Glossary of terms
Accounting, tax and audit terms used in Uzbekistan, explained in plain English. Search for a term or pick a section.
Trilingual glossary: Uzbek, Russian and English names in one table →
A
Abandonment (in insurance)
In marine and cargo insurance, giving up the insured property in favour of the insurer and claiming the full amount of the loss. It is used in the case of a "constructive total loss": the property has not been physically destroyed, but the cost of saving it or repairing it and delivering it to its destination exceeds its value. Under the United Kingdom's Marine Insurance Act 1906, the insured may choose in such a case: treat the loss as a partial loss, or abandon the property and recover it as if it were an actual total loss. To abandon, the insured must send the insurer a notice of abandonment; without the notice, the loss can only be treated as a partial loss. In an actual total loss (when the property has been destroyed) no notice is required.
Account
A table that tracks the movement of one type of asset, liability, equity, income or expense. Each account has a four-digit code.
Accountable person
An employee who has received an advance from the company for purchases, operating needs or a business trip and is obliged to report how it was spent. The money issued to the employee is recorded in accounts 4220–4290, and the company's debt to the employee in account 6970.
Accounting
A system for collecting, recording and summarizing in reports, on the basis of documents, information about a company's property, liabilities and business transactions.
Accounting policy
The set of methods and rules a company chooses for keeping its accounts, for example the depreciation method or the method of writing off goods. It is approved by an order of the company's head.
Accounting price (standard price)
A predetermined price at which materials are carried in day-to-day accounting instead of their actual cost: planned cost, average purchase price, wholesale price and others. It may be used when the range of materials is large, when internal movement is intensive, in agriculture and in other necessary cases; the difference from actual cost is accumulated in account 1610, and the purchasing process is reflected in account 1510 (NAS No. 21, paragraphs 88–89, 112–115).
Accounting register
A table, book or electronic form in which data from primary documents is recorded in grouped and orderly form. For small business entities, the forms of registers (the journal of business transactions, the record book and statements) are given in the appendices to NAS No. 20.
Accounts payable
Amounts that the company owes to others. For example, an amount not yet paid to a supplier for goods received.
Accounts receivable
Amounts that other persons and organizations owe to the company. For example, the debt of a customer who has received goods but has not yet paid for them.
Accrual basis
An approach under which a transaction is recorded not on the day money comes in or goes out, but in the period in which it actually took place. Income is recognised in the month the goods are delivered or the service is rendered, and expenses in the month the resource is used; when the money moved does not matter. Under NAS No. 1, all financial statements except the statement of cash flows are prepared on this basis. As a result, the statements give information not only about money paid, but also about amounts to be received and paid in the future: goods sold but not yet paid for appear in the balance sheet as accounts receivable, and services received but not yet paid for as accounts payable.
Accrued interest
Interest that has been accrued on loans and borrowings received but not yet paid. It accumulates on the credit side of account 6920 and is written off from the debit side when paid.
Accumulated profit
Profit (or uncovered loss) accumulated in previous years and left undistributed. After the reporting period's profit has been distributed to dividends and the reserve, the remainder is transferred from account 8710 to account 8720.
Acquiring (merchant acquiring)
A banking service that allows a retail or service business to accept payment by bank card. The bank providing this service is called the acquirer. It concludes an agreement with the business, connects a POS terminal or an online payment page, routes the payment authorisation request to the card network, and then transfers the received amount to the business's account. However, the full amount may not arrive: if the agreement provides for the acquirer's service fee (commission), it is withheld; its size and calculation method depend on the agreement. The cardholder is served by the bank that issued the card (the issuer), while the business is served by the acquiring bank. If a disputed payment arises (for example, the buyer asks for a refund), the acquirer manages this process on the business's side. For an accountant this has a clear practical meaning: money from card payments may arrive from the bank with the service fee already deducted, so the sales amount and the amount credited to the account differ.
Actuary
A specialist who uses probability theory and statistics to assess insurance risks and to calculate insurance rates and the reserves needed for the insurer's future obligations. Their calculations are important for the insurer to remain solvent.
Additional entry
A correction used when the accounts were chosen correctly but the amount was understated: with the same accounts, only the missing difference is recorded additionally. The original entry is not cancelled.
Additional paid-in capital
The part of equity, other than charter capital, that arises from transactions with owners. Under NAS No. 21 it is kept in account 8400 in two sub-accounts.
Administrative expenses
Expenses related to managing the company: wages of management staff, repair of fixed assets serving general management, rent for general business premises and others. They are accumulated in account 9420 and closed to 9910 at the end of the period.
Advance paid
A payment the company transfers to a supplier or contractor before receiving goods, work or services. Until the goods arrive, it is an asset of the company (a receivable) and is recorded in account 4300.
Advance payment of taxes to the budget
An amount paid to the budget before full settlement of taxes and levies. It is accounted for by type in account 4410; under NAS No. 21 this account also reflects the value added tax shown in the settlement documents for inventories purchased (paragraphs 189–190).
Advance received
A payment received from a buyer or customer before goods, work or services are delivered. Until the goods are delivered, it is not income but a liability of the company, and it is recorded in account 6310.
Advance received from share subscribers
Money received in advance from persons who have subscribed to buy shares that a joint-stock company is issuing, before the shares are allotted to them. Until the shares are allotted, this amount is a liability of the company and is kept in account 6320.
