
Financial Glossary
Your Essential Guide to Financial & Tax Terms: A simplified, go-to reference for understanding the key terms, concepts, and compliance language used in accounting, VAT, tax consultancy, and business regulations. This glossary is designed to help entrepreneurs, business owners, and professionals navigate financial conversations with clarity and confidence.
Trade debtors
Trade debtors are businesses or individuals that owe money to a company for goods or services that have been supplied on credit. Trade debtors are also known as accounts receivable or trade receivables. A trade debtor is typically a customer who has purchased goods or services from the company and is responsible for paying for those goods or services within a certain period of time, typically 30, 60, or 90 days, depending on the terms of the credit agreement.
Trial balance
A trial balance is a list of a company’s accounts and their balances at a specific point in time. It is a tool that is used to check the arithmetical accuracy of a company’s accounting records. A trial balance is typically prepared at the end of an accounting period, such as a month, quarter, or year. It includes all of the accounts in the company’s chart of accounts, such as asset accounts, liability accounts, equity accounts, revenue accounts, and expense accounts.
VAT - Value Added Tax
Value Added Tax (VAT) is an indirect tax imposed on most goods and services bought and sold in a country. It is often referred to as a type of general consumption tax and is charged at each stage of the supply chain. Businesses act as tax collectors, collecting and accounting for VAT on behalf of the government.
The ultimate consumers bear the cost of VAT, while businesses pay the collected tax to the government and may receive refunds for the tax paid to suppliers.
VAT is implemented in over 150 countries, including EU members, Canada, New Zealand, Australia, Singapore, and Malaysia.
VAT IN UAE:
Main Points:
- In the UAE, VAT was introduced on January 1, 2018, at a standard rate of 5%.
- Businesses must register for VAT if their taxable supplies and imports surpass the mandatory registration threshold of AED 375,000.
- A business has the option to register for VAT voluntarily if its supplies and imports are below the mandatory threshold but exceed the voluntary registration threshold of AED 187,500.
- Businesses can also choose to register voluntarily if their expenses exceed the voluntary registration threshold. This option allows start-up businesses with no turnover to register for VAT.
Variable cost
A variable cost is a type of cost that varies in proportion to the volume of goods or services produced. This means that as the volume of production increases, the variable cost also increases, and vice versa. Examples of variable costs include the cost of raw materials and labor. Fixed costs, on the other hand, are costs that remain constant regardless of the volume of production, such as rent and insurance.
Venture Capital Associate
A venture capital associate is a professional who works for a venture capital firm, helping to identify and evaluate potential investments in startup companies. Venture capital associates typically have a background in finance, entrepreneurship, or a related field, and are responsible for conducting research and analysis on potential investments, assisting with due diligence, and providing support to the venture capital partners and principals in their decision-making process. Venture capital associates are typically early in their careers and are looking to gain experience and knowledge in the venture capital industry. They may also be responsible for providing guidance and support to the startup companies in which the venture capital firm invests.
Venture Capital Partner
A venture capital partner is a professional who works for a venture capital firm, helping to identify and evaluate potential investments in startup companies. Venture capital partners typically have a background in finance, entrepreneurship, or a related field, and are responsible for conducting due diligence on potential investments, negotiating investment deals, and providing guidance and support to the startup companies in which the venture capital firm invests. Venture capital partners are typically highly skilled and experienced professionals who are knowledgeable about the venture capital industry and have a strong track record of successful investments. They play a critical role in helping venture capital firms identify and invest in the most promising startup companies, with the goal of generating strong returns on their investments.
Venture Capital Principal
A venture capital principal is a professional who works for a venture capital firm, helping to identify and evaluate potential investments in startup companies. Venture capital principals typically have a background in finance, entrepreneurship, or a related field, and are responsible for conducting due diligence on potential investments, negotiating investment deals, and providing guidance and support to the startup companies in which the venture capital firm invests. Venture capital principals are typically highly skilled and experienced professionals who are knowledgeable about the venture capital industry and have a strong track record of successful investments. They play a critical role in helping venture capital firms identify and invest in the most promising startup companies, with the goal of generating strong returns on their investments. The term “venture capital principal” is often used interchangeably with the term “venture capital partner,” and the specific titles and roles within a venture capital firm may vary.
Vesting Acceleration
Vesting acceleration refers to the process of speeding up the vesting schedule of a stock option or other form of equity compensation. Vesting schedules are typically put in place to align the interests of employees with those of the company by requiring employees to remain with the company for a certain period of time before they are able to exercise their stock options and receive the full benefits of their equity compensation. Vesting acceleration can occur in a number of different situations, such as in the event of a merger or acquisition, the death or disability of the employee, or the voluntary or involuntary termination of the employee’s employment. Vesting acceleration can provide a valuable benefit to employees by allowing them to receive the full value of their equity compensation sooner than they would under the normal vesting schedule.
Working capital
Working capital is a measure of a company’s liquidity and efficiency. It is calculated by subtracting a company’s current liabilities from its current assets. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and other obligations that are due within a year. A company with a positive working capital is able to meet its short-term obligations, while a company with a negative working capital may have difficulty paying its bills in the short term. Therefore, a healthy level of working capital is important for a company’s ongoing operations and its ability to invest and grow.
Zero-Coupon Bond
A zero-coupon bond is a type of bond that does not pay periodic interest payments to the bondholder, known as a coupon. Instead, the bond is issued at a discount to its face value, and the bondholder receives the face value of the bond at the time of maturity. This means that the bondholder effectively receives the interest payments when the bond matures, rather than receiving periodic payments. Zero-coupon bonds are typically long-term investments, with maturities ranging from a few years to several decades. Because they do not pay periodic interest payments, zero-coupon bonds tend to be less expensive than other types of bonds, making them an attractive option for investors looking to generate long-term returns on their investments.
Zero-Coupon Convertible Security
A zero-coupon convertible security is a type of financial instrument that combines the features of a zero-coupon bond with those of a convertible security. A convertible security is a type of security that can be converted into a specified number of shares of the issuer’s common stock at some point in the future, typically at the discretion of the holder. A zero-coupon convertible security, therefore, is a bond that does not pay periodic interest payments, but that can be converted into a specified number of shares of the issuer’s common stock at a predetermined time in the future. This type of security can be attractive to investors who are looking for the potential for both long-term capital appreciation and income from their investments.

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