| Acquisition |
When one company buys controlling stake in another company. Can be friendly (agreed upon) or hostile (no agreement). |
Visa announced that it has completed the acquisition of the token services and ticketing businesses, formerly Bell ID and Ecebs LTD, from Rambus. |
Takeover |
Growth |
| Agile |
A philosophy of software development that promotes incremental development and emphasizes adaptability and collaboration. |
One of the primary areas of focus for Agile teams is the ability to work iteratively. Iterative work is completed in short cycles with a small portion of the overall project done at one time. |
Agile Development |
Flexibility |
| Angel investor |
Individual who provides a small amount of capital to a startup for a stake in the company. Typically precedes a Seed Round and usually happens when the startup is in its infancy. |
Angel investors are interested in helping small startups by injecting capital in exchange for convertible debt or owner equity. |
Informal Investor |
Seed Investor |
| Accelerator |
A hub where startups are given mentorship, space to work on their ideas and sometimes seed capital. In an Accelerator, a Seed investment is made in return for equity and usually between $15K - $50K. Startups are admitted in classes and work in groups. They are generally given a deadline to complete intensive training and iteration (typically 1 week to 6 months). Startups end an accelerator program with a Demo Day in which they pitch to investors. |
Y Combinator is an American seed accelerator launched in March 2005 and was used to launch over 2,000 companies including Dropbox, Airbnb, Stripe, Reddit, Optimizely, Zenefits, Docker, DoorDash, Mixpanel, Heroku. |
Incubator |
Seed Investor |
| Series A Financing Round |
"A" Round Financing - The first major round of business financing by private equity investors or venture capitalists. In private equity investing, an “A” round, or Series A financing, is usually in the form of convertible preferred stock. An “A” round by external investors generally takes place after the founders have used their seed money to provide a “proof of concept” demonstrating that their business concept is a viable and eventually profitable one. |
Adroit Worldwide Media closes out $11 Million Series A Financing Round. |
"A" Round Financing |
First Round of Financing |
| Accelerated Cost Recovery System |
The IRS-approved method of calculating depreciation expense for tax purposes. Also known as Accelerated Depreciation. |
The Accelerated Cost Recovery System (ACRS) is a method of depreciating property for tax purposes; it allows individuals and businesses to write off capitalized assets in an accelerated manner. |
NA |
The Modified Accelerated Cost Recovery System |
| Accredited Investor |
An individual with $1,000,000 or more in net worth (assets - liabilities), excluding their primary residence, or $200,000 in annual income, or $300,000 of income if earned jointly with their spouse, for the previous two years with a reasonable expectation of continued income for the following year. Note that separate definitions apply for legal entities. |
The definition of an accredited investor (if any), and the consequences of being classified as such, vary between countries. Generally, accredited investors include high-net-worth individuals, banks, financial institutions and other large corporations, who have access to complex and higher-risk investments such as venture capital, hedge funds and angel investments. |
Sophisticated Investor |
Qualified Purchaser |
| Accrued Interest |
Accrued interest is the amount of interest earned on a debt, such as a bond, but not yet collected. Interest accumulates from the date a loan is issued or when a bond's coupon is made. |
The accrued interest adjustment is thus the extra amount of interest that is paid to the owner of a bond or other fixed-income security. The amount paid is equal to the balance of interest that has accrued since the last payment date of the bond. |
Accrued Liability |
Accrued Expense |
| Acqui-hire |
One company's acquisition of another for the primary purpose of hiring its employees, rather than for the intrinsic value of the business itself. |
By the early 2010s, acqui-hiring had become increasingly common in venture capital-backed startup companies, especially within the competitive technology sector (where skilled software engineers working for startups were considered lucrative). By March 2013, Facebook was the largest performer of talent acquisitions, with 12 over the last five fiscal quarters. One such Facebook purchase in 2009, FriendFeed, brought several high-profile Google alumni into the company, including Bret Taylor — who became Facebook's chief technology officer shortly after the purchase.[6] Twitter, Yahoo!, and Google ranked alongside Facebook as a similarly major user of talent acquisitions |
Talent Acquisition |
Buy Out |
| Add-on Service |
Add-on Services are the services provided by a venture capitalist that are not monetary in nature, such as helping to assemble a management team and helping to prepare the company for an IPO. |
An Add-on Service is a type of Service that cannot stand alone and can only be added to an existing Service. |
Venture Capital Platform |
Support and Services |
| Adventure Capitalist |
An adventure capitalist is an entrepreneur who helps other entrepreneurs financially and often plays an active role in the company's operations such as by occupying a seat on the board of directors, etc. |