Adverse opinion
A type of modified opinion: it is expressed when the auditor concludes that misstatements in the financial statements are both material and pervasive. It means that the statements as a whole are not fairly presented.
Agency agreement
An agreement under which one party (the agent) sells the goods of the other party on its instructions for a fee; until sold, the goods remain the owner's property. The owner accounts for the goods dispatched in account 2960 (2830 if finished goods), and the agent keeps them off the balance sheet in account 004 (NAS No. 21, paragraphs 140 and 150).
Allowance for doubtful debts
A reserve created in advance for receivables that are unlikely to be collected. It is calculated at the end of the reporting year on the basis of the results of the stocktaking of receivables, assessing the debtor's ability to pay for each doubtful debt, and charged to expense 9430; account 4910 is a contra account to receivables (NAS No. 21, paragraphs 217–219).
Amount receivable under a claim
An amount the company demands from its counterparty (supplier, transport organization, bank and others). NAS No. 21 (paragraph 213) lists the following claims in account 4860: prices and tariffs in invoices that do not match the contract or price list, and arithmetic errors; shortages of cargo; defective products and downtime caused through the fault of a supplier or contractor; amounts wrongly debited by a bank; fines, penalty interest and forfeits recognized by the payer or awarded by an economic court. The amount of a claim not recognized by the payer is not reflected in the accounts (paragraphs 213–214).
Analytical accounting
Accounting that breaks down the total amount in a synthetic account by the individual items that make it up; for most accounts, the items by which it is kept are specified in the instructions of NAS No. 21. In particular, NAS No. 21 provides that analytical accounting for receivables (4000) is kept for each buyer (customer). The sum of the analytical accounts always equals the balance of the corresponding synthetic account.
Analytical procedures
A method of identifying unexpected changes or inconsistencies by comparing financial data with each other and with other information. The auditor first estimates the expected value and then looks for an explanation of the difference from the actual amount.
Analytical procedures
A test method in which the auditor compares financial information with other data and analyses the logical relationship between them. Under the international standard on auditing (ISA 520), they are evaluations of financial information through analysis of plausible relationships among both financial and non-financial data. The idea is simple: unless there is a clear cause, relationships between data persist over time. The auditor first forms their own expectation (for example, revenue should grow in line with the volume sold), then compares it with the figure in the report. If a large difference appears between the expected and actual value, or the relationship contradicts other data, the auditor must investigate the cause. The procedures are used both in risk assessment and in substantive testing. On their own they do not always prove that the amount being tested is correct: more often they show where to look deeper.
Animals being fattened
Animals being fattened for meat, as well as animals culled from the basic herd as unfit. They are accounted for in account 1120; the value of the weight gained is added to this account every month (NAS No. 21, paragraphs 106 and 108).
Animals being raised
Young animals not yet transferred to the basic herd. NAS No. 21 provides that, together with young animals, adult animals being fattened and on pasture, poultry, wild animals, rabbits, bee colonies and cattle are also accounted for in group 1100: those being raised in account 1110, those being fattened in account 1120; when transferred to the basic herd, they move to 0170 via 0840 (NAS No. 21, paragraphs 105 and 109).
Annuity repayment
A method of repaying a loan in equal amounts over the whole term. The interest share of each payment is largest at the start and decreases every month, while the principal share increases accordingly.
Arbitrage
Buying the same asset in a cheap market and simultaneously selling it in an expensive market in order to profit from the difference in its prices in different markets. There is arbitrage in currencies, securities, commodities and interest rates. When many participants simultaneously buy in the cheap market and sell in the expensive one, prices converge, so such a difference usually does not last long. In true arbitrage there is almost no risk; transaction costs and time differences can eat up the profit.
Arithmetic mean
An indicator found by dividing the sum of all values by their number. A single very large or very small value can shift the mean considerably.
Asset
A resource that a company owns or controls and that is expected to bring economic benefits in the future.
Associate (dependent company)
A company whose decisions another company can influence through its participation in the charter capital, but which it does not control as it would a subsidiary. NAS No. 8 calls it an "organization under influence (dependent)" and states that it does not apply to accounting for such investments (paragraph 3). An investment in an associate is kept in account 0630, and current settlements with it in account 4120 (NAS No. 21, paragraphs 56 and 177).
Audit
An examination of the reliability of a company's financial statements by an independent specialist (auditor), who then issues an opinion on them.
Audit evidence
The information an auditor gathers to reach an opinion: documents, confirmations, recalculations, and the results of observation and inquiry.
Audit plan
An internal document setting out which financial statement items the auditor will examine, with which procedures, when and by whom. The plan helps devote more time to high-risk areas and is updated if new information emerges during the audit.
Audit risk
The risk that the auditor issues an unmodified opinion when the financial statements contain a material misstatement. The auditor plans the audit to reduce this risk to an acceptable level.
Audit sampling
A method in which the auditor examines not all documents in a population but a part of them, and projects the result to the whole population. Large amounts are usually checked in full, and the rest are tested on a random or systematic sample basis.
Audit working papers
Written records of the work the auditor performed, the evidence obtained and the conclusions reached. They should be prepared so that an experienced auditor who did not carry out the audit can understand what was done and what the opinion is based on.
