Accounting and Tax Glossary

Glossary of Accounting, Taxation and Financial Management | Fiscal360

Easily navigate our complete glossary of technical terms used in accounting, taxation and financial management. Fiscal360 brings together clear and accessible definitions to help you understand concepts essentials and make informed decisions in your company or professional life.

Fiscal360 Glossary

Explore essential accounting, taxation and financial management terms, organized from A to Z.

Accrual

The increase is recognized with the results of transactions and other occurrences, being recorded accounting and reported in the Financial Statements of the periods with which they are associated.

Assets

Assets represent the resources that an entity possesses, resulting from past events, which future economic benefits are anticipated.

Audit

The Audit is an independent, concrete and effective analysis of a set of statements financial statements of a given entity, containing all the evidence that supports this analysis.

Balance sheet in accounting

Balance sheets in Accounting demonstrate the financial situation, which considers financial metrics most important: The Profit, Assets, Liabilities (debts) and assets that your company owns are mirrored...

Banco De Portugal (Central Balance Sheet)

Banco De Portugal (Central Balance Sheet) is a database that compiles all economic information and financial on Portuguese non-financial companies. It enables companies to have a set...

BETA (Bi)

BETA (Bi) is a measure that determines the sensitivity of an asset or a portfolio of assets to market fluctuations. It allows you to quantify how much an asset or portfolio of assets varies in...

CAE Service Provider

The Economic Activity Code (CAE) for service providers formally identifies the area of performance of a company or independent worker. This code is mandatory and must appear in tax documents, such as the Finance Portal, the Permanent Certificate and the company's corporate purpose.

CAES

CAEs define the nature of the economic activity carried out. They are essential for tax purposes, statistical and legal. For example, CAE 691 refers to legal activities, including services law offices and notary offices, it is essential to choose the CAE most appropriate to the reality of the company.

Calculate VAT

VAT is an indirect tax applied to the consumption of goods and services. The calculation of VAT is levied on the value of sales (VAT paid) and expenses (deductible VAT). The amount payable is the difference between both. It is essential to monitor monthly to ensure compliance and avoid tax fines.

Calculation of Seniority Pay

Seniority payments represent a salary increase attributed depending on the worker's seniority in the company. The calculation varies depending on the applicable collective bargaining agreement, but generally a fixed amount or percentage is considered for each three-year or five-year period spent in the role.

IRC calculation

IRC is the tax on corporate income. The calculation is based on taxable profit, obtained by the difference between income and tax-deductible expenses. The clearance of tax must comply with the rules of the IRC Code and can be influenced by tax benefits and loss reports.

Intellectual Capital

Intellectual capital refers to a company's intangible assets, such as knowledge of employees, intellectual property, brand and reputation. Manage this capital strategically allows you to increase competitiveness, generate innovation and improve the organization's overall performance in market.

Professional Deontology

Professional Deontology guides the ethical behavior of professionals in the exercise of their duties functions. It is based on principles such as integrity, responsibility, confidentiality and respect for others. It serves as a guide to conduct and strengthens trust between professionals and society.

Deferrals

Deferrals represent expenses or income that should not be recognized in the current period, but in future years. They are essential to ensure the correct application of the principle of specialization of exercises and guarantee the fidelity of financial statements.

Capital Structure

Capital Structure refers to the combination of equity and debt capital that a company uses to finance its operations. Choosing this structure directly impacts the risk finance and the cost of capital, being crucial for the stability and sustainable growth of the organization.

Financial Structure

The Financial Structure represents the way in which the company's resources are distributed between own capital and debt capital. A good balance in this structure guarantees greater safety financial situation, greater capacity to respond to obligations and better positioning before institutions financial.

Invoice

The invoice is a mandatory tax document issued in all commercial transactions, whether subject to or exempt from VAT. It proves the sale of goods or the provision of services, containing essential information such as date, value, description and buyer and seller data.

Forward

A forward contract is a financial agreement between two parties to buy or sell an asset in a future date for a previously established price. Unlike futures contracts, forwards are personalized and not traded on an exchange, and are common in currency risk management.

Futures

Futures contracts are standardized derivative instruments traded on an exchange, allowing buying or selling an asset at a future date at a price defined in the present. Used for both speculation and to protect against market risks, are common in commodities and currencies.

Company Fleet: Price per km

The price per kilometer is a fundamental indicator in the management of corporate fleets. Allows you to calculate the operating cost of each vehicle based on the distance traveled, including fuel, maintenance, insurance and depreciation, thus optimizing financial control and profitability of the fleet.

Expenses

Expenses represent all outflows of financial resources from a company with the aim of obtaining goods or services. They are essential for the functioning of economic activity and have a direct impact on profitability and accounting results of the entity.

Fixed Expenses

Fixed expenses are expenses that do not change with the volume of production or sales, such as rental of facilities, administrative salaries or insurance. They guarantee the operational continuity of the company, even in periods of low activity, being predictable and regular.

Variable Expenses

Variable expenses increase or decrease depending on the production level or sales volume of the company. company. Examples include raw materials, sales commissions and transportation costs. The control of these expenses is essential for good management of profit margins and budget planning.