An adventure capitalist is another word for "venture capitalist," or someone who invests in start-up companies. The term is also a specific type of a venture capitalist who is more accessible, but who may be harder to find and whose pockets are not as deep as a traditional venture capitalist. |
Venture Capitalist |
Investor |
| Advisor |
An individual providing business connections, guidance, advice and support to the entrepreneur as they develop and grow their startup. |
An adviser or advisor is normally a person with more and deeper knowledge in a specific area and usually also includes persons with cross-functional and multidisciplinary expertise. An adviser's role is that of a mentor or guide and differs categorically from that of a task-specific consultant. |
Guide |
Consultant |
| Advisory Board |
A group of external advisors to a private equity group or portfolio company. Advice provided varies from overall strategy to portfolio valuation. Less formal than a Board of Directors. |
An effective advisory board, properly composed and structured, can provide non-binding but informed guidance and serve as a tremendous ally in the quest for superior corporate governance. |
Consultative Body |
Advisory Counsil |
| Allocation |
The amount of securities assigned to an investor, broker, or underwriter in an offering. An allocation can be equal to or less than the amount indicated by the investor during the subscription process, depending on market demand for the securities. |
Asset allocation is a broad strategy that determines the mix of assets to hold in a portfolio for an optimal risk-return balance based on an investor's risk profile and investment objectives. Security selection is the process of identifying individual securities within a certain asset class that will make up the portfolio. |
Securities Allocation |
Asset Allocation |
| Alpha Test |
Internal testing, of a pre-production model, typically on a controlled basis, with the objective of identifying functional deficiencies and design flaws. |
Alpha testing is a type of acceptance testing; performed to identify all possible issues/bugs before releasing the product to everyday users or the public. Alpha testing is carried out in a lab environment and usually, the testers are internal employees of the organization. |
Preliminary Software Field Test |
Beta Test |
| Alternative Minimum Tax |
A tax designed to prevent wealthy investors from using tax shelters to avoid income tax. The calculation of the AMT takes into account tax-preference items. |
The alternative minimum tax is a tax imposed by the United States federal government in addition to the regular income tax for certain individuals, estates, and trusts. |
NA |
NA |
| Amortization |
An accounting procedure that gradually reduces the book value of an intangible asset through periodic charges to income. |
In business, amortization refers to spreading payments over multiple periods. The term is used for two separate processes: amortization of loans and amortization of assets. In the latter case it refers to allocating the cost of an intangible asset over a period of time. |
Asset Value Reduction |
Depreciation |
| Angel Capital Association (ACA) |
A North American association of angel groups, accredited investors and family offices which promotes public policies for investors and startups. The association provides investors access to trending ideas and professional knowledge and entrepreneurs insight into how angels think. See www.angelcapitalassociation.org for more information. |
Angel Capital Association is the official industry alliance of over 100 of the largest angel investor groups in the United States. |
NA |
National Angel Capital Organization (NACO) |
| National Angel Capital Organization (NACO) |
NACO provides intelligence, best practices, tools and resources to its members to unlock the angel capital funding and mentorship that is critical to helping Canadian founders to grow and scale their companies globally. |
The National Angel Capital Organization (NACO) is committed to advancing a thriving, early-stage entrepreneurial ecosystem in Canada. Since 2012, NACO members have invested over $853.3 million into 1472 companies. |
NA |
Angel Capital Association (ACA) |
| Angel Fund |
A formal or informal assemblage of active angel investors who cooperate in some part of the investment process. Key characteristics of an angel group are: control by member angels (who manage the entity or have control over the entity’s managers), and collaboration by member angels in the investment process. |
Angel Funds are the easiest way to start a venture fund. Raise capital up front so you can make investments quickly and privately. Without the overhead of running a fund. Committed capital. Completely private. |
NA |
Angel Syndicate |
| Angel Financing |
Seed capital raised from independently wealthy investors, for startup companies. |
Angel investing can be risky business. Most prior studies posit that 5-10 percent of investments will be economically profitable. In The American Angel, investors said on average, 11 percent of their total portfolio yielded a positive exit. |
Angel Investing |
Seed Investing |
| Angel Group |
An organization composed of accredited investors which serves as a platform for them to coordinate investments in seed and early stage startup companies. The group members typically work together consolidating their resources, expertise and capital through informal networks or formal funds. |
