Accounting terms

August 5, 20220

Assets – resources owned by an economic operator at a certain point in time. They can be classified into financial and real assets. Financial assets include all the financial resources owned by a company or an individual. Real assets include commodities, buildings or land, i.e. an intangible right of a company or individual that has certain value.


Annuity (monthly payment on a credit) – an amount payed for a certain period of time in order to pay back a credit or a loan. The annuity includes both debt and associated interests. It is determined in such a manner that the entire amount of the debt is payed back on a maturity.


Depreciation – a bookkeeping term used to describe the process of constant reduction of an asset (property of a company). The purpose of depreciation is to replace the company resources that have been spent with new ones. In case of fixed assets, they are usually depreciated in compliance with the law.


Assignment – an order, a common way of settling liabilities. Usually, the thing that is assigned is money. Three persons are included in the assignation process: the assignor gives the order, i.e. instructs the second person (the obligor) to pay the amount specified in the order to the third person, i.e. the person to whom the order is given (the assignee).



Shares – securities that are purchased (owned) to take the ownership over a part of a joint-stock company capital. The owner of the shares is the real owner of the company capital and on the grounds of their stake, the owner exercises the following rights:

– managing right

– dividend right

– the right to liquidation surplus in the company goes into liquidation.

In case the company achieves a positive financial result, the shares enable shareholders to gain investment profit based on two grounds:

– on the grounds of the increase in the share price

– on the grounds of dividend distribution.


Copyright and copyright royalties (German: Autorenrecht, Urheberrecht) – a set of legal rules regulating relations related to the creation of literary works, scientific works and works of art of all kinds. The way these works are treated affects personal interests of authors and community, so the copyright needs to bring the author’s interests in line with the interests of the community. The copyright includes author’s property and moral rights. Property rights imply the exploitation of a copyright work, including publishing, reproducing, making copies, displaying, performing, etc. Whenever the work is exploited, the author is entitled to a royalty during their lifetime and after their death, their relatives are entitled to it for a certain period of time. Moral rights include the author’s right to be recognized and mentioned as the author of the work, as well as a special right to require the prohibition of any work modification. Withholding taxes and contributions are calculated and payed on copyright royalties.


An advanced payment implies that a part of the debt shall be paid in advance. Materially, it is commonly expressed in monetary terms, although it can also be made using some other replaceable thing of determined value, which is given by one contracting party (usually: a buyer, employer) to another contracting party at the moment of contract conclusion. In its essence, i.e. by its legal nature, an advanced payment represents partial obligation fulfillment that takes place before the due date of the same obligation, i.e. a way to stimulate the fulfillment of a contractual obligation.


A vista interests – interests accrued on a vista assets.


Bank guarantee –a contract whereby a bank undertakes to pay out a certain amount of money to the beneficiary (creditor from the basic agreement) if a certain third party (initial debtor) does not fulfill his obligations within a given deadline. The contract of guarantee is always concluded in relation to another basic contract (contract of credit, sale, etc.). Under these basic contracts, the debtor undertakes to obtain a guarantee from a specific bank for the creditor’s needs. Under the guarantee, the bank shall undertake to pay out a certain amount if the debtor does not fulfill their obligation.


Balance – a cumulative resource overview that is divided into two sections (sides). The resources are classified into categories with displayed value. The left side of the balance (assets) outlines all the company assets and receivables and they can be classified into fixed and current assets. The right side of the balance (liabilities) outlines the asset sources: own funds, credits for fixed assets (long-term credits), credits for current assets (long-term and short-term credits) and supplier’s credit (indebtedness to suppliers). The main balance sheet characteristic is the balance between assets and liabilities (resources and their sources).



Balance sheet – a way of outlining company assets and the sources of those assets as of a certain day. The balance sheet represents an economic operator asset (resource) overview, divided into two sections (sides) and analyzed from the perspective of their form (assets) and from the perspective of their funding (liabilities). It is understood that there is a balance between the left side (assets), displaying a list of fixed and current assets, and the right side (liabilities), displaying a list of asset sources (own and borrowed).


Income statement – profit and loss account. The income statement is a nominal, accounting, cumulative financial statement covering a specific period of time. By determining and comparing total expenses and total revenues gained in a same accounting period, we come to the business result that can be qualified as profit or loss.


Cashier’s order – a document created at the cash register at the moment when money is payed out or payed in (payment order), supported by a document that represents the grounds for paying the money out (for example, an invoice) or in (for example, promissory note).


Blank – an expression used in financial and trade course of dealing to describe the signing of a document that is not filled in (blank) or is partially filled in, whereby the signatory completely undertakes an obligation based on that document. This also includes a signed authorization that does not specify the authorizations themselves. Apart from this, in terms of finance, a blank credit is a credit that is based on confidence and does not have to include coverage.


Gross – the best explanation is “total” and it is usually used in the following expressions: gross weight – the weight of both goods and packaging, gross product – the total volume of the production of a regional unit or the total national product, gross wage – earnings including taxes payed on them.


Gross profit – a selling value reduced for the sales and production expenses. Gross profit includes the profit tax.


Gross domestic product (GDP) – total amount of goods produced and services provided in a country, regardless of ownership. This means that GDP includes the value of the products made by foreign nationals (companies) in

the country, while it does not include the performance of domestic residents operating abroad.




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