Every industry has its own language and terms. These words and phrases can confuse anyone who is not part of the daily operations of a specific sector, and the accounting business is no exception.

So, to help you understand the terms, acronyms, and phrases regularly used when working with an accountant, Peal Accounting & Taxation Services Inc. has created this handy reference guide. Here you’ll find valuable information allowing you to comprehend and communicate your accounting needs effectively.

Accrual Basis Accounting: A method of accounting that records revenues and expenses before payments are received.

Advance Tax Payments: The amount of taxes, including HST and Corporation Tax, paid in advance rather than a lump-sum payment at the end of the tax year.

Accrued expenses: An expense recognized on the books before it gets paid.

Accrued income: Income earned but not yet received.

Capital Cost Allowance (CCA): Amortization expenses the government allows a business to deduct from its income for tax reporting purposes.

Accruals: It refers to an entry made in the books related to the recording of revenue or an expense without a cash exchange.

Holding Companies: A company that owns other firms and exists solely to operate those subsidiaries.

Provisions: A fund set aside for future expenses and contingencies.

Retained Earnings and Dividends: These relate to a firm’s cumulative net earnings or profits after considering dividend payments.

Promoters, Shareholders, and Directors: Stakeholders that play a vital role in the company’s decision-making.

Bad Debts: This is the term for any outstanding balances that a business writes off as uncollectible.

Employee Benefits as shown in the tax returns:  It includes fringe benefits and allowances for travel, fuel, and meal vouchers.

Short-Term and Long-Term Investments: Long-term investments are resources put aside for far-off future events, including retirement. On the other hand, short-term investments are when money gets saved for a new vehicle or holiday.

Accrued Liability: It refers to an expense incurred but not yet paid for by a business.

Tax Payable: The amount of money a firm expects to pay in income tax over the next year.

Get in touch with us today!

We hope these terms made you feel more confident about working with an accountant. If you’re looking for an accounting expert in Mississauga, Ontario, reach out to Peal Accounting & Taxation Services Inc. With over thirty years of experience in the accounting sector, we offer a comprehensive range of reliable services.

We specialize in registering businesses, corporate account setup, self-employed businesses/ personal tax returns, payroll, and bookkeeping. We also complete tax returns for non-profit organizations and charities.

We offer our services across Mississauga, Markham, Vaughan, Brampton, Hamilton, Toronto, Ajax, Whitby, Oshawa, Oakville, Burlington, Caledon, Brantford, and Barrie.

View our complete list of services here, or contact us by calling (905) 461-2160. Alternatively, you can email pealtaxinc@gmail.com.