Accounting Glossary
Over 100 accounting, tax, and financial terms explained in plain language, adapted to the regulations and practice in Bosnia and Herzegovina.
Showing 154 of 154 terms
Accounting Agency
A company or sole proprietorship that, for a fee, provides bookkeeping, payroll, and tax advisory services to other clients.
Accounting Period
The time span covered by a set of financial statements, such as a month, quarter, or year.
Accounting Policies
The specific rules, methods, and procedures a company adopts internally to apply accounting principles and standards when preparing financial statements.
Accounting Principles
The fundamental rules and assumptions (e.g. accrual basis, prudence, going concern) underlying bookkeeping and the preparation of financial statements.
AML/CFT Law
The Law on Prevention of Money Laundering and Financing of Terrorist Activities, which obligates entities (including accounting firms) to identify clients and report suspicious transactions.
Annual Financial Statements
The set of financial statements (balance sheet, income statement, and others) an entity must prepare and submit to the competent institutions after year-end.
Assets
Everything a company owns - cash, receivables, inventory, fixed assets, and more.
Assignment of Claims
The transfer of a receivable from one creditor to another, with the debtor's consent or notification.
Audit
An independent examination of financial statements by a licensed auditor, confirming they present a true and fair view.
Audit Opinion
The auditor's conclusion on whether the financial statements fairly represent the company's financial position.
Balance
The difference between the debit and credit sides of an account as of a given date.
Balance Sheet
A financial statement showing a company's assets, liabilities, and equity at a specific point in time.
BAM (Convertible Mark)
The international three-letter code for the Convertible Mark, the official currency of Bosnia and Herzegovina, pegged to the euro at 1.95583:1.
Bank Statement
A summary of all incoming and outgoing payments on a company's bank account for a given period.
Bankruptcy
A court proceeding initiated against an insolvent debtor to collectively settle creditors' claims out of the debtor's assets.
Bill of Exchange (Promissory Note)
A negotiable instrument by which the issuer undertakes to pay a stated amount to the holder by a set date, often used as a payment security instrument.
Budget
A company's plan of expected revenues and expenses for a future period, used to monitor and control performance.
Business Transaction
Any event that affects a company's assets, liabilities, equity, revenues, or expenses and is recorded in the books of account.
Business Unit (Branch)
An organizational part of a legal entity (e.g. a branch or facility) that operates outside the registered seat, entered in the court registry without its own legal personality.
Cash Flow Statement
Shows cash inflows and outflows from a company's operating, investing, and financing activities.
Cash-on-Hand Limit
The maximum amount of cash a company may keep in its till at the end of the day, per its internal policy.
Certified Accountant
A professional title obtained by passing exams before a licensed professional body, confirming an advanced level of bookkeeping and accounting qualification.
Chart of Accounts
A structured list of all accounts a company uses in its bookkeeping, adopted internally in line with applicable accounting regulations.
Cheque
A negotiable instrument by which the issuer instructs their bank to pay a stated amount from their account to the bearer or a named person.
Company Registration
The process of establishing and entering a business entity into the court registry, granting it legal capacity.
Consolidation
The preparation of a single set of financial statements for a group of related companies as if they were one economic entity.
Consumption (of Material)
The quantity of material, raw materials, or energy actually consumed in production or service delivery during a given period.
Corporate Income Tax
The tax paid by companies on their profit; the rate is 10% in both entities of B&H.
Correspondence Register
A register in which all incoming and outgoing business correspondence is logged chronologically, for tracking and archiving purposes.
Cost
The value of resources (materials, labor, services) consumed in the course of business, before it is recognized as an expense.
Cost Price
The total cost incurred to produce or acquire a product, before any margin is added.
Court Registry
The official register in which companies and their status information are recorded.
Credit
The right side of an account; increases liability and equity accounts and decreases asset accounts.
Creditworthiness
An assessment of a company's financial stability and reliability, used for example when granting credit.
Current Assets
Assets expected to be converted to cash or used up within one business cycle, such as inventory, receivables, and cash.
Current Assets (alt. term)
An alternative term for "obrtna sredstva" (current assets) - assets expected to be converted to cash or used up within one business cycle.
Current Liabilities
A company's obligations due for payment within one year, such as amounts owed to suppliers or short-term loans.
