Accountant: A qualified person who is skilled at managing and analyzing business financial records.

Accounts Payable: Is money you owe to suppliers and other business creditors as a result of purchases of stock and other expenses such as overheads and taxes.


Acquisitions: In relation to the GST, acquisitions include the things you buy (goods, services and anything else) for your business. They also include many other transactions, such as obtaining advice or information, taking out a lease for business premises or hiring business equipment.



Bad Debts: Money owed to you that you can’t collect.


Bank Reconciliation: A comparison between the bank’s record of transactions and the record of the business’s cash book. After taking into account such items as uncleared cheques and bank charges etc., the two records should show an identical balance.



Bookkeeping: The process of recording business transactions in the accounting records


Budget: An estimate of expenses and revenue required.

Business Number (BN): An identifier for dealings with the Canada Revenue Agency and for future dealings with other government departments and agencies.

Capital: The total owned and borrowed funds in a business.

Capital Gain: A financial gain made from selling fixed assets such as land, buildings, or a business at a price above the original purchase price.

Cash: Includes all money in the bank, in the cash drawer and in petty cash. Banknotes, coins, bills and negotiable securities (like cheques) are cash. But so is the money you can draw on demand – your bank accounts or savings accounts also represent “cash”.


Collateral: Security provided by a borrower to cover the possibility that the loan will not be repaid.

Company: A business owned by a group of people called shareholders, which has its own legal identity separate from its owners.

Contingent Liability: A liability which will only arise upon the happening of a certain event, for example, the guarantor of a loan being asked to honor the guarantee if the borrower defaults.

Contract: A legally binding agreement between two or more parties.

Controllable Expenses: Those expenses that can be controlled or restrained by the businessperson.


Cost of Goods Sold: The total cost to the business of the goods sold during an accounting period. In its simplest form this is the sum of the opening stock plus all purchases less the closing stock.

Credit: An entry made on the right hand side of an account and indicating a gain to a liability, owner’s equity or revenue account.

Credit Application: A form to be completed by an applicant for a credit account, giving sufficient details to allow the seller to establish the applicant’s credit worthiness.

Credit Limit: The upper limit of credit that a business will allow a customer to have.

Creditor: A person or business to which money is owed.


Current Liabilities: Short-term debts such as bank overdraft, creditors and provisions set aside to pay taxation and other commitments (for example, holiday pay) and expected to come due within one year of the Balance Sheet.


Debt: That which is owed. If you borrow money, buy something on credit or receive more money on an account than is owed, you have a “debt.”

Debt Capital: Money from external sources used to finance a business. See also equity capital.

Debtor: A person or business who owes money

Default: To fail to meet an obligation when due, such as paying a debt.


Depreciation Expense: Gradual reduction of the value of a fixed asset and gradual application of this cost to the expenses of a business over the useful life of the asset.


Direct Costs: The costs incurred, in addition to fixed costs, as a result of manufacturing a product or providing a service. Direct costs are made up of direct material, direct labor and direct manufacturing or servicing costs.

Disbursements: Funds paid out of a business in settlement of obligations.

Discount: A deduction made from the normal cost or purchase price.

Dishonored: The word used to describe a cheque, which the bank will not pay, because the customer’s account lacks sufficient funds.

Dividend: A distribution of the profits of a company among its members or shareholders.

Drawings: Withdrawals of assets (usually cash) from a business by a sole proprietor or a partner.

Entity: An individual (sole trader), partnership, a body corporate, a corporation, an incorporated association or body of persons

Entrepreneur: A person who organizes and manages a business, but usually only applied to people who have shown exceptional ability and imagination in launching and succeeding with new business ventures.

Equities: Stocks and shares invested in a business and not bearing fixed interest.

Equity Capital: Money provided by the business owner/s to finance the business.

Expenses: Costs incurred by a business in earning income, for example, rent, advertising, wages etc.

Feasibility Study: An examination of a particular project or business to assess its chances of operating successfully, before committing large amounts of money to it.

Finance: Money resources

Financial Statements: Formal reports prepared from accounting records describing the financial position and performance of the business.

Financial Year: An accounting period of 12 months, often coincident, for convenience, with the fiscal year

Financing: Obtaining money resources. Businesses usually have to obtain finance at some time, either to go into business or expand operations.

Fixed assets: The land, buildings, vehicles, materials and equipment owned by a business, which are used to earn revenue rather than being for sale.



Franchisee: The purchaser of a franchise license who operates one or more outlets of the franchise business.

Franchisor: The owner of a franchise system.


Gross: The total overall amount. For example, gross profit is the trading profit of a business without any deductions for business expenses.

Gross Profit: The excess of net sales over cost of goods sold usually expressed as a percentage.

Income: Money that is being earned by the business.



Intangible Assets: Those assets of a business, which cannot be assigned a firm, fixed value, such as leases, franchises, goodwill and patent rights.

Interest: The cost of borrowing money.


Investment: Money used to purchase any capital items for the business and expected to yield an income.

Invoice: Document which shows the customer charges for goods delivered or work done.