Angel groups are typically organized by geographic region. Top angel groups appear to incorporate around 100-200 members. Some focus on a specific group of industries, while others are more open. Collectively these groups have invested in over 60,000 US based startups. |
NA |
Angel Syndicate |
| Angel Round |
A round of investment into a startup company from angel investors not previously affiliated with the founder. Typically the first money invested in a company after the founders own money, and the founders friends and family. |
Angel round is when you raise from Individual investors. It could come before a seed or after a seed round. |
NA |
Pre-Seed or Seed Round |
| Annex Fund |
Annex funds are side funds that can provide an extra pool of money to supplement the original VC Funds. |
Lots of private equity firms are out marketing annex funds or variants thereof, including Sun Capital Partners Inc. on the buyout side and Kleiner Perkins Caufield and Byers on the venture side. But not all of these firms are going to be able to raise them, panelists on a recent Dow Jones & Co. webinar about liquidity said. |
NA |
NA |
| Annual Recurring Revenue (ARR) |
The recurring subscription-based revenue which software as a service / platform as a service, (SaaS / PaaS) based companies receive annually; also known as the run rate. |
Annual Recurring Revenue, or ARR, is a subscription economy metric that shows the money that comes in every year for the life of a subscription (or contract). More specifically, ARR is the value of the recurring revenue of a business’s term subscriptions normalized for a single calendar year. |
NA |
Monthly Recurring Revenue (MRR) |
| Annual Run Rate (ARR) |
Annual run rate is a method of forecasting annual earnings based on revenue from a shorter period (typically the current month or quarter). Though it’s a quick and easy way to predict revenue for the year, many consider ARR to be overly simplistic and don’t rely on it for accurate forecasts. That said, ARR can help business owners project annual earnings when there isn’t much other data available, which can be helpful for marketing and pitching to investors in the early days of running a startup. |
Annual run rate is calculated by multiplying monthly or quarterly earnings into an annual figure. For instance, you could tally up sales from a specific month or quarter and use this to extrapolate a projected annual revenue. |
NA |
Annual Contract Value |
| Annual Contract Value (ACV) |
Annual Contract Value (or ACV) is the value of subscription revenue from each contracted customer, normalized across a year. Say a customer signs a 5-year deal with you for $50,000—normalizing this to a single year means your ACV is $10,000. |
Like its closely related cousin annual recurring revenue (ARR), annual contract value can help you understand the health of your SaaS business. Unfortunately, almost no-one agrees on how to calculate ACV, leading to a ton of confusing information out there around how to measure ACV. |
N/A |
Annual Recurring Revenue |
| Anti Dilution Provisions |
Anti Dilution Provisions are contractual measures that allow investors to keep a constant share of a firm's equity in light of subsequent equity issues. These may give investors preemptive rights to purchase new stock at the offering price. Examples include Broad-Based Weighted Average Ratchet, Narrow-Based Weighted Average Ratchet, and Full Ratchet Anti Dilution. |
An anti-dilution provision is a clause in an option, security, or merger agreement that gives the investor the right to maintain his or her percentage ownership of a company by buying a proportionate number of shares of any future issue of the security. |
Subscription Rights, Preemptive Rights, Subscription Privileges |
Broad-Based Weighted Average Anti Dilution |
| Articles of Incorporation |
Documentation filed with the Secretary of State or Company Registrar which acts as a charter to document the establishment and existence of a corporation. The articles typically include the businesses name, address, a statement of business purpose, and details related to the types of stock the corporation is entitled to issue. |
Articles of incorporation is a set of formal documents filed with a government body to legally document the creation of a corporation. Articles of incorporation must contain pertinent information such as the firm's name, street address, agent for service of process and the amount and type of stock to be issued. |
Certificate of Incorporation, Corporate Charter |
Articles of Organization |
| Articles of Organization |
Documentation filed with the Secretary of State which acts as a charter to document the establishment and existence of a Limited Liability Company. |
The articles of organization are a document similar to the articles of incorporation, outlining the initial statements required to form a limited liability company (LLC) in many U.S. states. Some states refer to articles of organization as a certificate of organization or a certificate of formation. Once filed and approved by the Secretary of State, or other company registrar, the articles of organization legally create the LLC as a registered business entity within the state. |
Certificate or Organization, Certificate of Formation |
Articles of Incorporation |
| Assets |
