Accounting & Tax Vocabulary: 100 Key English Terms
Accounting is often called the language of business, and in international companies that language is English: group reporting packs, audit reports, IFRS financial statements and tax correspondence with foreign partners are all written in it. This glossary collects the words accountants and auditors use every day, from debits and credits to VAT, payroll and reporting standards, with natural Turkish equivalents and examples from real work.
100 terms
11 topics
47 core terms
200 example sentences
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No account needed. Read the meaning, see where the term is used, then study the examples. Click any word in the lesson for help. You can also select a word and press Alt + Enter.
Bookkeeping & Ledgers
accounting
noun
Meaning
The work of recording, organising and reporting a business's financial transactions so that owners, managers, tax offices and investors can understand its financial position.
Where you use it
The name of the profession, the department and the academic subject. People work in accounting, study accounting and talk about accounting rules, records and software. The person who does it is an accountant.
Examples
She has worked in accounting for six years, mostly for manufacturing companies.
We're moving to new accounting software in January, so please close all open items by December.
Usage note
Accounting is the activity and the subject; accountancy is mainly British and refers to the profession. The person is an accountant, never 'an accounting'.
Common phrases
accounting department · accounting software · accounting records · accounting policies · accounting period
The day-to-day recording of a business's transactions, such as sales, purchases, receipts and payments, in its books or accounting system.
Where you use it
Bookkeeping is the routine recording side of accounting; accounting adds analysis, reporting and tax work. A bookkeeper keeps the books up to date, and many small businesses outsource their bookkeeping.
Examples
We outsource our bookkeeping to a small firm, but the tax returns are prepared in-house.
Good bookkeeping makes the year-end audit much faster.
Usage note
Bookkeeping has three double letters in a row (oo, kk, ee), so it is a common spelling mistake.
Common phrases
keep the books · bookkeeping system · double-entry bookkeeping · outsource bookkeeping
An entry on the left side of an account. Debits increase asset and expense accounts and decrease liability, equity and revenue accounts.
Where you use it
Used constantly with credit in double-entry bookkeeping: every transaction has debits and credits with equal totals. It is also a verb: you debit an account. Ledgers often shorten it to Dr.
Examples
To record the sale, debit accounts receivable and credit revenue.
The total debits don't match the total credits, so there must be an error in one of the entries.
Usage note
In accounting, debit just means the left side; it is not good or bad. Do not confuse it with a debit card.
Common phrases
debit an account · debit side · debit balance · debits and credits
An entry on the right side of an account. Credits increase liability, equity and revenue accounts and decrease asset and expense accounts.
Where you use it
The partner of debit in double-entry bookkeeping, shortened to Cr. As a verb, you credit an account. Outside bookkeeping, credit also means a loan or buying now and paying later, so the context matters.
Examples
When you pay the office rent, credit the bank account and debit rent expense.
Accounts payable normally has a credit balance.
Usage note
On a bank statement, a credit is money coming into your account, because the bank records your balance as its own liability. In the company's books, the same money is a debit to the bank account.
Common phrases
credit an account · credit side · credit balance · credit entry
A record of one business transaction in the accounting system, showing the date, the accounts affected, the debit and credit amounts and a short description.
Where you use it
Accountants post, reverse and correct journal entries. Month-end adjusting entries and manual journals (often called JEs or MJEs) are reviewed carefully by managers and auditors.
Examples
Can you post a journal entry to accrue last month's electricity bill?
The auditors asked for supporting documents for every manual journal entry over 50,000 lira.
Common phrases
post a journal entry · reverse a journal entry · adjusting journal entry · manual journal entry
The main set of accounts of a business, where all transactions are collected account by account to show the balance of each one.
Where you use it
Usually called the GL. Journal entries are posted to the general ledger, and the trial balance and financial statements are produced from it. In ERP systems the GL module sits at the centre of finance.
Examples
All bank charges should go to a separate account in the general ledger.
The general ledger is closed for March, so any new entries will go into April.
Common phrases
post to the general ledger · general ledger account · GL code · general ledger balance
The organised list of every account a company uses in its ledger, each with a number and a name, grouped into assets, liabilities, equity, revenue and expenses.
Where you use it
Accountants set up, update and map the chart of accounts, often shortened to CoA. International groups ask their subsidiaries to map local accounts to one group chart.
Examples
Our parent company sent us its chart of accounts, and we have to map our Turkish accounts to it.
Please check the chart of accounts before you ask for a new account to be opened.
Usage note
Do not translate 'hesap planı' as 'account plan'; the English term is chart of accounts.
Common phrases
chart of accounts mapping · set up a chart of accounts · account code · group chart of accounts
A list of all ledger accounts with their debit or credit balances at a certain date, used to check that total debits equal total credits before preparing statements.
Where you use it
Accountants run or pull a trial balance (TB) at month-end. Auditors start their work from the TB, and the version after year-end adjustments is called the adjusted trial balance.
Examples
Can you send me the trial balance as of 30 June in Excel?
The trial balance doesn't balance; there's a difference of 1,250 lira.
Common phrases
run a trial balance · adjusted trial balance · trial balance as of · the trial balance balances
An amount recorded in the period it belongs to, even though cash has not yet been paid or received, such as a utility bill that only arrives next month.
Where you use it
Accountants post accruals at month-end so that costs and revenue land in the right period. The accrual basis (accrual accounting) is the standard method for companies. The verb is accrue.
Examples
We haven't received the lawyer's invoice yet, so post an accrual for 30,000 lira.
Under the accrual basis, revenue is recorded when it is earned, not when the customer pays.
Common phrases
post an accrual · reverse an accrual · accrual basis · accrual accounting · year-end accruals
To compare two sets of records, such as the ledger and a bank statement, to make sure they agree, and to find and explain any differences.