Customs (EORI) Number
A unique identification number assigned by the Indirect Taxation Authority to a business for carrying out customs procedures on the import and export of goods.
Debit
The left side of an account; increases asset accounts and decreases liability or equity accounts.
Default Interest
Interest charged on a due but unpaid obligation, as a penalty for late payment, at a rate prescribed by law or contract.
Deferred Tax
Tax arising from temporary differences between accounting and tax recognition of income or expenses, payable in a future period.
Delivery Note
A document accompanying goods on delivery, confirming their quantity and type.
Depreciation
The gradual allocation of a fixed asset's cost as an expense over its useful life.
Depreciation
A term often used interchangeably with "amortizacija" for the wear-down in value of tangible fixed assets such as equipment, vehicles, and buildings.
Depreciation Rate
The percentage rate at which a fixed asset's cost is written off each year.
Double-Entry Bookkeeping
An accounting method where every transaction is recorded on two accounts at once - one debit and one credit - keeping the books in balance.
Electronic Signature
Electronic data attached to other electronic data, used to identify the signatory, carrying the same legal weight as a handwritten signature when legal requirements are met.
Employee Registration
The employer's legal obligation to notify the competent institutions (tax authority, pension, health insurance) of a new hire before the employee starts work.
Employment Contract
The legal document that establishes and governs the employment relationship between employer and employee.
Equity (Capital)
The owners' stake in a company's assets after subtracting all liabilities.
Exchange Rate
The value ratio between the domestic and a foreign currency, published on the Central Bank of B&H's daily rate list.
Exchange Rate Differences
Gains or losses arising from a change in the exchange rate between the date a receivable or liability is recorded and the date it is settled.
Expense
A decrease in economic benefit during an accounting period from using up assets or incurring liabilities to run the business.
Finance Lease
A form of leasing in which substantially all risks and rewards of ownership transfer to the lessee, with the asset typically purchased at the end of the term.
Financial Statement
A formal report on a company's financial position and performance, comprising the balance sheet, income statement, and related reports.
Fiscal Cash Register
A cash register connected to the tax authority that logs every retail transaction for revenue-tracking purposes.
Fiscal Receipt
A receipt issued via a fiscal device confirming a cash or card transaction.
Fiscal Year
A 12-month accounting period for which financial statements are prepared; in B&H it usually matches the calendar year.
Fixed Assets
Long-term assets a company uses in its operations for more than one year, such as equipment, vehicles, or property.
Fixed Assets (alt. term)
An alternative term for "osnovna sredstva" (fixed assets) - long-term assets a company uses in its operations for more than one year.
Fixed Costs
Costs that don't vary with production or sales volume, such as rent or administrative salaries.
Foreign Currency Account
A company's bank account held in a foreign currency, used for dealings with foreign partners.
Founding Act (Deed of Incorporation)
The document by which founders formally establish a company and define its key elements.
General Ledger
The central record where all business transactions are posted chronologically and systematically to individual accounts.
Gross Profit
The difference between sales revenue and the direct cost of goods or services sold, before other expenses are deducted.
Gross Salary
An employee's total earnings before deducting personal income tax and social contributions.
Health Insurance
A mandatory contribution that secures employees' and other insured persons' right to healthcare.
Hot Meal Allowance
An allowance an employer pays an employee for meals during working hours, which may be (partly) tax-exempt up to the amount prescribed by law.
IAS (International Accounting Standards)
A set of rules for preparing financial statements issued before IFRS, some of which remain in force today.
IFRS (International Financial Reporting Standards)
A unified set of accounting standards applied by larger entities and public-interest entities in B&H when preparing financial statements.
Income Statement
A statement showing revenues, expenses, and the resulting profit or loss over a given period.
Independent (Self-Employed) Activity
An activity an individual carries out independently, at their own risk, for profit (e.g. a trade or freelance profession), taxed as income from independent activity.
Input Invoice Book (Purchase Ledger)
A record of all incoming invoices a company receives from suppliers, forming the basis for deducting input VAT.
Inspection Oversight
A review of a business's compliance with the law carried out by a competent inspection or tax authority, e.g. tax or labor inspection.
Intangible Fixed Assets
Long-term assets without physical form that a company uses in its operations, such as software, licenses, patents, or goodwill.