Auditor independence
The auditor's freedom from financial, family or other interests connected with the audited company, and the ability to form an opinion without anyone's influence. Independence must exist both in fact and in appearance: a connection that raises doubts among users is also dangerous.
Auditor's report
The official document prepared as a result of an audit. In it, the auditor gives an opinion on whether the financial statements are fairly prepared in all material respects.
Authorised economic operator
A legal entity that has obtained a special status in customs relations because it meets the requirements of legislation. Under the Customs Code, only legal entities can obtain this status. How the status is obtained, the criteria by which a company is selected for entry into the register, and which simplified procedures open up for the operator are determined by the Cabinet of Ministers. The register is kept by the State Customs Committee, which posts it on its official website and updates it "at least monthly". In essence, this is a trust-based relationship with customs: procedures are simplified for a company that consistently meets the requirements.
Auxiliary production
Production that supports and serves primary production or the main activity. NAS No. 21 (paragraph 124) provides that account 2310 is used for the costs of: supplying various types of energy; transport services; repairing fixed assets; making tools, dies, spare parts, building parts and structures, or enriching construction materials; extracting stone, gravel, sand and other non-ore materials; preparing timber and sawing it into boards; salting, drying and canning agricultural products. Their costs are accumulated in account 2310 and transferred to the costs of the unit that received the service (NAS No. 21, paragraphs 123–125).
B
Balance (of an account)
The balance of an account: the difference between total debits and total credits. There is an opening balance and a closing balance for a period.
Balance sheet
A report showing a company's assets and their sources (liabilities and equity) as at a certain date. In a balance sheet, total assets always equal total liabilities and equity.
Balance sheet total
The final total of the balance sheet: total assets, or the equal total of liabilities and equity. If the two sides do not match, this indicates an error in the accounts.
Bank
A financial institution that accepts funds from individuals and businesses, grants loans and processes payments. To operate, a bank obtains a license from the Central Bank.
Bank card
A means of payment used to pay without cash, transfer money and withdraw cash from funds in a bank account. With a debit card the holder spends the money in their own account; with a credit card the holder uses borrowed funds within a limit granted by the bank.
Bank guarantee
A bank's written undertaking: if the client fails to fulfil its obligation to a third party, the bank pays that party the amount stated in the guarantee. The bank charges the client a fee for this and then claims the amount paid from the client.
Bank statement
A document issued by the bank showing how much money came into and went out of the settlement account during a period and what the balance is. Entries for account 5110 are made on this basis.
Barter
The direct exchange of goods or services for other goods or services without the use of money. As Britannica notes, the exchange takes place at fixed ratios or by bargaining. The main difficulty of moneyless trade: each side must want exactly what the other has (the "double coincidence of wants"); money removes this problem because everyone accepts it. In accounting, under NAS No. 2, selling goods or services in exchange for other goods or services (barter) is a revenue-generating transaction; an exchange for goods of equal or similar value, however, does not generate revenue. In barter, revenue is recognised at the value of the goods or services received at current prices (adjusted for the amount of money transferred or received); where such a measurement is not possible, the value of the goods or services dispatched is used as the basis.
Basic herd
Adult productive and working animals kept as fixed assets. The costs of forming it (transferring young animals that have been raised, buying and delivering adult animals) are accumulated in account 0840 and then transferred to account 0170 (NAS No. 21, paragraph 71).
Beneficiary
The person granted the right to receive the insurance payout. It may be the policyholder or another person named in the contract.
Bill of exchange
A strict written debt obligation to pay a set amount within a stated term; a type of security. For the seller, a bill of exchange received from the buyer secures the receivable (4020, long-term portion 0910); for the buyer, the bill it has issued is an obligation to pay (6020, 7020). When it is used: when payment is deferred, to make the debt formal and reliable.
Bill of exchange issued
A bill of exchange that the company gave to a supplier instead of payment for goods, materials, work or services purchased. Until it is paid, the debt secured by the bill stays on the credit of account 6020 (if up to 12 months) or 7020 (long-term). On payment, the bill amount is debited to 6020 and the interest on the bill to 6920.
Bill of exchange payable
A bill of exchange the company gave to a lender in return for money received from it. The difference from a bill given for goods is that here the company receives cash. If the repayment term is up to 12 months, it is recorded in account 6840; if longer, in 7840.
Bill of exchange received
A bill of exchange that a buyer or customer has given to the seller as a payment document for goods sold, work performed or services rendered. The seller accounts for it as a receivable in account 4020 for the current portion and in account 0910 for the long-term portion; if it is not paid on time, a claim is made and it is transferred to account 4860 (NAS No. 21, paragraphs 77 and 172).
Bond
A debt security: the organization that issues it (the issuer) undertakes to repay the face value to the holder within a set term and usually to pay interest. The difference from a share: a bondholder is not a co-owner of the company but a lender.
Bond coupon
The interest that a bond's issuer pays the holder regularly until maturity. It is usually set as an annual percentage of the face value (the coupon rate) and may be paid once, twice or four times a year. The coupon is usually fixed when the bond is issued; even if the market price changes, the amount paid is calculated on the face value. That is why an investor who bought the bond below face value earns an actual yield above the coupon rate, while one who bought above face value earns less. Under the Tax Code, both the coupon and income in the form of a discount are treated as interest.