Where you use it
Accountants reconcile accounts, balances and statements every month. The noun is reconciliation, often shortened to 'rec'. Intercompany balances and supplier statements are reconciled too.
Examples
I need to reconcile the supplier statement with our AP ledger before Friday.
The intercompany balances don't reconcile; there's a difference of 8,000 euros.
Common phrases
reconcile accounts · reconcile a balance · reconcile the difference · account reconciliation
To enter a transaction or journal into the accounting system or ledger so that it updates the account balances.
Where you use it
Very common in daily accounting work: post an entry, post an invoice, post to the wrong account. Once a period is closed, nothing more can be posted to it unless it is reopened.
Examples
The invoice was posted to the wrong cost center, so I'll correct it today.
Has the payroll journal been posted yet?
Usage note
This meaning has nothing to do with sending letters or posting on social media.
Common phrases
post an entry · post an invoice · post to an account · posting date · posted transactions
The set of tasks accountants complete after each month ends, such as posting accruals and reconciling accounts, so that the month's results are final.
Where you use it
Teams talk about the close, the close calendar and closing the books within a set number of working days (WD3 means the third working day). The year-end close is the bigger version.
Examples
During month-end close, please send me your accruals by the second working day.
We've cut our month-end close from eight days to five.
Common phrases
close the books · close calendar · year-end close · closing entries
A regular check that compares the cash balance in a company's books with the bank statement and explains every difference between them.
Where you use it
Usually prepared monthly, or daily for busy accounts. Typical reconciling items are cheques not yet cleared, deposits in transit and bank charges not yet recorded.
Examples
The bank reconciliation shows a difference of 2,300 lira from an unrecorded bank fee.
Auditors usually ask for the December bank reconciliation for every account.
Common phrases
prepare a bank reconciliation · reconciling items · bank statement · outstanding cheques
A small amount of cash kept in the office to pay for minor expenses, such as stamps, taxis or cleaning supplies, without making a bank transfer.
Where you use it
One person is responsible for the petty cash box. Each payment needs a voucher or receipt, and the fund is topped up (replenished) regularly. Auditors sometimes count it without warning.
Examples
You can take the money for the courier from petty cash, but bring back the receipt.
A method of accounting that records income only when money is received and expenses only when they are paid, rather than when they are earned or incurred.
Where you use it
Simple and used by some small businesses and freelancers, but most companies must use the accrual basis. Accountants often compare the two when explaining why profit and cash are different.
Examples
On a cash basis, a December invoice paid in January counts as January income.
Freelancers often keep their records on a cash basis.
Common phrases
cash basis accounting · cash accounting · accrual basis · on a cash basis
A financial statement that shows what a company owns (assets), what it owes (liabilities) and the owners' share (equity) on a specific date.
Where you use it
One of the main financial statements; IFRS calls it the statement of financial position. Items are on or off the balance sheet, and the two sides must always balance.
Examples
The new loan will appear as a liability on the balance sheet.
Cash on the balance sheet fell by 20 percent compared to last year.
Common phrases
on the balance sheet · strong balance sheet · balance sheet date · off-balance sheet
A financial statement that shows a company's revenue, expenses and resulting profit or loss over a period, such as a quarter or a year.
Where you use it
Called the profit and loss account in the UK and the statement of profit or loss under IFRS. Managers usually say 'the P&L' and talk about costs that hit the P&L.
Examples
The income statement shows a net loss for the first quarter because of one-off restructuring costs.
Marketing is the largest expense line on our income statement.
Usage note
A simple way to remember: the balance sheet is a photo of one day; the income statement is a film of a whole period.
Common phrases
income statement for the year · prepare an income statement · P&L account · hit the P&L
A financial statement that shows how cash came into and went out of a business during a period, split into operating, investing and financing activities.
Where you use it
Read together with the balance sheet and income statement. Analysts look closely at operating cash flow to see whether profit is turning into real cash. IFRS calls it the statement of cash flows.
Examples
The company is profitable, but the cash flow statement shows that many customers are paying late.
We prepare the cash flow statement using the indirect method.
The income a business earns from its normal activities, mainly from selling goods or services, before any costs or expenses are deducted.
Where you use it
The top line of the income statement. Revenue is recognised, booked and reported. Under IFRS 15 it is recognised when control of the goods or services passes to the customer.
Examples
Revenue rose 18 percent in the third quarter, mostly thanks to export sales.
We can't recognise the revenue until the machine is installed at the customer's site.
Usage note
Revenue is not profit: a company with high revenue can still make a loss.
Common phrases
recognise revenue · revenue recognition · annual revenue · revenue growth · top line
A cost a business has used up in a period to earn revenue, such as salaries, rent, electricity or advertising, which reduces profit.
Where you use it
Expenses are incurred, accrued and recognised in the income statement. As a verb, to expense something means to record it as a cost immediately instead of capitalising it as an asset.
Examples
Office rent is our biggest fixed expense.
Small tools under the threshold are expensed immediately, not capitalised.
Common phrases
operating expenses · incur an expense · accrued expenses · expense an item · travel expenses
The profit left after all expenses, interest and taxes have been deducted from revenue for a period. If the result is negative, it is a net loss.
Where you use it
The bottom line of the income statement, also called net profit or net earnings. Analysts compare it with revenue (net margin) and divide it by the number of shares (earnings per share).
Examples
Net income fell to 45 million lira because of higher interest costs.
Our net income margin remains below the sector average.
Common phrases
net income for the year · report net income · net profit · bottom line
The direct cost of the products a company sold in a period, such as purchase price, materials and production labour. It is deducted from revenue to find gross profit.