An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity (IASB Framework). It is worth noting that the framework defines asset in terms of control rather than ownership. This word refers to all financial resources that a corporation owns. Current assets can be any form of currency, including traded inventory, investments, and checks. Fixed assets (capital assets) consist of material goods and equipment of a company, such as the land by which the company sits on, the company building, and technological machinery. Intangible assets mainly comprise of intellectual property protection, copyrights, patents, etc. |
An asset is a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company's balance sheet and are bought or created to increase a firm's value or benefit the firm's operations. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it's manufacturing equipment or a patent. |
Resource |
Liability |
| Advertorials |
Advertorials are paid content that is meant to look and feel like a true story or blog post. Companies are turning to these because display ad pricing has become less effective and viewers have become immune to them. |
An advertorial is an advertisement in the form of editorial content. The term "advertorial" is a blend (see portmanteau) of the words "advertisement" and "editorial." |
Advertainment |
Native Advertising |
| Accelerated Payment |
Accelerated payment occurs when a borrower speeds up the repayment of a loan. Accelerated payments reduce the borrower’s interest costs (the total fee paid to the lender for the loan). This can benefit a business but depends on a reliable cash flow. Before committing to an accelerated payment schedule, it is good practice for companies to ask if they can switch back to a slower repayment schedule should their cash flow change. |
In most loans, part of the monthly payment is principal and part of the loan is interest. In the case of demand loans additional lump-sum payments can typically be made at the discretion of the borrower without issue. This basically means most loans have an “accelerated payment” option built in. |
NA |
Acceleration Clause, Acceleration Covenant |
| Accounts payable |
Accounts payable refers to the money a company owes its suppliers for goods and services that have been provided and for which the supplier has submitted an invoice. (This makes accounts payable different from accrued expenses, which do not have invoices to match.) |
Accounts payable (AP) is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents. |
Payables |
Accrued Expenses |
| Accrual Basis of Accounting |
Accrual accounting is one of two accounting method, the other being cash accounting. Accrual accounting measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. |
The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. The cash method is a more immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses. |
Accrual Accounting |
Cash Accounting |
| Cash Basis of Accounting |
The cash basis is a method of recording accounting transactions for revenue and expenses only when the corresponding cash is received or payments are made. Thus, you record revenue only when a customer pays for a billed product or service, and you record a payable only when it is paid by the company. |
The cash basis and accrual basis of accounting are two different methods used to record accounting transactions. The core underlying difference between the two methods is in the timing of transaction recordation. The timing difference between the two methods occurs because revenue recognition is delayed under the cash basis until customer payments arrive at the company. |
Cash Accounting |
Accrual Accounting |
| Accruals |
Accruals are revenues earned or expenses incurred which impact a company's net income on the income statement, although cash related to the transaction has not yet changed hands. Accruals also affect the balance sheet, as they involve non-cash assets and liabilities. Accrual accounts include, among many others, accounts payable, accounts receivable, accrued tax liabilities, and accrued interest earned or payable. |
Accruals and deferrals are the basis of the accrual method of accounting, the preferred method by generally accepted accounting principles (GAAP). Using the accrual method, an accountant makes adjustments for revenue that has been earned but is not yet recorded in the general ledger and expenses that have been incurred but are also not yet recorded. The accruals are made via adjusting journal entries at the end of each accounting period, so the reported financial statements can be inclusive of these amounts. |
NA |
Deferrals |
| Deferrals |
A deferral often refers to an amount that was paid or received, but the amount cannot be reported on the current income statement since it will be an expense or revenue of a future accounting period. In other words, the future amount is deferred to a balance sheet account until a later accounting period when it will be moved to the income statement. |
Deferrals are the consequence of the revenue recognition principle which dictates that revenues be recognized in the period in which they occur, and the matching principle which dictates expenses to be recognized in the period in which they are incurred. |
NA |
Accruals |
| Adjusting Entries |
Adjusting entries are accounting journal entries that convert a company's accounting records to the accrual basis of accounting. An adjusting journal entry is typically made just prior to issuing a company's financial statements. |
