TECFEE key terms

The accounting practice of recording revenue when it is earned and expenses when they are incurred, regardless of when cash actually changes hands.

The gradual reduction of a debt or intangible asset over a set period through scheduled payments or charges, as opposed to a single lump-sum settlement.

The systematic allocation of the cost of a tangible fixed asset across its useful life, reflecting wear, obsolescence, or decline in market value.

A permanent reduction in the carrying value of an asset when its recoverable amount falls below the amount recorded on the balance sheet.

An amount set aside in the accounts for a liability of uncertain timing or amount, such as expected loan losses or pending legal claims.

The ease with which an asset can be converted into cash without significant loss of value, or the ability of a firm to meet short-term obligations.

The capacity of a company or institution to meet its long-term financial commitments, measured by the excess of assets over liabilities.

The use of borrowed funds to finance assets, which magnifies both potential returns and potential losses for the equity holder.

An asset pledged by a borrower to secure a loan, which the lender may seize and sell if the borrower defaults on repayment.

A binding promise in a loan agreement requiring the borrower to maintain specified financial conditions or to refrain from certain actions.

The failure of a borrower to make a scheduled interest or principal payment, or to comply with a material term of the loan agreement.

The formal removal of an asset or receivable from the balance sheet once it is judged unrecoverable, with the loss charged to earnings.

A risk-management strategy that uses offsetting positions or derivative instruments to reduce exposure to adverse price, rate, or currency movements.

A financial contract whose value is derived from an underlying asset, index, rate, or currency, such as a forward, future, option, or swap.

The amount of risk a person or institution bears from a particular position, counterparty, market variable, or currency at a given moment.

The income return generated by an investment, usually expressed as an annual percentage of its price or par value.

The fixed rate of interest that a bond issuer promises to pay the holder, typically stated as an annual percentage of the bond's face value.

The difference between two related prices or rates, such as the gap between a bid and an offer or between a bond yield and a benchmark.

A standard reference rate or index against which the performance of an investment, portfolio, or interest rate is measured and compared.

The date on which a financial instrument or debt obligation falls due and the principal must be repaid to the investor or lender.

The repayment of a bond or fund holding at or before maturity, or the process by which an investor withdraws capital from a fund.

The process by which a financial institution assesses and assumes the risk of issuing securities or granting credit in exchange for a fee.

The investigation and verification of facts about a transaction, counterparty, or target company before a deal or credit decision is finalized.

The threshold at which an omission or misstatement of information could reasonably influence the economic decisions of those relying on the financial statements.

The release of relevant financial and non-financial information to investors, regulators, and the public, often required by law or listing rules.

An independent examination of an entity's financial records and internal controls, performed to express an opinion on the fairness of its statements.

Any party with an interest in the activities or performance of an organization, including shareholders, employees, creditors, regulators, and customers.

The process of comparing two sets of records, such as bank statements and internal ledgers, to confirm that the figures agree and to explain differences.

A financial report showing the inflows and outflows of cash from operating, investing, and financing activities over a defined accounting period.

A statement listing an entity's assets, liabilities, and equity at a specific date, showing what it owns and owes and the owners' residual interest.

A report summarizing revenues, costs, and expenses over a period to arrive at net profit or loss for that period.

The residual interest in a company's assets after deducting all liabilities, representing the book value attributable to owners.

A sustained rise in the general level of prices for goods and services, which erodes purchasing power and affects interest rates and investment returns.

A significant decline in economic activity lasting more than a few months, typically visible in output, employment, income, and spending data.

A legal obligation of a person entrusted with another's assets to act in that person's best interest and to avoid conflicts of interest.

The professional duty to keep sensitive client or corporate information private and to disclose it only where authorized or legally required.

The other party to a financial transaction or contract, whose performance and creditworthiness create risk for the institution dealing with it.

The state of conforming to laws, rules, and guidance issued by financial authorities, including reporting, conduct, and capital requirements.