Where you use it
Shortened to COGS, often said as one word. It is called cost of sales in the UK and in many IFRS statements. It moves with sales volume, unlike most overheads.
Examples
Cost of goods sold went up because steel prices increased in the second half.
Freight costs for raw materials are included in cost of goods sold.
Common phrases
cost of sales · COGS ratio · calculate cost of goods sold
Revenue minus the cost of goods sold, before operating expenses such as rent, salaries and marketing are deducted.
Where you use it
Gross profit divided by revenue gives the gross margin, a key measure of pricing and production efficiency. Managers talk about protecting or improving gross margin.
Examples
Gross profit was flat, but higher marketing costs pushed operating profit down.
Our gross profit margin on spare parts is much higher than on machines.
The detailed explanations that follow the main financial statements, describing accounting policies, estimates and the breakdown of key figures.
Where you use it
Usually just called 'the notes'. They are an essential part of the statements and are audited too. Readers find details on debt, leases, tax and related parties there.
Examples
The notes to the financial statements explain how the company values its inventory.
You'll find the lease details in the notes to the financial statements, not on the balance sheet itself.
Common phrases
see Note 12 · accounting policies · disclosure notes · notes to the accounts
Earnings before interest, taxes, depreciation and amortization: a measure of operating profit that leaves out financing costs, tax and non-cash asset costs.
Where you use it
Very common in management reports, loan covenants and company valuations, but it is not defined by IFRS. Analysts quote EBITDA margin and adjusted EBITDA. Usually said 'ee-bit-dah'.
Examples
EBITDA rose 25 percent, but net income fell because of higher interest costs.
The loan agreement requires net debt to stay below three times EBITDA.
Common phrases
EBITDA margin · adjusted EBITDA · net debt to EBITDA
The owners' share in a business: what remains when all liabilities are subtracted from the assets. It includes paid-in capital and retained earnings.
Where you use it
Shown on the balance sheet as shareholders' equity (US: stockholders' equity). The basic accounting equation is assets = liabilities + equity. Companies raise equity by issuing shares.
Examples
The losses of the last two years have reduced our equity by almost half.
Assets must always equal liabilities plus equity.
Usage note
In finance, equity can also mean shares in general: equity markets are stock markets.
Common phrases
shareholders' equity · total equity · negative equity · raise equity · return on equity
The gradual spreading of the cost of a physical asset, such as a machine or vehicle, over the years it is used, recorded as an expense each period.
Where you use it
Assets are depreciated over their useful life, often on a straight-line basis. Depreciation is a non-cash expense, so it is added back in the cash flow statement. Accumulated depreciation reduces the asset's book value.
Examples
Depreciation on laptops is calculated over three years on a straight-line basis.
Depreciation for the year was 12 million lira, most of it on the new production line.
Usage note
Turkish uses 'amortisman' for both physical and intangible assets; English normally uses depreciation for physical assets and amortization for intangible ones.
Common phrases
depreciation expense · accumulated depreciation · straight-line depreciation · useful life · depreciate an asset
A long-term physical asset that a business uses to operate rather than to sell, such as buildings, machinery, vehicles or computers.
Where you use it
IFRS calls them property, plant and equipment (PP&E). Fixed assets are capitalised, depreciated and tracked in a fixed asset register. Sales and scrapping of assets must also be recorded.
Examples
The new forklift was added to the fixed asset register this morning.
Fixed assets make up more than half of the company's total assets.
Common phrases
fixed asset register · purchase of fixed assets · capitalise a fixed asset · fixed asset disposal
An asset that is expected to be turned into cash, sold or used up within one year, such as cash, receivables, inventory and prepaid expenses.
Where you use it
Analysts compare current assets with current liabilities to judge short-term liquidity (the current ratio). Working capital is current assets minus current liabilities.
Examples
Cash and receivables account for most of our current assets.
Inventory is classified as a current asset because we sell it within a few months.
Usage note
Here 'current' means 'within one year', not 'up to date'.
Common phrases
total current assets · current ratio · other current assets · current and non-current assets
A debt or obligation that a company must pay within one year, such as supplier invoices, short-term loans, taxes payable and unpaid salaries.
Where you use it
Shown on the balance sheet against current assets. The part of a long-term loan that falls due within the next year is also reclassified as a current liability.
Examples
Current liabilities rose because the VAT for December has not been paid yet.
The part of the bank loan due next year is shown under current liabilities.
Common phrases
total current liabilities · current portion of long-term debt · other current liabilities
The total profits a company has kept over the years instead of paying them out to shareholders as dividends. They form part of equity.
Where you use it
Shown in the equity section of the balance sheet. Net income increases retained earnings, while dividends and losses reduce them. Accumulated losses appear as negative retained earnings.
Examples
The board decided to keep this year's profit in retained earnings to finance the new plant.
Retained earnings turned negative after three years of losses.
Common phrases
retained earnings balance · accumulated losses · statement of retained earnings · transfer to retained earnings
Goods a business holds to sell, plus the raw materials and unfinished products used to make them. It is a current asset on the balance sheet.
Where you use it
Called stock in British English. Companies count inventory (a stock count or stocktake), value it with methods such as FIFO or weighted average, and write down obsolete or damaged items.
Examples
We do a full inventory count on the last day of the year.
Inventory is building up in the warehouse because sales are slower than planned.
Usage note
FIFO means first in, first out. LIFO (last in, first out) is allowed under US GAAP but not under IFRS.
Common phrases
inventory count · inventory valuation · write down inventory · inventory turnover · raw materials inventory
A cost that belongs to a period but has not yet been invoiced or paid, recorded as an expense and a liability so the period shows its true cost.