In accrual accounting, you report transactions when your business incurs them, not when you physically spend or receive money. Adjusting journal entries are required to record transactions in the right accounting period. |
NA |
Journal Entries |
| Journal Entries |
Journal entries are the first step in the accounting cycle and are used to record all business transactions and events in the accounting system. |
A journal entry is a record of the business transactions in the accounting books of a business. A properly documented journal entry consists of the correct date, amounts to be debited and credited, description of the transaction and a unique reference number. A journal entry is the first step in the accounting cycle. |
NA |
Adjusting Entries |
| Accounting Cycle |
The accounting cycle is a collective process of identifying, analyzing, and recording the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. |
There are eight steps to the accounting cycle. An organization begins its accounting cycle with the recording of transactions using journal entries. The entries are based on the receipt of an invoice, recognition of a sale, or completion of other economic events. After the company posts journal entries to individual general ledger accounts, an unadjusted trial balance is prepared. The trial balance ensures that total debits equal the total credits in the financial records. At the end of the period, adjusting entries are made. These are the result of corrections made and the results from the passage of time. For example, an adjusting entry may accrue interest revenue that has been earned based on the passage of time. |
Full Cycle Accounting |
NA |
| Acid-test ratio |
The acid-test ratio compares a company’s “quick assets” (cash and accounts receivable) to its current liabilities. It is one of six basic calculations used to determine short-term liquidity—the ability of a company to pay its bills as they come due. |
The acid-test, or quick ratio, compares a company's most short-term assets to its most short-term liabilities to see if a company has enough cash to pay its immediate liabilities, such as short-term debt. The acid-test ratio disregards current assets that are difficult to liquidate quickly such as inventory. |
Quick ratio |
Acid ratio |
| Amortization period |
The amortization period is the total length of time it takes a company to pay off a loan—usually months or years. |
If a company chooses a short amortization period, it will pay less interest overall but must make higher payments on the principal (the original amount of the loan before interest). A company that takes a longer amortization period will have lower monthly payments but pay more interest overall. |
Settlement |
Reimbursement |
| Asset-backed securities |
An asset-backed security is a security whose income payments and hence value are derived from and collateralized by a specified pool of underlying assets. The pool of assets is typically a group of small and illiquid assets which are unable to be sold individually. |
Asset-backed securities (ABS) and mortgage-backed securities (MBS) are two of the most important types of asset classes within the fixed-income sector. MBS are created from the pooling of mortgages that are sold to interested investors, whereas ABS is created from the pooling of non-mortgage assets. These securities are usually backed by credit card receivables, home equity loans, student loans, and auto loans. The ABS market was developed in the 1980s and has become increasingly important to the U.S. debt market. Despite their apparent similarities, the two types of assets possess key differences. |
NA |
Mortgage-backed securities |
| Average collection period (receivables turnover) |
The average collection period is the average number of days it takes a business to collect and convert its accounts receivable into cash. It is one of six main calculations used to determine short-term liquidity, that is, the ability of a company to pay its bills (current liabilities) as they come due. |
The average collection period is the average number of days between 1) the dates that credit sales were made, and 2) the dates that the money was received/collected from the customers. The average collection period is also referred to as the days' sales in accounts receivable. |
Receivables collection period |
Days sales outstanding |
| Accounting Standards for Private Enterprises (ASPE) |
The Accounting Standards for Private Enterprises (ASPE) are accounting principles for small and medium-sized enterprises (SMEs) in Canada that publish financial statements for general-purpose use but do not have to report their financial results publicly because their shares are not traded on a public stock exchange. |
Canadian SMEs may choose to use either the ASPE or IFRS. Following either yields a standardized package of information that boosts the confidence of the people who use it for decision-making. They may include owners not involved in managing the business, potential owners, existing and potential lenders, creditors, credit rating agencies and vendors/suppliers. |
NA |
International Financial Reporting Standards (IFRS) |
| Accounts receivable |
Accounts receivable refers to the money a company’s customers owe for goods or services they have received but not yet paid for. For example, when customers purchase products on credit, the amount owed gets added to the accounts receivable. |