Interest
The compensation a debtor pays a creditor for the use of borrowed funds, usually expressed as a percentage of the principal.
Interest Rate
The percentage that determines the amount of interest on borrowed or invested funds, usually expressed on an annual basis.
Internal Control
The set of procedures and safeguards a company puts in place to ensure accurate records and prevent misuse.
Inventory
Goods, materials, or products a company holds for resale or further production.
Investment
The commitment of money or other resources with the aim of generating future economic benefit.
Invoice
An accounting document by which a seller confirms delivery of goods or services and requests payment from the buyer.
ITA - Indirect Taxation Authority
The state-level institution in B&H responsible for VAT, customs, and excise duties across the whole country.
Journal
An accounting record where transactions are logged in the order they occur, before being posted to the general ledger.
Leasing
A contractual arrangement in which the lessor grants the lessee the right to use an asset (e.g. a vehicle or equipment) for a period in exchange for installments.
Ledger Account
The basic unit of bookkeeping used to track the balance and changes of a specific type of asset, liability, revenue, or expense.
Liabilities
Amounts a company owes to suppliers, the state, employees, or other creditors.
Liabilities and Equity
The sources that finance a company's assets - obligations to third parties (liabilities) and owners' equity.
Liquidation
The process of winding up a company in which, after settling all liabilities, remaining assets are distributed to owners and the company is deregistered.
Liquidity
A company's ability to meet its short-term obligations on time with available funds.
LLC - Limited Liability Company
The most common business form in B&H, where owners' liability for the company's debts is limited to their invested capital.
Long-Term Liabilities
A company's obligations due for payment more than one year from now, such as long-term loans or bonds.
Loss
The negative difference between total revenues and total expenses in an accounting period.
Margin
The difference between the selling price and the cost price of a product or service, usually expressed as a percentage.
Municipal Utility Fee
A fee businesses pay to the local municipality for the use of public space, displaying a company sign, or other municipal services.
Net Profit
A company's final financial result after deducting all expenses, including corporate income tax.
Net Salary
The amount an employee actually receives after tax and contributions are deducted from the gross salary.
Non-Resident
An individual or legal entity without domicile, residence, or registered seat in B&H, taxed only on income earned within B&H.
nPIS (New Tax Information System)
The electronic system of the FBiH Tax Administration for submitting tax returns, calculating contributions and salaries, and communicating with taxpayers.
Offsetting (Set-off)
The settlement of mutual debts and claims between two parties without an actual cash payment.
Operating Lease
A form of leasing in which the lessor retains ownership and most of the risks of the asset, while the lessee simply uses it for a rental fee.
Output Invoice Book (Sales Ledger)
A record of all outgoing sales invoices a company issues to customers, forming the basis for calculating output VAT.
Payment Order
A banking instrument by which an account holder instructs the bank to make a payment to another party.
Payroll Calculation
The process of calculating an employee's gross and net salary, including taxes, contributions, and any allowances.
Payslip (Payroll Sheet)
A document showing each employee's calculated gross and net salary, contributions, and taxes for a given pay period.
Pension and Disability Insurance
The contribution for pension and disability insurance, which secures entitlement to a pension and disability-related benefits.
Personal Income Tax
The tax levied on individuals' income, including salary, at a rate that depends on the entity.
Personal Tax Allowance
The tax-free amount deducted from the personal income tax base when calculating salary.
Petty Cash (Cash Register)
The physical till and record where a company keeps and tracks cash on hand for small, day-to-day payments.
Pro Forma Invoice
A document giving the buyer advance information on price and delivery terms before the final invoice is issued.
Profit
The positive difference between total revenues and total expenses in an accounting period.
Profitability
A measure of business performance showing how much profit a company generates relative to invested capital or revenue.
Provisions
Amounts set aside as an expense for future obligations whose amount or timing is uncertain, such as pending litigation.
Receivables
Amounts owed to a company by customers or other parties for goods or services already delivered.
Registration Number
The identification number assigned to a business entity upon entry into the court registry.
Related Parties
Individuals or entities connected to a company through ownership, management, or family ties, in a position of mutual influence.
Representative Office
A unit of a foreign legal entity in B&H that, unlike a branch, may not conduct business activity, only preliminary and preparatory tasks.