Where you use it
Typical examples are utilities, interest, bonuses and professional fees. In British English they are usually just called accruals. They are reversed when the real invoice arrives.
Examples
Accrued expenses include the December electricity bill, which we only receive in January.
Please book an accrued expense for the audit fee.
Common phrases
accrued liabilities · accrued interest · book an accrued expense · reverse an accrual
Money received from customers for goods or services not yet delivered. It is recorded as a liability until the company has earned it.
Where you use it
Common in subscription and software businesses. Also called unearned revenue or, under IFRS 15, a contract liability. It is moved to revenue over time as the service is provided.
Examples
Annual subscriptions paid upfront are booked as deferred revenue.
Deferred revenue went up because many customers renewed early.
A liability recorded for an expected future cost whose exact amount or timing is uncertain, such as a lawsuit, warranty claims or restructuring.
Where you use it
Companies make, book, increase or release provisions. Under IFRS a provision needs a present obligation, a probable outflow and a reliable estimate. Allowances for doubtful debts are also loosely called provisions.
Examples
We booked a provision of 5 million lira for the pending court case.
The warranty provision is based on the claim rate of the last three years.
Usage note
False friend: Turkish 'provizyon' is a temporary hold on a bank card, not an accounting provision. In accounting a provision is 'karşılık'.
Common phrases
make a provision · release a provision · provision for doubtful debts · warranty provision
To remove an asset, such as an unpaid receivable or damaged stock, from the books because it no longer has value, recording the loss as an expense.
Where you use it
Used as a phrasal verb (write off a debt, write it off) and as a noun (a write-off). A write-down only reduces the value of an asset; a write-off removes it completely.
Examples
We had to write off the damaged stock after the warehouse flood.
The write-off of the old software reduced profit by 3 million lira.
Common phrases
write off a debt · write off inventory · write it off · write down
The gradual spreading of the cost of an intangible asset, such as software, a licence or a patent, over its useful life, recorded as an expense.
Where you use it
The British spelling is amortisation. Depreciation is used for physical assets and amortization for intangibles. The word also means paying off a loan in regular instalments.
Examples
Amortization of the customer list is charged over ten years.
EBITDA leaves out both depreciation and amortization.
Common phrases
amortization expense · amortization schedule · depreciation and amortization · amortise over
An asset with no physical form that still has value for the business, such as software, patents, trademarks, licences or customer relationships.
Where you use it
Intangible assets are capitalised when they meet strict criteria and are then amortised. Goodwill is a special intangible: under IFRS it is not amortised but tested for impairment.
Examples
Development costs for the new app were capitalised as an intangible asset.
Brands a company creates itself are not recognised as intangible assets.
Common phrases
capitalise an intangible asset · amortise intangible assets · intangibles · indefinite useful life
A fall in the value of an asset below the amount shown in the books, recorded as a loss so that the asset is not overstated.
Where you use it
Companies carry out impairment tests, record an impairment loss or charge, and may later reverse it, except for goodwill. Typical triggers are falling sales, physical damage or changes in the market.
Examples
We recorded an impairment of 20 million lira on the closed factory.
Goodwill must be tested for impairment at least once a year.
Common phrases
impairment test · impairment loss · impairment charge · reverse an impairment · write down
A financial plan that sets out expected income and spending for a future period, usually a year, and is used to control costs and compare actual results.
Where you use it
Teams prepare, approve and stick to a budget. Results come in on, under or over budget. The budgeting process usually runs in the last quarter of the year.
Examples
We're 15 percent over budget on travel this quarter.
The 2027 budget has to be approved by the board in December.
Common phrases
prepare a budget · over budget · under budget · annual budget · budget cut
A cost that stays the same in total whatever the level of production or sales, at least in the short term, such as rent, insurance or salaried staff.
Where you use it
Used in cost accounting, budgeting and pricing. Spreading fixed costs over more units lowers the cost per unit, which is why volume matters in businesses with high fixed costs.
Examples
Rent and insurance are fixed costs, so they don't change if we produce less.
Our fixed costs are high, so we need volume to make money.
Common phrases
high fixed costs · cover fixed costs · fixed and variable costs · fixed cost base
The ongoing costs of running a business that cannot be linked directly to one product or service, such as rent, utilities, office staff and IT.
Where you use it
Usually uncountable in American English (overhead) and plural in British English (overheads). Cost accountants allocate or absorb overhead into product costs.
Examples
We moved to a smaller office to cut overhead.
Factory overheads are allocated to products based on machine hours.
A department or unit, such as HR, IT or a production line, to which costs are assigned so that managers can track and control spending.
Where you use it
Each cost center has a code and an owner responsible for its budget. The British spelling is cost centre. A profit center, unlike a cost center, is also measured on its revenue.
Examples
Please charge the training costs to the HR cost center.
Each cost center manager gets a monthly report of actual spending versus budget.
Common phrases
cost center code · charge to a cost center · cost center manager · profit center
The difference between a planned or budgeted amount and the actual result. It is favourable if the result is better than planned and adverse if it is worse.
Where you use it
Management accountants run variance analysis every month and explain significant variances to managers. British English says favourable and adverse; American English often says favorable and unfavorable.
Examples
There's an adverse variance of 12 percent on raw materials this month.
Can you explain the variance between budget and actual for marketing?
Usage note
In statistics, variance means 'varyans'; in budgeting it simply means a difference.
An updated estimate of future results, such as sales, costs or cash, based on actual figures so far and current expectations.
Where you use it
Unlike the budget, a forecast is updated during the year, for example as a rolling or quarterly forecast. It is also a verb, with the past form forecast. Cash flow forecasts are vital for treasury teams.