Fair Value Hierarchy

The fair value hierarchy classifies valuation methods into three levels: Level 1 is based at active market prices; Level 2 uses indirect observable data; and Level 3 uses internal premises. This structure ensures transparency in the measurement of assets and liabilities.

Working Hours

Working hours define the number of daily and weekly hours that an employee must work. In Portugal, the legal regime establishes a maximum of 8 hours per day and 40 per week, which can be adapted by collective agreement. It is crucial for the protection of labor rights and the balance life-work.

Overtime

Overtime refers to time worked beyond normal working hours. They must be justified by specific needs and paid with legal surcharges. Its implementation must respect maximum limits per day and per year, ensuring the protection of the health and rights of workers.

IES (Simplified Annual Business Information Declaration)

IES was created to simplify companies’ compliance with their reporting obligations. Allows the joint delivery, electronically, of accounting, tax and statistical data, through a single annual submission, facilitating sending to entities such as AT, INE, Banco de Portugal and Commercial Registration.

Uncertainty

Uncertainty in the business context refers to the difficulty of predicting future events with accuracy. It may be related to economic, political or market changes, affecting decisions strategic. It differs from risk, as in uncertainty it is not possible to quantify the probabilities of occurrence.

Inventories

Inventories represent tangible assets held for sale or transformation in the normal course of business. company activities. They include raw materials, work in progress and merchandise. Your correct Management is essential for controlling the cost of goods sold and valuing the active.

Compound interest

Compound interest is calculated on the initial capital plus interest accumulated over periods previous ones. This model enhances investment growth over time, being widely used in financial applications, credit, loans and profitability analysis.

Default Interest

Late payment interest is applied when there is a delay in paying an obligation, such as taxes or invoices. They serve as compensation for time elapsed without compliance and encourage payment punctual. The late payment rate is legally defined and varies depending on the type of debt and the context contractual.

Fair Value

Fair value represents the amount for which an asset can be sold or a liability transferred in a transaction between informed and interested parties. It is widely used in accounting to reflect current market values, even if there is not always an actual transaction associated.

Accounting Entry

The accounting entry is the formal recording of a financial transaction in the company's books. Each entry affects at least two accounts (debit and credit) and ensures compliance with the accounting principles, contributing to the transparency and financial control of the organization.

Leasing or Financial Lease

Leasing is a form of financing in which the lessor grants the use of an asset to the lessee through periodic payment. At the end of the contract, the good can be purchased, returned or replaced. It is common in vehicles and equipment, offering flexibility and tax benefits to companies.

Profit

Profit is the positive financial result obtained when revenues exceed production costs and expenses. a company. It is a fundamental indicator of profitability, operational efficiency and viability economic, being crucial to attracting investors and sustaining business growth.

Safety Margin

The margin of safety indicates how much sales can fall before the company reaches its breaking point. balance. Represents the financial gap between real revenues and the break-even point, being a key indicator in operational risk analysis and strategic decision making.

Liquid Financial Means

Liquid financial resources refer to the resources immediately available to the company, such as cash on hand, bank balances and cash equivalents. This indicator is essential for assess liquidity and the ability to meet short-term commitments.

Financial market

The financial market is the environment where transactions involving the purchase and sale of assets such as shares, bonds, currencies and derivatives. It can be organized, like stock exchanges, or informal, like the over-the-counter market. It is vital for fundraising and efficient allocation of capital.

Credit Note

The credit note is issued to totally or partially cancel a previously posted invoice, correcting errors or adjusting values. Can be used for returns, later discounts or rectifications. It is a tax document with direct implications for VAT calculation and accounting of the company.

Debit Note

The debit note is used to regularize invoices where VAT or other amounts were initially underpriced. It is a valid tax document that increases the amount payable by the customer and guarantees compliance with the rules of the VAT Code and the reality of the transactions carried out.

Purchase Order

The purchase order formalizes the order for goods or services between companies, functioning as a commitment prior to issuing the invoice. Details the agreed conditions, such as quantities, prices and delivery times, facilitating purchasing management and logistical control for both parties.

Obligation

A bond is a debt security issued by companies or governments with the aim of raising resources from investors. This instrument ensures the payment of periodic interest and the capital invested on the maturity date, being valued based on future cash flows discounted.

Triangular Operations

Triangular operations involve three companies from different European Union countries, with the physical circulation of goods does not always correspond to the issuance of invoices. This type of transaction aims to facilitate intra-community trade and requires attention to tax treatment, namely VAT.

Order of Certified Accountants

The Order of Certified Accountants (OCC) is the entity responsible for regulating and supervise the exercise of the profession of certified accountant in Portugal. Ensures training continuous, compliance with the code of ethics and the prestige of the profession among public and private.

Liabilities

Liabilities represent the company's financial obligations that will require an outflow of resources in the future. Include debts with suppliers, bank loans, taxes payable and other liabilities assumed, being essential to assess the financial health of the organization.

Accounting Policies

Accounting policies establish the basis for recording, presenting and disclosing financial information. Its adoption guarantees comparability, consistency and compliance with standards legal and accounting standards, such as the SNC or IFRS, promoting transparency and reliability of reports.

