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CA-Chartered Accountant
Glossary Index

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[example: Balance Sheet]

Accounting Controller- The Accounting Controller is the position held within a company by the person in charge of the Accounting Department. This department may be as small as one person or as large as 30 or 40 people, depending on the size and nature of the company. The Accounting Department may, in some cases, be formally divided into sub-departments such as Payroll, General Accounting, Cost Accounting and Financial Planning. The Accounting Controller will most likely report to the Chief Financial Officer and be responsible for all the accounting functions within the company. These functions usually include the daily bookkeeping of all accounting transactions within the General Ledger, recording of receivables and payables, collection of outstanding receivables and payment of outstanding bills, recording of weekly or monthly payroll transactions and payment of pay-cheques to staff, and generation of daily, weekly and monthly accounting reports for operating departments.

Accrual- Expenses are regarded as applicable to the time period in which they are incurred, regardless of when they are paid. An “accrual” is an adjusting entry to the books of account which sets up an item as an expense of the period although it was paid in a later period.

Allowance for doubtful accounts- This is a provision taken against the accounts receivable of a company, representing the amount of receivables that is not likely to be collected from customers. It is subtracted from the gross receivables on the balance sheet, resulting in a net receivables amount that is expected to be collected. The purpose is to show a receivables figure on the balance sheet that is realistic rather than optimistic. When it is set up, the allowance for doubtful accounts is expensed to the current period as well as being credited or subtracted from the balance sheet receivables. In the following fiscal year, the prior year allowance for doubtful accounts is reversed, and a new provision is set up according to the current year collection conditions. Since the collectibility of receivables is based on the opinion of the company and is inherently subjective, it must be set up in a consistent and systematic manner. The most appropriate method is on an account-by-account basis, meaning that each customer receivable balance is scrutinized and added to the provision if it is deemed uncollectible, or one-half is set up if possibly uncollectible. This approach is also acceptable for Canadian income tax purposes.

Audit of financial statements- The objective of an audit of financial statements is to express an opinion on whether the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows in accordance with generally accepted accounting principles.

Balance Sheet - The financial statement which reports the assets, liabilities and retained earnings of a business entity on a particular date.

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