Examples
Based on the latest forecast, we will miss the annual target by about 5 percent.
Please update the cash flow forecast for the next 13 weeks.
Common phrases
sales forecast · cash flow forecast · rolling forecast · full-year forecast · revise a forecast
The branch of accounting that prepares internal information, such as budgets, cost analysis and performance reports, to help managers make decisions.
Where you use it
Contrasted with financial accounting, which prepares statements for outsiders under fixed standards. Management accountants often work in FP&A or controlling teams and follow no single standard.
Examples
Our management accounting team produces a margin report for each product line.
She moved from audit into management accounting to be closer to business decisions.
A document a seller sends to a buyer listing the goods or services supplied, the amount due, any VAT and the payment terms.
Where you use it
Suppliers issue, send or raise invoices; customers receive, approve and pay them. An invoice can be outstanding, overdue or disputed. It is also a verb: we will invoice you at the end of the month.
Examples
Could you issue the invoice in euros and include our tax number?
We have three overdue invoices from August that the customer hasn't paid.
Usage note
Turkish speakers sometimes say 'cut an invoice' (fatura kesmek). In English you issue, raise or send an invoice.
Common phrases
issue an invoice · pay an invoice · outstanding invoice · invoice date · e-invoice
Money a company owes to its suppliers for goods or services bought on credit, and also the team that processes and pays those supplier invoices.
Where you use it
Shortened to AP. It is a current liability on the balance sheet. People say 'send it to AP' or 'AP is processing the invoice'. The UK term trade creditors is also used.
Examples
Accounts payable increased because we delayed some supplier payments to December.
I work in accounts payable, so I deal with supplier invoices all day.
Common phrases
accounts payable team · AP invoice · accounts payable balance · AP aging report
Money that customers owe a company for goods or services it has already delivered on credit, and also the team that collects those payments.
Where you use it
Shortened to AR; a current asset on the balance sheet. Credit controllers chase overdue receivables, and an aging report shows how long each amount has been unpaid. UK: trade debtors.
Examples
Accounts receivable over 90 days have doubled since last year.
The accounts receivable team sends a reminder as soon as an invoice becomes overdue.
Usage note
Aging is the US spelling; British English writes ageing (an ageing report).
A document that proves money has been paid or goods have been received, given to the person who paid or delivered.
Where you use it
Employees keep receipts for expense claims, and finance asks for the original or a scanned copy. In accounting, 'receipts' also means money coming in, as in cash receipts.
Examples
Please attach all your taxi receipts to the expense claim.
Cash receipts for the day are deposited at the bank every evening.
Usage note
The 'p' in receipt is silent.
Common phrases
keep a receipt · original receipt · cash receipts · issue a receipt
A document a buyer sends to a supplier to order goods or services, stating the items, quantities, prices and delivery terms agreed.
Where you use it
Shortened to PO. Many companies follow a 'no PO, no pay' policy, so suppliers must quote the PO number on their invoice. A three-way match checks the PO, the goods receipt and the invoice.
Examples
Please quote the purchase order number on your invoice, otherwise we can't process it.
The purchase order was approved, but the goods haven't arrived yet.
Common phrases
raise a purchase order · PO number · approve a purchase order · three-way match
A document a seller issues to reduce or cancel an amount a customer owes, for example after returned goods, a pricing error or a discount.
Where you use it
Called a credit memo in the US. A credit note is issued and then applied against an invoice. Accountants match credit notes with the original invoices when reconciling accounts.
Examples
We'll issue a credit note for the five damaged boxes.
The customer deducted the credit note from their last payment.
Common phrases
issue a credit note · credit memo · apply a credit note · debit note
The conditions agreed between buyer and seller about when and how an invoice must be paid, such as 'net 30' or a discount for early payment.
Where you use it
Shown on invoices and contracts. Net 30 means the full amount is due 30 days after the invoice date; 2/10 net 30 adds a 2 percent discount for payment within 10 days. Companies negotiate and extend payment terms.
Examples
Our standard payment terms are 60 days from the invoice date.
The supplier agreed to extend our payment terms to 90 days.
Common phrases
net 30 · agree payment terms · extend payment terms · early payment discount
The date by which a payment, such as an invoice, loan instalment or tax, must be made, or by which a return or report must be submitted.
Where you use it
Invoices become overdue after the due date. Tax authorities set due dates for filing and payment, and paying late usually brings extra charges or penalties.
Examples
The due date for this invoice is 15 November.
If the VAT is paid after the due date, a late payment charge is added.
Common phrases
payment due date · past the due date · miss a due date · filing deadline
The process of calculating and paying employees' wages, including tax and social security deductions, and also the total amount a company pays its staff.
Where you use it
Companies run payroll every month, either in-house or through a provider. 'On the payroll' means employed by the company. Payroll costs are often the largest expense of service firms.
Examples
We run payroll on the 25th, so overtime must be approved by the 20th.
The company has 140 people on the payroll.
Usage note
The document one employee receives is a payslip (US: pay stub), not 'a payroll'.
Common phrases
run payroll · payroll department · payroll costs · on the payroll · payroll tax
An employee's total earnings for a period before income tax, social security and other deductions are taken off.
Where you use it
Shown at the top of a payslip. Gross pay includes basic salary, overtime, bonuses and allowances. In many countries job offers quote a gross annual salary.
Examples
Her gross pay is 80,000 lira a month, but she takes home much less after deductions.
Overtime is added to gross pay before tax is calculated.
A document given to an employee each pay period showing gross pay, each deduction such as tax and social security, and the final net pay.
Where you use it
Payslip is British English; Americans say pay stub. Payslips are now mostly electronic. Employees check them each month, and banks may ask for recent payslips with a loan application.
