside financial performance | Growing importance — BRSR, SDGs |
| HRA (Human Resource Accounting) | Quantifying the monetary value of human capital in an organisation | Introduced by Rensis Likert, 1960s |
| BRSR | Business Responsibility and Sustainability Reporting — mandatory for top 1,000 listed cos (SEBI, FY 2022-23) | Latest development |
| Triple Bottom Line | People, Planet, Profit — John Elkington, 1994 — framework for holistic corporate reporting | Social accounting framework |
| Green GDP | GDP adjusted for environmental degradation and resource depletion costs | National-level environmental accounting |