Bond discount
The difference that arises when a bond is bought for less than its face value. The company that bought it does not recognize this difference as income immediately: it stays in accounts 7210 (long-term) and 6210 (current portion) as deferred income and is transferred in instalments to account 9530 "Interest income" until the bond is redeemed. Only the buyer of the bond uses these accounts.
Bond payable
A liability for bonds the company itself issued and sold and must later repay to their holders. If the payment term is up to 12 months, they are kept at face value in account 6830; if longer, in 7830. The part sold above face value is recorded as a premium in account 6220 or 7220.
Bond premium (markup)
The excess amount a company receives when it sells a bond it has issued for more than its face value. The face value is recorded in account 6830 or 7830, and the excess in accounts 7220 and 6220 as deferred income, which is transferred to account 9530 in instalments until the bond is redeemed. Only the seller of the bond (the issuer) uses these accounts.
Break-even point
The sales volume at which revenue exactly covers all costs, so there is neither profit nor loss. It is found by dividing fixed costs by the margin per unit (price minus variable cost).
Budget
A plan of income and expenditure drawn up for a certain period. The state budget is formed from taxes and other receipts.
Budget Accounting Standard No. 13
Budget Accounting Standard (BHS) No. 13 “Consolidated Financial Statements” sets the procedure for preparing consolidated budget reports of budget organizations, state trust funds and other extra-budgetary funds. It is not intended for business entities: it is a budget accounting standard (BHS No. 13). Approved by Order No. 9 of the Minister of Finance dated 29 March 2022 (registered with the Ministry of Justice on 01.04.2022, No. 3361); in force from 1 January 2023.
Business plan
A document setting out the goal, market, product, organization and financial calculations of a new company or project. For the entrepreneur it serves as a road map, and for banks and investors it is the basis for deciding whether to fund the project.
Business trip
A trip by an employee, on the employer's order, away from the permanent place of work for a set period to carry out an official assignment. The advance issued for the trip is recorded in account 4220 and is closed after the trip with an advance report.
C
Capital adequacy ratio
The ratio of a bank's own capital to its risk-weighted assets. This indicator shows whether the bank can absorb unexpected losses from its own capital without touching depositors' money. Formula: capital ÷ risk-weighted assets × 100%. "Risk-weighted" means that each asset is taken not at its balance sheet value but multiplied by a risk weight: a low-risk asset (for example, a government security) is counted with a low weight, while an unsecured loan is counted with a high weight. The concept is based on the international approach developed by the Basel Committee on Banking Supervision. The minimum requirement and the risk weights are set by each country's central bank; for Uzbekistan, check the exact standards in the Central Bank's current regulation.
Capital investments
Expenses incurred to create, acquire and improve fixed assets and intangible assets and to form the basic herd that have not yet turned into a finished asset. They are accumulated in accounts 0810–0890; when the item is ready, they are transferred to the relevant fixed asset or intangible asset account (NAS No. 21, paragraphs 67–74).
Cargo customs declaration
A document submitted to customs by the declarant or customs broker, containing accurate information about goods being placed under a particular customs procedure. It is submitted in electronic form or on paper; the list of cases, goods and procedures in which paper declaration is allowed is set by the Cabinet of Ministers, and an electronic copy is attached to a paper declaration. The CCD may be used in preliminary declaration, and also as a short, provisional, incomplete or periodic declaration. In accounting, the CCD is one of the primary documents confirming the value of imported inventories and fixed assets.
Carrying amount (net book value)
The value of a fixed asset or intangible asset that remains after accumulated depreciation (amortization) is deducted from its initial cost.
Cash book
A register in which cash received into and paid out of the cash desk is recorded every day and the balance at the end of the day is calculated. NAS No. 20 states that the cash book is kept in the manner established by the rules for cash transactions of legal entities.
Cash collection
A service in which cash is taken from a company's cash desk to the bank by cash collectors and credited to its account. While the money has left the cash desk but has not yet reached the bank, it is "cash in transit".
Cash desk
The place in a company where cash is kept and where cash payments are received or made. National currency in the cash desk is accounted for in account 5010, foreign currency in account 5020: money received into the cash desk is reported in the debit, and money paid out of the cash desk or deposited with the bank in the credit (NAS No. 21, paragraph 222).
Cash disbursement voucher
A document confirming that cash has been paid out of the till. The person receiving the money signs it.
Cash equivalents
Under NAS No. 21, valuables kept in the cash desk: the standard lists them as "stamps, coupons and other cash equivalents" (paragraph 235). They are recorded in account 5610 at face value: the account is debited when they are purchased and, when used, they are written off to expense accounts.
Cash flow
The movement of cash into and out of a company during a certain period. Cash flow can be negative even when there is a profit, for example while customers have not yet paid.
Cash in transit
Cash that has left its place of storage but has not yet reached its destination: takings handed to a cash collector or a money transfer in transit. In NAS No. 21 it is recorded in account 5710; the standard calls this account a transit account (paragraph 238).
Cash receipt voucher
A document confirming that cash has been received into the till. It records the amount, from whom and on what basis the money was received.
Central bank
The state's principal bank that conducts monetary and credit policy. It issues the national currency, supervises commercial banks and sets the policy rate.
Certificate (act)
A document confirming a fact or a piece of work: work completed, property handed over, the result of an inventory count, or a reconciliation of debts.