Examples
My payslip shows a deduction I don't understand. Can you check it?
Payslips are available on the HR portal from the 28th of each month.
Compulsory payments by employers and employees, calculated on wages, that fund pensions, health care and other social benefits.
Where you use it
There is usually an employee share deducted from pay and an employer share paid on top. In the UK they are National Insurance contributions; in the US, Social Security and Medicare taxes (FICA).
Examples
Employer social security contributions add a significant amount to our labour costs.
In Turkey, the employee's social security contributions are deducted from gross pay before income tax is calculated.
Common phrases
employer contributions · employee contributions · pay social security contributions · National Insurance
A request an employee submits to get back money spent personally on business costs, such as travel or client meals, supported by receipts.
Where you use it
Expense claim is British; the American term is expense report. Employees submit claims, managers approve them and finance reimburses them, often through an expense app.
Examples
Submit your expense claim within 30 days of the trip, with all the receipts.
My expense claim was rejected because the hotel invoice was missing.
An independent examination of a company's financial statements and records to check that they are accurate and follow the applicable rules.
Where you use it
External auditors carry out the annual audit, while internal audit reviews processes during the year. It is also a verb: the accounts were audited by a Big Four firm. An audit ends with a report and an opinion.
Examples
The auditors arrive next week, so please have all the bank statements ready.
The year-end audit took longer than expected because of the new ERP system.
Common phrases
carry out an audit · annual audit · external audit · internal audit · audit report
A qualified professional who examines a company's accounts and records and gives an independent view on whether they are reliable.
Where you use it
External auditors work for audit firms and report to shareholders; internal auditors are employees who review controls and processes. Companies appoint, change or rotate their auditors.
Examples
The auditors want to see the contract behind every large sale in December.
Our external auditor raised a point about stock counts in the management letter.
The policies and procedures a company uses to protect its assets, prevent errors and fraud, and make sure its financial reporting is reliable.
Where you use it
Examples include approval limits, segregation of duties and regular reconciliations. Auditors test controls and report control deficiencies. In the US, SOX requires listed companies to assess internal control over financial reporting.
Examples
Good internal control means no one can create a new supplier and approve its payment alone.
The auditors found a weakness in internal control over petty cash.
Common phrases
internal control system · segregation of duties · control weakness · test controls · internal control over financial reporting
A record in time order that shows who entered, changed or approved each transaction and when, so it can be traced back to its source documents.
Where you use it
Modern accounting systems keep an automatic audit trail with user names and timestamps. Auditors and tax inspectors rely on a clear audit trail; manual workarounds in spreadsheets can break it.
Examples
Every change to supplier bank details must leave an audit trail.
Without an audit trail, we can't show who approved the payment.
Common phrases
leave an audit trail · clear audit trail · system audit trail · audit trail report
The idea that an error or omission matters if it is large or important enough to change the decisions of people who read the financial statements.
Where you use it
Auditors set a materiality level, often as a percentage of profit, revenue or assets, and focus their work on material items. The adjective is material: a material misstatement, a material weakness.
Examples
Overall materiality for this audit was set at 5 percent of profit before tax.
The error is well below materiality, so it won't be adjusted.
Usage note
Here 'material' means 'important', not 'materials' in the sense of supplies.
The auditor's formal conclusion, given in the audit report, on whether the financial statements are fairly presented in all material respects.
Where you use it
An unqualified (clean) opinion is the best outcome. The others are a qualified opinion, an adverse opinion and a disclaimer of opinion. Auditors issue or express an opinion.
Examples
The company received a clean audit opinion for the fifth year in a row.
A qualified audit opinion can worry banks and investors.
Usage note
'Unqualified' sounds negative, but here it is the best result: the opinion has no reservations.
Common phrases
clean audit opinion · qualified opinion · adverse opinion · disclaimer of opinion · issue an opinion
An accountant who has passed professional exams and belongs to a recognised accounting body, qualified to audit, advise on tax and sign certain reports.
Where you use it
The title is used in the UK, Ireland and many Commonwealth countries, for example by ICAEW members (ACA). The closest US title is certified public accountant (CPA). These titles are protected by professional bodies.
Examples
She qualified as a chartered accountant after three years at an audit firm.
The certificate has to be signed by a chartered accountant.
Usage note
Turkish CVs often translate SMMM as 'Certified Public Accountant' and YMM as 'Sworn-in Certified Public Accountant'. These are descriptions of Turkish titles, not the US CPA licence.
Common phrases
qualify as a chartered accountant · certified public accountant · professional body · CPA exam
Value added tax: a tax on the sale of most goods and services, collected at each stage of the supply chain and finally paid by the end consumer.
Where you use it
Businesses charge VAT on sales, reclaim VAT on purchases and pay the difference to the tax authority. Prices are quoted including or excluding VAT. The US has no VAT; states use sales tax instead.
Examples
All prices in the quote exclude VAT.
We can reclaim the VAT on the new laptops.
Usage note
In Britain you hear both V-A-T (letter by letter) and 'vat' as one syllable; letter by letter is the safer choice in international meetings.
The VAT a business pays on its purchases of goods and services, which it can usually deduct from the VAT it charges on its own sales.
Where you use it
Businesses reclaim or recover input VAT on the VAT return. If input VAT is higher than output VAT, the difference is carried forward or refunded, depending on the rules.
Examples
Input VAT on some company cars cannot be deducted.
This month our input VAT exceeded our output VAT, so the balance is carried forward.
A tax on the income of individuals, such as salaries, rent, business profits and investment income, usually charged at rates that rise as income rises.
Where you use it
Employers deduct income tax from salaries every month; self-employed people usually file an annual return. In the US, 'income tax' also covers company profits (corporate income tax).