Break-even Point

The break-even point is the sales volume necessary to cover all the company's costs. A From this point on, the company begins to generate profit. It is a fundamental metric in planning and control of business activity, especially in price and production decisions.

PPC (Special Payment on Account)

The PPC is a payment on behalf of the IRC owed by companies, calculated based on the year's turnover previous. Since 2022, the obligation can be waived if all tax returns are regularized. It works as a tax advance and avoids surprises at the final settlement.

Carrying Amount

The carrying amount corresponds to the value at which an asset is recorded in accounting, resulting from the amount recognized deducted from accumulated depreciation and impairment losses. This value is crucial for analyzing assets and making decisions about impairment or revaluations.

Recoverable Amount

The recoverable amount of an asset is the greater of its fair value (less selling costs) and the use value. This concept is used in the assessment of impairment, ensuring that assets do not are recorded above the value that the company expects to recover in the future.

CMVMC Ratio

The CMVMC ratio calculates the cost of goods sold and materials consumed. The formula is: CMVMC = Initial stock + Purchases ± Stock register – Final stock. It is used to evaluate the direct cost of sales and control inventories and profit margins.

Cost-To-Income Ratio

This ratio measures the operational efficiency of financial institutions, such as banks and insurance companies. A formula is: Cost-To-Income = Personnel costs + Other expenses + Depreciation / Banking income. One lower value indicates greater efficiency in resource management.

Efficiency Degree Ratio

The degree of efficiency ratio compares operational expenses with the product generated, reflecting the level efficiency in the use of available resources. Like Cost-To-Income, it assesses whether the entity you are getting a return commensurate with the costs incurred, ideally keeping it low.

General Liquidity Ratio (GLG)

GLG assesses the company's ability to meet short-term obligations. Formula: Current assets / Current liabilities. A ratio above 1 indicates good liquidity capacity, but very high values may mean misapplied resources or excess inventory.

Immediate Liquidity Ratio (GLI)

GLI indicates the company's ability to pay immediate debts with available cash. or bank. Formula: Cash and current liabilities. It is a conservative indicator, but useful for assess financial health in contexts of greater uncertainty or solvency requirements.

Reduced Liquidity Ratio (GLR)

GLR is an adjusted liquidity indicator, which excludes inventories and biological assets from the equation. Formula: (Current Assets – Inventories – Biological Assets) / Current Liabilities. Allows you to evaluate the payment capacity with resources that can be realized more quickly.

Billing SAFT

The billing SAFT is a file generated by certified software, containing records of invoices issued. It is mandatory in Portugal and must be submitted monthly to the Authority Tax, being crucial for fiscal control and transparency of the company's commercial operations company.

SAFT-PT (Standard AuditFile for Tax Purposes)

SAFT-PT is a standardized digital file in XML used in Portugal for tax audits. Contains companies' accounting and tax information and allows tax authorities carry out automated validations on compliance with tax and accounting obligations.

Exchange rate

The exchange rate represents the value of one currency in relation to another. It is used in transactions international markets to convert values between different currencies, being influenced by factors economic, political and market. Directly affects imports, exports and investments foreigners.

Taxonomies

Taxonomies are coding systems used to classify accounts and transactions accounting. They allow automatic filling of the IES and facilitate the standardization of financial and tax information, contributing to greater efficiency and reliability of data transmitted.

Fiscal Transparency

The fiscal transparency regime applies to certain entities that, although they have legal, are not taxed in IRC. Income is attributed directly to its partners. It is common in civil, professional societies or societies with specific CAEs.

Autonomous Taxation

Autonomous taxation applies to specific expenses, such as vehicles, allowances or expenses undocumented, regardless of the company's taxable profit. It's a way of penalizing certain expenses that do not directly contribute to the organization's productive activity.

Costing Unit

The costing unit is the basis for measuring costs in a given section or process. Allows relate all expenses in that section to a common unit, facilitating cost control and profitability analysis of each operational activity within the organization.

Imputation Unit

The allocation unit is a metric used to distribute costs based on an objective criterion, such as working hours, occupied area or units produced. Ensures fair and rational allocation from expenses to the activities or products that actually consume them.

Work Unit

The work unit is used in analytical accounting and corresponds to a technical unit of measurement of work performed. It must be associated with a costing unit so that it can be calculate the unit cost of the work or service performed in a reliable and comparable way.

Use Value

Value in use corresponds to the present value of future cash flows that a company expects obtain from an asset. It is used in the impairment test to compare with the carrying value and determine whether it is necessary to record impairment losses on the asset in question.

Net Realizable Value

Net realizable value is the amount a company expects to obtain from the sale of inventory, costs directly associated with the sale are deducted. This value is essential to assess impairments and ensure that inventories are not recorded above what can actually be recovered.

Sale of Goods

The sale of goods consists of the transfer of ownership of products, whether manufactured by the company or purchased for resale. This concept is at the heart of commercial activities and involves tax, accounting and legal obligations that guarantee the regularity of the operation.

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