Certificate of deposit
A document (often in the form of a security) confirming that money has been placed with a bank for a certain term and that at the end of that term the deposit amount will be returned with the agreed interest. It resembles an ordinary term deposit: the term and the interest are set in advance, and the interest is usually fixed. Withdrawing the money before maturity is often associated with a penalty or giving up part of the interest. Some certificates can be transferred to another person before maturity; this possibility is written in the terms of issue, so the terms should be read before buying.
Charter capital
The money value of the shares, the nominal value of stock and other contributions that the founders (participants) bring into the organisation's property to support the activity set out in its founding document. In a joint-stock company it is formed by shareholders (8310 ordinary, 8320 preferred shares); in a limited liability company and other forms, by participants (8330 units and shares). A contribution can be made in money, fixed assets, intangible assets, securities or inventories; a share not yet paid in is carried on account 4610 as the founders' debt.
Cheque book
A book issued by a bank with whose cheques a company makes payments from funds set aside (deposited) in advance. The money set aside for this purpose is accounted for in account 5520 (NAS No. 21, paragraph 232).
Clearing
Banks (or other participants) offsetting their claims and obligations to one another and paying only the remaining net difference. Britannica describes a clearinghouse as an institution set up by firms engaged in similar activities to offset their mutual transactions and limit payments to net balances. As a result of clearing, instead of each payment being made separately, a smaller amount is transferred at the end of the day, which reduces the bank's need for liquidity.
Co-insurance (coassurance)
Several insurers jointly accepting one large risk in shares agreed in advance. Usually one of them is the leader: it agrees the terms, services the policy and handles the claim, while the others cover their own shares. Each insurer is liable only for its own share. The difference from reinsurance: in reinsurance the policyholder concludes a contract with one insurer, which itself passes part of the risk to another company; in co-insurance all the insurers share the risk from the outset. Be careful: the English word "coinsurance" is sometimes also used in another sense, meaning that the insured person pays part of each loss himself.
Coefficient of variation
The ratio of the standard deviation to the mean, as a percentage. It helps compare the spread of data sets with different average levels.
Collateral (pledge)
Property against which the creditor may enforce recovery if a debt is not repaid. Collateral reduces the risk of a loan not being repaid, so a bank may grant a secured loan on more favourable terms than an unsecured one.
Comparative advantage
The ability of a country (or a person or company) to produce a product with less sacrifice (opportunity cost) than others. Britannica notes that this theory was developed in the 19th century by the British economist David Ricardo: if countries specialise in what they do relatively better and buy the rest, both sides gain from trade. Key conclusion: even if one country produces everything more efficiently than another (absolute advantage), trade can still be beneficial.
Competition
Rivalry among sellers in a market for buyers through price, quality and service. The stronger the competition, the less sellers can raise prices arbitrarily and the more they are compelled to improve quality.
Complementary goods
Goods that are consumed together, where one does not give full benefit without the other. Their sign is a negative cross elasticity of demand: if one good becomes cheaper, demand for the other rises, and if it becomes more expensive, demand falls. Cross elasticity = percentage change in demand for the second good ÷ percentage change in the price of the first good. A positive coefficient indicates substitute goods, a coefficient close to zero indicates unrelated goods. The larger the negative number in absolute value, the stronger the relationship. The relationship is not always symmetric and should be checked with market data, not guesswork. The business takeaway: a discount on one good often increases sales of the other.
Components and purchased semi-finished goods
Parts, details and semi-finished goods bought ready-made from outside to complete a product: they require assembly or further processing. They are accounted for in account 1020 (NAS No. 21, paragraph 91).
Compound interest
A method in which the interest calculated at the end of each period is added to the principal, and in the next period interest is calculated on this increased amount. With simple interest, by contrast, interest is always calculated only on the original amount.
Compulsory insurance
Insurance that, in cases established by law, a person must take out whether they want to or not. Its types, terms and rates are established by legislation; in voluntary insurance, by contrast, the parties agree on the terms between themselves.
Conditions for removal of goods from the customs territory
The Customs Code sets out the steps that must be completed before goods are sent abroad. First rule: goods may be removed only after they have been placed under the relevant customs procedure. Second rule: goods or a means of transport cannot be removed from the territory without passing customs control; control may also be carried out on the basis of the carrier's advance notice of its intention to remove the goods. Third rule: lodging the customs declaration and carrying out with the goods all further actions provided for by the Code, before the goods actually cross the customs border, are conditions of removal. If the goods are placed under the export procedure, additional requirements apply: payment of customs duties and compliance with economic policy measures, and removal of the goods in the condition they were in on the date the customs declaration was registered (except for changes resulting from natural wear or loss under normal conditions of transport and storage; Article 30). When removing the goods, the carrier must present to the customs authority the customs declaration or another document on the basis of which removal is permitted, as well as the documents required depending on the type of transport. The movement of national currency and currency valuables across the border is carried out separately, in accordance with the legislation.
Confidence interval
A range of values calculated from sample data to estimate an unknown indicator of the population (say, the mean). Instead of a single number (a point estimate), a "lower limit – upper limit" is given, together with a confidence level (for example, 95%). 95% means that if samples were drawn many times by this method and an interval calculated each time, about 95% of them would contain the true value. As the sample gets larger, the interval narrows, that is, the estimate becomes more precise.