Examples
Income tax is deducted from her salary every month, so she doesn't have to file a return.
Rental income above the exemption limit is subject to income tax.
Common phrases
pay income tax · income tax rate · income tax bracket · deduct income tax
Tax that the payer deducts from a payment, such as a salary, rent, dividend or freelance fee, and pays to the tax authority on behalf of the person being paid.
Where you use it
Employers and companies withhold tax and pay it over to the tax office. Cross-border dividends, interest and royalties are often subject to withholding tax, which tax treaties may reduce.
Examples
We pay the office rent net of withholding tax and declare the tax in the monthly return.
The dividend paid to our German parent was subject to withholding tax.
Usage note
Turkish 'tevkifat' covers both income tax withholding and VAT withholding (KDV tevkifatı). In English the second is usually called VAT withholding.
A tax on the taxable profits of companies, calculated on the profit for the year after allowed deductions and adjustments.
Where you use it
Called corporation tax in the UK and corporate income tax in the US. Companies calculate, provide for and pay corporate tax, often with advance payments during the year.
Examples
Our effective corporate tax rate was lower this year because of investment incentives.
Part of the corporate tax is paid in advance during the year as provisional tax.
The part of income on which tax is actually calculated, after allowed expenses, exemptions and allowances have been deducted from total income.
Where you use it
Taxable income usually differs from accounting profit, because tax rules treat some income and expenses differently. These differences are why deferred tax exists.
Examples
Non-deductible expenses are added back to arrive at taxable income.
Our taxable income was higher than our accounting profit this year.
Common phrases
calculate taxable income · taxable profit · reduce taxable income · accounting profit
A rule that removes certain income, transactions or organisations from tax, either completely or up to a set limit.
Where you use it
Exemptions are granted, claimed, or lost when the conditions are not met. Common examples include exports, some investment incentives and income below a threshold.
Examples
Export sales qualify for a tax exemption, so no VAT appears on the invoice.
The company lost its tax exemption because it didn't meet the employment conditions.
Usage note
Turkish law separates 'muafiyet' (a person or entity is outside the tax) from 'istisna' (certain income or a transaction is outside the tax). English usually calls both an exemption.
Allowed by tax law to be subtracted from income when calculating taxable profit, which reduces the amount of tax to pay.
Where you use it
Used about expenses, donations and losses: an expense is tax-deductible or non-deductible. Accountants check whether costs such as entertainment or fines can be deducted.
Examples
Tax penalties and fines are not tax-deductible.
Is the cost of this training course tax-deductible for the company?
Tax that will be paid or recovered in future periods because some income and expenses are recognised at different times in the accounts and in the tax return.
Where you use it
Covered by IAS 12. Companies recognise deferred tax assets and liabilities on temporary differences, for example when tax depreciation is faster than accounting depreciation.
Examples
The difference between tax and book depreciation creates a deferred tax liability.
We only recognise a deferred tax asset on past losses if future profits are probable.
An official form a taxpayer submits to the tax authority, reporting income, expenses or sales for a period and calculating the tax due.
Where you use it
You file, submit or complete a tax return, usually online. Missing the filing deadline can lead to penalties. Common types are income tax, corporate tax and VAT returns.
Examples
Our accountant is preparing the corporate tax return, which is due next month.
Did you file your tax return before the deadline?
Usage note
A tax return is the form, not money coming back. Money repaid by the tax office is a tax refund.
Common phrases
file a tax return · submit a tax return · annual tax return · filing deadline · amended tax return
An examination by the tax authority of a taxpayer's books, returns and documents to check that the correct amount of tax has been declared and paid.
Where you use it
Tax inspectors open and carry out a tax audit; companies are selected for one or are under a tax audit. It may end with additional tax and penalties. British English also says tax investigation or tax enquiry.
Examples
We've been selected for a tax audit covering the last two years.
During the tax audit, the inspector asked for all intercompany contracts.
Common phrases
tax inspector · under a tax audit · open a tax audit · tax assessment · tax penalty
A unique number the tax authority gives to each taxpayer, used on invoices, returns and official documents to identify the person or company.
Where you use it
Shortened to TIN or simply tax ID. In the EU, businesses also have a VAT number. Suppliers ask for your tax ID before issuing an invoice, and foreign partners need it for withholding tax forms.
Examples
Please send us your company name, address and tax identification number for the invoice.
The tax identification number on the invoice doesn't match the customer's records.
Common phrases
tax ID · VAT number · company registration number · tax office
Illegally not paying tax that is owed, for example by hiding income, using false invoices or keeping two sets of books.
Where you use it
A criminal offence in most countries, punished with fines and prison. It is different from tax avoidance, which uses the law. People are accused of, charged with or convicted of tax evasion.
Examples
The owner was charged with tax evasion after using fake invoices to reduce VAT.
Tax evasion through unrecorded cash sales is a serious problem for many governments.
Common phrases
commit tax evasion · be charged with tax evasion · fake invoices · tax fraud
Arranging financial affairs within the law in order to pay less tax, for example by using allowances or choosing where to invest.
Where you use it
Legal in principle, but aggressive tax avoidance is criticised and often blocked by anti-avoidance rules. Tax planning is the neutral professional term; evasion is the illegal version.
Examples
New transfer pricing rules were introduced to limit tax avoidance by multinationals.
There is a fine line between tax planning and aggressive tax avoidance.
Usage note
Avoidance is legal use of the rules; evasion is a crime. Mixing them up in a meeting can sound like an accusation.
International Financial Reporting Standards: the global accounting rules issued by the IASB and required for listed companies in more than 140 jurisdictions.
