UAE Accounting & Financial Reporting Glossary

Accounting

Systematic process of recording, classifying, summarizing, and interpreting financial transactions to provide useful information for business decision-making.

Financial Reporting

Professional services improving confidence of stakeholders in financial or non-financial information through independent evaluation and reporting.

Bookkeeping

Day-to-day recording of financial transactions including sales, purchases, receipts, and payments within accounting records.

Chart of Accounts

Structured list of all accounts used by an entity to record financial transactions systematically.

General Ledger

Primary accounting record containing all financial transactions classified by accounts.

Trial Balance

Statement listing all ledger balances to verify total debits equal total credits at specific date.

Adjusted Trial Balance

Trial balance prepared after recording adjusting entries to reflect accurate account balances.

Journal Entry

Record of a financial transaction showing debit and credit effects on specific accounts.

Accrual Accounting

Accounting method recognizing revenues and expenses when earned or incurred, regardless of cash movements.

Cash Accounting

Accounting method recognizing revenues and expenses only when cash is received or paid.

Revenue Recognition

Accounting principle determining when revenue should be recognized under IFRS standards.

Matching Principle

Concept requiring expenses to be recognized in same period as related revenues.

Consistency Principle

Requirement to apply same accounting methods consistently across reporting periods.

Materiality Principle

Concept allowing omission or simplification of insignificant information not influencing user decisions.

Conservatism Principle

Accounting practice requiring recognition of expenses and liabilities when uncertainty exists.

Going Concern Principle

Assumption that business will continue operating for foreseeable future without liquidation.

Financial Statements

Structured reports including balance sheet, income statement, cash flow, and equity changes.

Balance Sheet

Statement presenting financial position showing assets, liabilities, and equity at specific date.

Income Statement

Statement reporting revenues, expenses, and profit or loss over accounting period.

Statement of Cash Flows

Report showing cash inflows and outflows from operating, investing, and financing activities.

Statement of Changes in Equity

Statement detailing movements in owners’ equity during reporting period.

Assets

Resources controlled by entity expected to provide future economic benefits.

Current Assets

Assets expected to be realized, sold, or consumed within one year.

Non-Current Assets

Long-term assets held for use beyond one accounting period.

Liabilities

Present obligations arising from past events requiring future economic outflows.

Current Liabilities

Obligations expected to be settled within twelve months.

Non-Current Liabilities

Long-term obligations not due for settlement within one year.

Equity

Residual interest in assets after deducting liabilities of entity.

Share Capital

Funds invested by shareholders in exchange for ownership interests.

Retained Earnings

Accumulated profits retained in business after dividend distributions.

Depreciation

Systematic allocation of cost of tangible assets over their useful lives.

Amortization

Allocation of cost of intangible assets over their useful life.

Impairment

Reduction in asset carrying value when recoverable amount falls below book value.

Cost of Goods Sold

Direct costs attributable to production of goods sold during period.

Gross Profit

Difference between revenue and cost of goods sold.

Operating Expenses

Expenses incurred from normal business operations excluding direct production costs.

Net Profit

Remaining profit after deducting all expenses, taxes, and costs from revenue.

Accounts Receivable

Amounts owed by customers for goods or services provided on credit.

Accounts Payable

Amounts owed to suppliers for goods or services purchased on credit.

Prepayments

Expenses paid in advance recorded as assets until consumed.

Accrued Expenses

Expenses incurred but not yet paid or recorded.

Provisions

Liabilities of uncertain timing or amount recognized under IFRS requirements.

Contingent Liabilities

Possible obligations dependent on uncertain future events.

Inventory

Goods held for sale or use in production process.

Inventory Valuation

Measurement of inventory using cost or net realizable value, whichever lower.

FIFO

Inventory valuation method assuming earliest purchased items sold first.

Weighted Average Cost

Inventory valuation method assuming earliest purchased items sold first.

Fair Value

Price received to sell asset or paid to transfer liability in orderly transaction.

Historical Cost

Accounting measurement based on original purchase price of asset.

Financial Year

Annual accounting period for preparing financial statements.

Notes to Financial Statements

Additional disclosures providing detailed explanations of financial statement items.

IFRS

International Financial Reporting Standards governing financial reporting in UAE.

Accounting Policies

Specific principles and methods adopted in preparing financial statements.

Accounting Estimates

Approximations used in financial reporting due to measurement uncertainties.

Segment Reporting

Disclosure of financial information by business or geographical segments.

Related Party Disclosures

Disclosure of financial information by business or geographical segments.

Foreign Currency Transactions

Transactions denominated in currencies other than functional currency.

Functional Currency

Primary currency of economic environment in which entity operates.

Consolidated Financial Statements

Financial statements combining parent and subsidiary accounts.

Subsidiary

Entity controlled by another entity through ownership or power.

Associate

Entity over which significant influence exists but not control.