Conservation (mothballing) of fixed assets
Placing a fixed asset into storage in the established manner so that it is temporarily not used. A mothballed item remains the company's property, but it is transferred to a separate account 0199 "Fixed assets in conservation (mothballed)" (NAS No. 21, paragraph 22). No depreciation is charged on fixed assets placed in conservation (NAS No. 21, paragraph 26).
Consignment of goods
A set of goods treated as a single whole for customs purposes. The Customs Code recognises a consignment in three cases: goods arriving at the address of one consignee under one transport document; goods sent under one postal waybill; goods carried by one individual in hand luggage and baggage. A consignment may consist of all the goods or a part of them. The practical importance of the term shows up in customs inspection: if part of a consignment declared as goods of one name is inspected, the result may be applied to the whole consignment. If the authorised person (the owner of the goods, a person with authority over the goods under the law, or a person acting on behalf of the owner under a contract or a power of attorney) does not agree with this, he or she has the right to demand an additional inspection of the remaining part.
Construction in progress
Costs accumulated for buildings and structures not yet completed and not yet put into service, and for equipment being installed. Regardless of whether construction is carried out by a contractor or by the company's own workforce, it is accounted for in account 0810; when the item is handed over, it becomes a fixed asset by the entry Dt 0100 – Ct 0810 (NAS No. 21, paragraphs 7 and 68).
Construction materials
Materials, structures and parts used in construction and installation work and in building or finishing buildings and structures. They are accounted for in account 1050; when used in construction, they become part of capital investment costs (0810) (NAS No. 21, paragraph 95).
Consumer price index
An index showing how much the price of a fixed set of goods and services bought by households (the consumer basket) has changed relative to the base period. The inflation rate is usually measured through this index; in actual calculation, each item is weighted by its share in expenditure.
Consumer surplus
The difference between the highest price a buyer is willing to pay for a good and the price actually paid. This is the buyer's "gain": he or she obtained the good more cheaply than he or she valued it. The concept was popularised by the economist Alfred Marshall, who regarded it as a measure of the extra benefit a person derives from his or her environment. At the market level, consumer surplus is shown as the area below the demand curve and above the market price line. If the price falls, the surplus of existing buyers increases and new buyers join; if the price rises, the opposite happens.
Contra-asset account
An account kept to reduce the value of an asset account and show its actual (carrying) amount. Its balance is on the credit side, but it is not a liability: in the balance sheet it is deducted from the asset's value.
Contra-equity (contra-liability) account
An account kept to reduce the value of a liability or equity account (for example, capital). Its balance is on the debit side.
Contractor and subcontractor
A contractor is an organization that performs work on the customer's order (construction, repair, installation, research and so on). If the general contractor hands over part of the work to another organization, that organization becomes a subcontractor. The general contractor also records its debt to its subcontractors in account 6010.
Contribution to increase the charter capital
Funds contributed by founders to increase the charter capital, where the change to the founding documents has not yet been state-registered. Until registration, this amount is the company's liability to the founder and stays in account 6630.
Control risk
The risk that a material misstatement that could occur in an assertion will not be prevented, or detected and corrected, on a timely basis by the company's internal control. Under ISA 200, control risk together with inherent risk makes up the "risk of material misstatement", and it depends on the company's own internal control: the auditor does not change it, only assesses it. The weaker the controls, the higher the control risk and the more the auditor has to extend his own substantive procedures. If the auditor intends to rely on controls, he confirms that they operate by means of tests of controls.
Copyright
The rights of authors and other right holders to works of science, literature and art (books, music, films, program code and others). In accounting, what matters is the right to use a work (to publish, reproduce, distribute it) that a company has bought from the author or another right holder: if it meets the recognition conditions in NAS No. 7, paragraph 6, it is accounted for as an intangible asset in account 0470.
Corporate profit tax
A tax that legal entities pay on their taxable profit.
Corporate profit tax expense
Corporate profit tax assessed on profit during the year (with advance payments and recalculation) is recorded as the company's expense on the debit of account 9810 and the credit of the account for payables to the budget. Other tax liabilities assessed on profit are recorded in account 9820. When the annual report is prepared, both accounts are closed to 9910.
Correlation
A relationship showing how two indicators change together. The linear correlation coefficient ranges from −1 to +1: close to +1, they rise together; close to −1, when one rises the other falls; close to 0, there is almost no linear relationship. Correlation does not prove cause and effect.
Correspondent account
An account of one bank opened with another bank (or with the Central Bank). Banks make payments to each other, including their clients' transfers to counterparties at other banks, through these accounts.
Cost (cost of production)
The total expenses incurred to produce a product or to purchase goods.
Cost of products (goods, work, services) sold
The cost attributable to finished products, goods, work and services sold in the reporting period. On sale, it is recorded on the debit of account 9110, 9120 or 9130 in correspondence with the finished goods (2800) or goods for resale (2900) accounts. At the end of the period these accounts are closed to 9910. Sales revenue minus the cost of products sold gives gross profit.
Costing (cost calculation)
Calculating the cost of one unit of a product, work or service by cost items. Costing is the basis for setting prices, planning profit and controlling expenses.
Counterparty
The other party with whom a company has concluded a contract or deal: a buyer, supplier, tenant, bank and others.