Where you use it
Companies report under IFRS or convert from local GAAP to IFRS. Standards are named by number, for example IFRS 15 on revenue and IFRS 16 on leases; older standards are called IAS. Usually said letter by letter.
Examples
We keep our statutory books under Turkish tax rules and do our group reporting under IFRS.
Under IFRS 16, most leases now appear on the balance sheet.
The twelve-month period a company or government uses for accounting and tax purposes. It may match the calendar year or end in another month.
Where you use it
Fiscal year is mainly American; British English prefers financial year. It is written as FY2026 or FY26. Many foreign groups end their year in March or June.
Examples
Our fiscal year ends on 31 March, so the budget process starts in January.
Sales in fiscal year 2026 were above target.
Common phrases
fiscal year end · financial year · FY results · previous fiscal year
The assumption that a business will continue operating for the foreseeable future, at least twelve months, rather than being closed down or sold off.
Where you use it
Financial statements are normally prepared on a going concern basis. If there is serious doubt, management must disclose a material uncertainty and the auditor draws attention to it in the report.
Examples
Given the large losses, the auditors questioned whether the company is still a going concern.
The financial statements have been prepared on a going concern basis.
Generally Accepted Accounting Principles: the set of accounting rules used in a particular country, most often meaning US GAAP, set by the FASB.
Where you use it
Pronounced like the word 'gap'. Groups talk about local GAAP (the rules of each subsidiary's country) and adjustments from local GAAP to IFRS or US GAAP. Non-GAAP measures are figures calculated outside these rules.
Examples
Our US parent reports under US GAAP, so we send them adjusted figures every quarter.
Most of the difference between local GAAP and IFRS comes from leases.
Common phrases
US GAAP · local GAAP · non-GAAP measures · GAAP adjustments
A document a company publishes each year containing its audited financial statements and a review of its business, strategy, risks and governance.
Where you use it
Listed companies must publish annual reports. Investors read the chair's letter, the management commentary and the financial statements. Many companies also publish a separate sustainability report.
Examples
The annual report is published in both Turkish and English.
Can you check the figures in the annual report against the audited accounts?
Common phrases
publish an annual report · integrated annual report · annual report and accounts · sustainability report
Financial statements that combine a parent company and all the subsidiaries it controls as if they were one single business.
Where you use it
Intercompany balances and transactions are eliminated on consolidation. Groups publish consolidated statements alongside, or instead of, the parent company's own accounts, which are called separate or standalone statements.
Examples
Sales between group companies are eliminated in the consolidated financial statements.
The consolidated financial statements include eight subsidiaries in four countries.
The price that would be received to sell an asset, or paid to transfer a liability, in a normal transaction between market participants on a given date.
Where you use it
Defined in IFRS 13 and used for financial instruments, investment property and acquisitions. Items are measured either at fair value or at cost; changes may go through profit or loss or other comprehensive income.
Examples
The investment property is measured at fair value, based on an independent valuation.
The fair value of the derivatives fell sharply at year-end.
Common phrases
measure at fair value · fair value hierarchy · fair value through profit or loss · fair value adjustment
Ten questions from this glossary. Pick the right meaning for each term and see your score.
How to learn accounting & tax vocabulary
Learn each English term together with its name in the Turkish Uniform Chart of Accounts: accounts receivable is 'Alıcılar', accounts payable 'Satıcılar', input VAT 'İndirilecek KDV'. Linking the two systems makes English trial balances and group reports much easier to read.
Read real texts from the field: many companies listed on Borsa İstanbul publish their audited financial statements and annual reports in both Turkish and English on KAP, so you can compare the same note line by line in two languages.
Watch the words whose accounting meaning differs from everyday English: credit, current, post, provision, material and goodwill all mean something special in a ledger or an audit report.
Learn the verbs that go with each noun: you post an entry, reconcile an account, accrue an expense, issue an invoice, file a return and write off a debt.
Notice US and UK differences: inventory and stock, fiscal year and financial year, pay stub and payslip, expense report and expense claim, CPA and chartered accountant.
Frequently asked questions
Does debit mean 'borç' and credit mean 'alacak' in Turkish accounting?
Yes. In double-entry bookkeeping, debit is the left side of an account (borç) and credit is the right side (alacak), and every entry has equal totals on both sides. The confusion usually comes from bank statements: there a credit is money coming into your account, because the bank looks at your balance from its own books, where it is a liability.
What is the difference between IFRS and TFRS?
TFRS (Turkish Financial Reporting Standards) are the Turkish versions of IFRS, translated and published by the Public Oversight, Accounting and Auditing Standards Authority (KGK). Their content is essentially the same as IFRS, so in English you can usually just say IFRS. Tax returns, however, are based on the statutory books kept under the Tax Procedure Law and the Uniform Chart of Accounts, not on TFRS.
Revenue, income or profit: which one should I use?
Revenue is the money from sales before any costs are deducted. Profit is what is left after costs. Income is the tricky one: net income means net profit, but other income and interest income are types of earnings, not profit. When in doubt, use revenue for sales and profit for the final result.
What is the English for SMMM and YMM?
There is no exact equivalent, because these are Turkish legal titles. The translations commonly used, including by the Turkish professional body TÜRMOB, are 'Certified Public Accountant' for SMMM and 'Sworn-in Certified Public Accountant' for YMM. In a CV the clearest option is to keep the Turkish abbreviation and add the English description, for example 'SMMM (Certified Public Accountant, Türkiye)'.
What is the difference between a cost and an expense?
A cost is the amount spent to acquire something; an expense is a cost that has been used up in a period and appears on the income statement. A machine bought this year is a cost recorded as an asset, and only its depreciation becomes an expense each year. In everyday speech the two words are often used loosely.