Joint Venture

Arrangement where parties share control over economic activity.

Financial Instruments

Contracts creating financial assets for one entity and liabilities for another.

Trade Receivables

Amounts receivable from customers arising from normal business activities.

Trade Payables

Amounts payable to suppliers arising from normal business activities.

Borrowings

Loans and financial obligations obtained from lenders.

Interest Expense

Cost incurred for borrowing funds during reporting period.

Deferred Revenue

Income received in advance recorded as liability until earned.

Deferred Expenses

Costs capitalized and expensed over future periods.

Tax Expense

Total amount of current and deferred tax recognized in period.

Corporate Tax

Tax imposed on company profits in accordance with applicable laws and jurisdictional regulations planning compliance reporting optimization transparency governance UAE.

VAT

Consumption tax on value added at each production stage collected by registered businesses on behalf government compliance filing credits refunds.

Withholding Tax

Tax deducted at source from payments to nonresidents and remitted to authorities compliance treaties rates documentation reporting obligations planning accuracy.

Transfer Pricing

ricing of transactions between related entities ensuring arm’s length principle compliance documentation benchmarking risk audits regulations fairness transparency taxation alignment.

Audit Trail

ocumented sequence of transactions allowing traceability from source documents to financial statements verification accountability controls transparency compliance governance reliability integrity.

Sampling

Audit technique selecting representative transactions to draw conclusions about entire populations efficiency judgment risk coverage reliability evidence standards planning effectiveness.

Regulatory Authority

Government or statutory body responsible for establishing, monitoring, and enforcing laws, regulations, and compliance standards within specific industries or sectors.

Chart of Accounts

Structured list of all accounts used to record financial transactions organization consistency reporting clarity scalability control customization compliance standards management.

Cost Accounting

Branch focusing on recording, analyzing, and controlling costs to improve efficiency and profitability budgeting variance decisions management optimization reporting control.

Management Accounting

Provision of financial and nonfinancial information to support internal planning and decision making strategy control performance evaluation forecasting accountability governance.

Financial Ratio Analysis

Technique using ratios to evaluate performance, liquidity, solvency, and efficiency comparison trends benchmarking decisions insights diagnosis monitoring reporting management improvement.

Statutory Audit

Legally mandated examination of financial statements to ensure compliance with applicable laws regulations standards independence assurance stakeholders credibility reporting governance.

External Audit

Audit conducted by independent firm providing assurance on financial statements for stakeholders objectivity credibility compliance standards reporting trust transparency governance.

Internal Audit

Independent appraisal function evaluating internal controls, risk management, and governance processes assurance improvement compliance effectiveness efficiency oversight accountability value enhancement.

Audit Opinion

Formal conclusion expressed by auditor regarding fairness of financial statements qualified unqualified adverse disclaimer assurance credibility standards compliance reporting users.

Qualified Opinion

Audit opinion indicating exceptions due to material misstatements or scope limitations disclosure impact assessment users attention compliance standards transparency judgment.

Unqualified Opinion

Audit opinion stating financial statements present fairly in accordance with applicable framework assurance confidence credibility compliance standards users acceptance transparency.

Adverse Opinion

Audit opinion concluding financial statements do not present fairly due to pervasive misstatements seriousness impact users decisions compliance standards transparency.

Disclaimer of Opinion

Audit statement indicating inability to form opinion due to significant scope limitations uncertainty risk disclosure users caution compliance standards transparency.

Forensic Accounting

Specialized accounting investigating fraud, disputes, and financial misconduct using analytical techniques evidence litigation support compliance integrity controls detection prevention expertise.

Fraud

Intentional act of deception for personal gain causing financial loss to others prevention detection controls ethics compliance governance awareness mitigation.

Error

Unintentional misstatement or omission in financial information arising from mistakes or oversight detection correction controls review processes training prevention accuracy.

Variance Analysis

Comparison of actual results with budgets or standards to identify deviations and causes control improvement accountability corrective actions performance evaluation.

Internal Controls

Policies and procedures designed to safeguard assets, ensure accuracy, prevent fraud, and promote efficiency compliance reliability governance risk management oversight.

Risk Management

Identification, assessment, and mitigation of financial and operational risks affecting organizational objectives proactively systematically strategically governance resilience continuity compliance performance.

Materiality

Concept determining significance of information influencing economic decisions of users of financial statements judgment thresholds relevance disclosure assessment consistency transparency.

Going Concern

Assumption that an entity will continue operations for foreseeable future without liquidation intent viability sustainability assessment disclosure judgment standards compliance.

Fair Value

Price received to sell an asset or paid to transfer a liability in orderly transaction marketbased measurement transparency relevance comparability.

Non-Deductible Expenses

Expenses disallowed for corporate tax such as fines, penalties, and certain entertainment costs.

Deductible Expenses

Costs incurred wholly and exclusively for business purposes allowed as deduction for tax calculation.