Covariance
An indicator showing how two variables change together. For each observation, the deviations of both variables from their own means are multiplied, and these products are averaged (for a full population divided by n, for a sample usually by n - 1). The sign gives the main information: if positive, the variables change in the same direction; if negative, in opposite directions; if close to zero, no linear relationship is noticeable. Its drawback: its value depends on the units of measurement, so the correlation coefficient is used to compare the strength of a relationship.
Credit (bank loan)
Borrowed money provided on condition of repayment, within a set term and usually with interest. Do not confuse it with "credit" in accounting (the right-hand side of an account).
Credit (in accounting)
The right-hand side of an account. In asset accounts a credit means a decrease; in liability and equity accounts it means an increase. Abbreviated as "Ct" ("Kt" in Uzbek). Do not confuse it with a bank loan.
Credit history
A set of information about the loans a person or company has taken in the past and how they were repaid. Before granting a new loan, banks assess the borrower's reliability on the basis of this history.
Credit line
An agreement under which a bank allows a client, over a certain period and within an agreed limit, to draw a loan in portions when needed rather than all at once. Interest is usually charged only on the amount actually drawn.
Credit risk
The probability that a borrower or other party to a transaction (counterparty) will not meet its obligation on the agreed terms, that is, will not repay the debt or interest on time and in full. For a bank this is the most fundamental risk, because its main asset is the loans it has issued. A bank manages credit risk by assessing the borrower (credit history, scoring), taking collateral and guarantees, spreading loans across industries and clients, and creating allowances for possible losses. The Basel Committee has set out principles for the management of credit risk in a separate document.
Credit scoring
A method by which a bank assesses the probability that a borrower will repay a loan on time, using a mathematical model to convert data about the borrower into points. The higher the score, the greater the likelihood of getting a loan and the more favorable its terms; this process is often automated.
Currency
A country's monetary unit. Foreign currency means the money of another country, for example the US dollar or the euro.
Current liability
A debt the company must settle within the next twelve months: to a supplier, to the budget, to employees, to a bank and others. In the chart of accounts, current liabilities are kept in accounts 6000–6900 and are shown in a separate section of the balance sheet.
Current portion of a long-term liability
The part of a debt under a long-term loan, borrowing, bond, bill of exchange or finance lease that must be paid within the next twelve months. It is transferred to account 6950, and the long-term liability decreases by this amount. This makes it clear on the balance sheet which debt will be paid soon.
Current ratio
The ratio of current (short-term) assets to current liabilities. It shows whether a company can cover its near-term debts from its working capital: if it is below 1, current debts exceed current assets.
Customs broker
A legal entity of Uzbekistan that, under a contract with the owner of the goods (the declarant) or an authorised person, performs customs clearance work on that person's instructions and on their behalf. The broker collects the documents, fills in and submits the CCD, and assumes the declarant's rights and obligations when the customs value is determined. The Customs Code specifically stresses that the broker's rights, obligations and liability set by law cannot be narrowed by the contract with the client. The broker must not disclose information received from the consignor or consignee of the goods that constitutes a secret protected by law, and must not use it for personal purposes.
Customs clearance
The set of operations performed by customs officials to ensure customs control over goods crossing the border: placing goods under the chosen procedure or closing a procedure, and calculating and collecting customs payments, are among them. Under the Customs Code it usually begins when documents are submitted to customs (for individuals the Code also provides for oral declaration) and ends once these matters between the customs authority and the declarant or authorized person have been settled. From the day the declaration is accepted and all necessary documents are submitted, the customs authority completes clearance and document checks within one working day; this period does not include the time taken by risk management measures and control by other state bodies.
Customs duty
A customs payment made when goods are imported across or exported across the customs border; under the Customs Code, customs payments include, along with duty, VAT, excise tax and customs fees. Duty rates are set by the President of the Republic of Uzbekistan. The rate may be ad valorem (a percentage of the customs value), specific (a fixed amount per unit of goods) or combined. In accounting for imported inventories and fixed assets, customs duties and fees paid are added to their cost (initial cost); only if the method of accounting for goods acquired for resale at purchase price has been chosen are such costs charged to period expenses (NAS No. 4, paragraph 30). The Customs Code lists the following types of customs duties:
Customs fee
A payment charged for the customs authority performing a specific action or procedure. The difference from duty: duty is paid for moving goods across the border, while a fee is paid for specific work performed by customs. For this reason, the Code requires that the amount of a fee not exceed the approximate cost of customs' expenses for that work. Fee rates are set by the Cabinet of Ministers. The Customs Code lists seven actions for which a fee is charged:
Customs procedure
A set of rules that determines what status goods crossing the border have from the customs point of view: whether the goods leave for good, come in temporarily, pass in transit or wait in a warehouse. The Customs Code defines a customs procedure as a "set of rules" and lists 16 procedures. The procedure is chosen by the authorized person (the owner of the goods or a person acting on the owner's behalf), and the declarant states the chosen procedure in the cargo customs declaration with a code. The classifier in Annex 3 to the instruction on completing the CCD gives the 16 procedures and their codes:
Customs territory and customs border
Customs territory: the land territory of Uzbekistan, its territorial and internal waters and the airspace above them. The limits of this territory are the customs border. The "importation" and "exportation" in the Customs Code are measured precisely against this border: moving goods across the customs border means bringing them into the customs territory or taking them out of it. There is an important exception: the territory may contain free customs zones and free warehouses, and goods placed in them are treated as located outside the customs territory for the purposes of paying customs payments and applying economic policy measures. In other words, even if goods physically stay inside Uzbekistan, from the point of view of payments they may not yet have "crossed the border".