Resident (Tax)
An individual or legal entity that, under B&H tax rules, is treated as a taxpayer on worldwide income, usually based on domicile or registered seat.
Resolution (Business Decision)
A formal act by which a company's competent body (general assembly, management) adopts a binding decision, e.g. on profit distribution.
Retained Earnings
The portion of accumulated profit kept within the company rather than distributed to owners.
Revaluation
Adjusting the book value of an asset to reflect its market or fair value, typically due to inflation or changing market conditions.
Revenue
An increase in economic benefit during an accounting period from selling goods, services, or other business activities.
Service Contract (Contract for Work)
A contract outside a formal employment relationship, engaging a person to perform a specific task or service.
Severance Pay
A cash payment made to an employee when their employment ends, for example due to retirement or redundancy.
Sick Leave
Absence from work due to temporary incapacity caused by illness or injury, during which the employee is entitled to salary compensation.
Small and Medium-Sized Enterprises (SMEs)
A category of businesses classified as micro, small, or medium-sized based on employee count, turnover, and asset value, with simplified reporting obligations.
Social Contributions
Mandatory contributions deducted from and added to salary for pension, health, and unemployment insurance.
Sole Proprietor
An individual who independently runs a registered business activity and is personally liable for its obligations with all their assets.
Solvency
A company's ability to meet all of its obligations, including long-term ones, from its total assets.
Statement of Open Items (Reconciliation Statement)
A form used to reconcile mutual receivables and liabilities between two business partners.
Statute (Articles of Association)
The founding document that sets out the governance rules and internal workings of a company.
Stocktaking (Physical Inventory Count)
An annual or periodic physical count of assets and liabilities to reconcile them with the bookkeeping records.
Supplementary Activity
An additional registered activity a business carries out alongside its main (predominant) activity.
Surpluses and Shortages
Differences between the physically counted and the book-recorded quantity of assets, identified during stocktaking.
Tax Administration
The entity-level institution (Tax Administration of FBiH or of RS) responsible for direct taxes and social contributions.
Tax Advance Payment
A periodic advance tax payment based on an estimated liability, later reconciled against the final tax calculation.
Tax Card
A record of an employee's personal data held by the employer, used to apply the personal tax allowance in payroll.
Tax Return
A form through which a taxpayer reports the tax base and calculated tax amount to the tax authority.
Tax Ruling
An official interpretation issued by the competent tax authority on how tax regulations apply to a taxpayer's specific situation.
Trade Margin (RUC)
The difference between the purchase and selling price of goods in trade, representing the trader's gross margin before other operating costs.
Transaction (Giro) Account
A business's bank account used for non-cash payment transactions in the domestic currency.
Transfer Pricing
The prices at which related parties exchange goods, services, or capital, which must reflect arm's-length market conditions.
Transport Allowance
An allowance an employer pays an employee for commuting costs, up to the prescribed tax-exempt amount.
Unemployment Insurance
A contribution that funds benefits for individuals who become unemployed.
Unique Identification Number
The unique ID number assigned to a business entity, used in all dealings with state institutions.
Unique Master Citizen Number
The unique personal ID number assigned to an individual, used for example in payroll processing.
Vacation Allowance
A cash allowance an employer pays an employee in connection with their annual leave.
Variable Costs
Costs that rise or fall directly in proportion to production or sales volume.
VAT (Value Added Tax)
A consumption tax applied in B&H at a uniform rate of 17% on the supply of goods and services.
VAT Identification Number
The unique number under which a taxpayer is registered for VAT with the Indirect Taxation Authority.
VAT Refund
A procedure in which a taxpayer, when input VAT exceeds output VAT, claims the difference back from the Indirect Taxation Authority instead of carrying it forward.
VAT Registration Threshold
The annual turnover amount (currently BAM 50,000) above which a business becomes obligated to register for VAT.
VAT Return
A periodic (monthly) calculation in which a taxpayer determines the difference between output and input VAT and submits it to the Indirect Taxation Authority.
Withholding Tax
A tax that the payer of income (e.g. dividends, interest, royalties to non-residents) withholds and pays directly to the tax authority on the recipient's behalf.
Write-off
The permanent removal of an asset or receivable from the books due to loss of value or uncollectibility.
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