On the balance sheet, accounts receivable appear under assets. Often, some portion of accounts receivable go uncollected because customers are unable to pay or for other reasons. To allow for this, the number on the balance is reduced by an estimate for bad debts. |
Balance due |
Accounts payable |
| Accrued expenses |
Accrued expenses are those incurred for which there is no invoice or other documentation. They are classified as current liabilities, meaning they have to be paid within a current 12-month period and appear on a company’s balance sheet. |
An example of an accrued expense would be a lease payment that comes due regularly each month. Even though the bill for a given month has not yet arrived, the company knows it will have to pay the usual amount. Terms of payment are usually defined by company policy or as part of a pre-existing agreement. |
NA |
Unearned revenue/Accrued revenue |
| Administration expenses (SG&A) |
Administration expenses are the costs of paying wages and salaries and providing benefits to non-sales personnel. They are one of three kinds of expense that make up a company’s operating expenses. The others are selling and general expenses. |
Administration expenses are categorized as indirect expenses on a company’s income statement because they do not contribute directly to the making of a product or delivery of a service. As they tend to remain stable even when production volumes change, administration expenses are described as fixed costs (as opposed to variable costs or semi-variable). |
Indirect costs |
Selling and General expenses |
| Selling expenses (SG&A) |
Selling expenses are the costs associated with distributing, marketing and selling a product or service. They are one of three kinds of expense that make up a company’s operating expenses. The others are administration and general expenses. |
Selling expenses are categorized as indirect expenses on a company’s income statement because they do not contribute directly to the making of a product or delivery of a service. Some components can change as sales volumes increase or decrease, while others remain stable. Hence, selling expenses are considered to be semi-variable costs (as opposed to fixed or variable costs). |
Indirect costs |
Administrative and General expenses |
| General expenses (SG&A) |
General expenses are the costs a business incurs as part of its daily operations, separate from selling and administration expenses. Together, general, selling and administration (SG&A) expenses make up a company’s operating expenses. |
General expenses are categorized as indirect expenses on a company’s income statement because they do not contribute directly to the making of a product or delivery of a service. They are fixed costs because they tend to remain stable even when production volumes change. |
Indirect costs |
Administrative and Selling expenses |
| Amortization expenses |
Amortization expenses account for the cost of long-term assets (like computers and vehicles) over the lifetime of their use. Also called depreciation expenses, they appear on a company’s income statement. |
When an amortization expense is charged to the income statement, the value of the long-term asset recorded on the balance sheet is reduced by the same amount. This continues until the cost of the asset is fully expensed or the asset is sold or replaced. Canada Revenue Agency sets annual limits on how much of a long-term asset’s cost can be amortized in a given year. These limits are called capital cost allowances. |
NA |
Depreciation expenses |
| Asset-based lending |
Asset-based lending occurs when a loan is granted primarily on the value of the assets the borrower offers as security (collateral). |
The terms of an asset-based loan depend on the type of asset being pledged. Lenders prefer highly liquid assets like treasury bills, stocks, bonds, mutual funds and exchange traded funds (ETFs) because these are easy to convert to cash. Loans based on highly liquid assets tend to have higher loan-to-value (LTV) ratios, lower interest rates and more flexible repayment terms. |
NA |
NA |
| Audited, accountant-reviewed and notice-to-reader financial statements |
Audited, accountant-reviewed and notice-to-reader are three types of financial statements—documents that show the financial status of a company. All three are prepared according to International Financial Reporting Standards (IFRS). Privately held companies can choose to adopt Accounting Standards for Financial Enterprises (ASPE) or IFRS. |
The differences between the three types of statements are as follows: Audited financial statements undergo a reasonable number of tests to make sure the assets and debts reported are accurate. The accountant preparing them also gives an opinion on the quality of the statement and lets the reader know the statement “fairly represents” the company’s financial status. Accountant-reviewed financial statements undergo fewer tests, focusing only on whether the statement is “plausible”—that is, likely to be accurate. The accountant preparing these statements does not give an opinion on their quality or accuracy. Notice-to-reader statements are simply compilations of information provided by the company. The information undergoes no tests and the accountant preparing them offers no opinion or assurance. Accordingly, they simply put the readers “on notice.” |
NA |
NA |