Lay-away: An arrangement where the customer in a retail store makes a deposit on an article and pays the amount owing in installments, while the retailer stores the article until the last payment has been made.

Lease: A legal contract covering the possession and use of property, plant or equipment between the owner (lessor) and another person (lessee) at a given amount, for a stated length of time.

Leasing Finance: A method of acquiring business equipment without capital outlay. The bank or finance company buys the equipment and leases it to the customer, in return for regular lease payments for the duration of the lease period.

Lessee: A person who enters into a lease contract as the user of the land, buildings, plant or equipment.

Lessor: An owner who allows his/her land, buildings, plant or equipment to be used under a lease contract.

Limited Partnership


Liquidate: To settle a debt or to convert to cash. This literally means to do away with.

Liquidity Ratio: A comparison of two accounts in a Balance Sheet, current assets divided by current liabilities.


Management: The role of conducting and supervising a business.


Mark-up: The price increase between buying at wholesale and selling at retail often expressed as a percentage of the wholesale or cost price. Compare margin.

Marketing: Finding out what customers want, and then setting out to meet their needs, provided it can be done at a profit. Marketing includes market research, deciding on products and prices, advertising, promoting, distributing and selling.


Marketing Strategy: A business’s approach to marketing its products/ services expressed in broad terms, which forms the basis for developing a marketing plan.

Merchandise: Goods that may be sold or traded.

Merchandising: Trading in a range of goods. Promoting the whole range of goods that are sold in a business.

Net: What is left after deducting all charges (see gross).

Net Profit: The remainder after all expenses of an accounting period are deducted from all revenue of the same period.

Net Worth: The owner/s interest in a business, calculated by subtracting all liabilities from the assets of the business.

Niche: A small specialized segment of a total market.

Operating Expense: All the expenses normally incurred in running a business, during an accounting period, excluding the cost of goods sold.


Overdraft: A form of loan by which a person with a current bank account is given permission to continue making drawings on the account up to an agreed limit, after the balance has been reduced to nil.




Payable: Ready to be paid.

Payee: Person to whom money is paid


Petty Cash: A small amount of money kept for minor purchases for the business, which do not warrant writing a cheque.

Posting: Making entries in an account system or book from original documents such as invoices and receipts.

Power of Attorney: Power to act on behalf of another person for specified purposes.

Premium: Consideration paid for an insurance policy.

Principal: In the case of a loan, refers to the actual amount borrowed and on which interest is paid.

Profit: Total revenue less total expenses for a period of time calculated in accordance with generally accepted accounting principles.

Profit and Loss Statement: Statement of revenue and expenses showing the profit or loss for a certain period of time.

Profit Margin: The amount that the price of a product or service is raised above its cost in order to provide a gross profit.

Projection: A forecast of future trends in the operation of a business.

Proprietorship: The value of the proprietor’s assets in a business less any external liabilities.

Receipt: A written acknowledgement of having received money or goods specified

Receivership: The legal condition a company is placed in when an official receiver is appointed to investigate and manage its affairs.

Residual: The pre-agreed estimated value at the end of a leasing period of an item subject to a leasing agreement.

Retail: To sell directly to the consumer, usually in small quantities in comparison with the total level of sales.

Return on Investment (ROI): The ratio of net profit after income tax, over owner’s equity. Usually expressed as a percentage.

Right of Assignment: In relation to business premises, a right given in the lease agreement for a tenant to assign the lease to another tenant when the business is sold.

Sales: The total value of goods sold or revenue from services rendered.


Service Business: A business that deals in service activities such as a retailer, tourism business, banking, education provider, etc.

Sole Trader: A person who does business by himself/herself without the use of a company structure or partners and bears alone full responsibility for the actions of the business.

Solvent: The condition of a business when all debts can be paid as they come due.

Stock: Physical items (inventory) that a business uses in its production process or has for sale in the ordinary course of doing business.



Supplies: In relation to the GST/HST, supplies include the goods and services you sell through your enterprise and many other transactions such as providing advice or information or leasing out commercial premises

Tangible Asset: Something substantial or real that is capable of being given an actual or approximate value.


Term Loan: A loan for a fixed period of more than one year and repayable by regular installments.

Trade Credit: An arrangement to buy goods or services on account, that is, without making immediate cash payment.



Trial Balance: A list of all balances in the ledger at a given time.

Undercapitalization: Insufficient investment of funds in a business.

Unsecured Loan: A loan that is not backed up by any collateral, such as a home or an automobile offered as security.

Valuation: The process of appraising the worth of property according to some recognized criteria.

Variable Costs: The costs additional to fixed costs of running a business that can vary depending on the level of demand and activity.

Vendor: A seller of goods or of a business.

Venture Capital: Capital invested in a business where the chances of success are uncertain.

Volume: An amount or quantity of business activity.

Wholesale: Selling in large quantities to businesses which will then resell to consumers in smaller quantities.

Workers Compensation: Money paid to an employee to compensate for injuries received in connection with their work. All employers must insure against claims for this kind of compensation.

Working Capital: The excess of current assets over current liabilities of any business at any time.