Customs transit
The procedure under which goods are moved under customs control, without payment of duties and taxes and without application of economic policy measures, from one customs authority (of departure) to another (of destination). It covers two situations: carriage of imported goods across the territory of Uzbekistan (including through the territory of a foreign state), and movement of goods of Uzbekistan between two customs authorities at the border through the territory of a foreign state. Its code in the CCD is 80. Do not confuse it with a "transit account" in accounting: that is a different concept.
Customs value
The value of goods taken as the basis for calculating customs payments; it is determined by one of the methods established by law. The main method is the transaction value: the price actually paid or payable for the goods at the moment they cross the border, adjusted by adding or deducting the costs specified in the Code. If the main method cannot be applied, the other methods are applied in turn (the order of the deductive and computed value methods may be swapped). The Customs Code sets the following 6 methods for imported goods:
Customs warehouse
The procedure under which goods brought in from abroad and intended for subsequent export are stored under customs control in special premises (places), without payment of customs duties and taxes and without application of economic policy measures. This procedure allows the owner of the goods to wait without paying duty until a buyer is found or the next destination is determined. Its code in the CCD is 74.
D
Debit
The left-hand side of an account. In asset accounts a debit means an increase; in liability and equity accounts it means a decrease. Abbreviated as "Dt".
Declarant
A person who declares goods or a vehicle to customs in their own name, and also a person in whose name a declaration is submitted. In other words, the party answerable to customs for the information about the goods: even if a customs broker completed the document, the declarant remains the company in whose name the broker acted.
Deductible (franchise)
The part of a loss that the insurer does not cover and the policyholder bears. With an unconditional deductible, this amount is subtracted from every loss; with a conditional deductible, if the loss does not exceed the set amount, nothing is paid, and if it does, the loss is paid in full.
Defective output (rejects)
Products that do not meet quality requirements. The costs of correcting them and losses from rejects that cannot be corrected are accumulated in account 2610; after deducting the amount recoverable from the person at fault and the value of usable remnants, the rest is transferred to the cost of production. Warranty repair costs are also recorded in this account (NAS No. 21, paragraph 131).
Deferral or instalment payment of tax
The option of postponing the deadline for paying a tax or paying the amount in parts. Under the Tax Code it is granted to an interested person if their financial position does not allow them to pay the tax on time, but there are sufficient grounds to believe they will be able to pay within the period granted; for this, at least one of the grounds listed in part two of Article 100 of the Code must exist. If the ground is damage from a natural disaster, technological catastrophe or other force majeure circumstance, or a delay in budget financing (payment for a state order), no interest is charged on the debt; if it is granted on the basis of items 3, 3¹, 4, 5, 6 of part two or of part four, interest is charged on the amount of the debt based on the Central Bank's refinancing rate. The application is submitted to the relevant authorised body, and the decision is made within thirty days from the day the application is received. The decision states the amount of the debt, the tax for which it is granted, and the procedure and deadlines for paying the debt and interest; at the request of the authorised body, pledge documents, a letter of surety or a bank guarantee are submitted. There is also a separate rule: a legal entity or individual entrepreneur is entitled to pay tax additionally assessed as a result of a tax audit or desk tax audit in equal instalments within six months from the day the decision enters into force; for this, a notification is sent to the tax authority. The deferral ends early if the tax and interest are paid in full; if the conditions are breached, it may be terminated early by decision of the authorised body.
Deferred corporate profit tax
An amount of corporate profit tax that arises because income or expenses are recognized in different periods in financial accounting and in tax accounting (temporary differences). The portion that will reduce tax in the future is accounted for as an asset in account 0950 (current portion 3210), and the portion to be paid in the future as a liability in account 6250 (long-term portion 7250) (NAS No. 21, paragraphs 81, 163 and 267).
Deferred expenses
Amounts already incurred that are transferred to expenses gradually in later periods and that are not among prepaid expenses (3100): deferred corporate profit tax, bond discount, preparation for seasonal production, land reclamation costs and others. The long-term portion is in accounts 0950–0990, the current portion in accounts 3210–3290 (NAS No. 21, paragraphs 162–165).
Deferred income
Income received (or accrued) in the reporting period but relating to future periods: rent, tickets sold, magazine subscriptions and so on. Until the goods are delivered or the service is rendered, it stays in account 6230 (the long-term part in 7230), and is then transferred to account 9010, 9020 or 9030 as income; deferred rental income, however, is transferred to account 9350 or 9550 in the relevant period.
Deferred liability
A liability that has arisen now, but whose payment or conversion into income is postponed to later periods. Under NAS No. 21 (paragraph 262), the current portion is kept in six accounts: 6210 "Deferred income in the form of discounts", 6220 "Deferred income in the form of premiums (markups)", 6230 "Other deferred income", 6240 "Deferred liabilities for taxes and levies", 6250 "Deferred corporate profit tax liabilities on temporary differences" and 6290 "Other deferred liabilities". The long-term portion is kept in the corresponding accounts of the 7200 group (7210–7290).
Deferred liability for taxes and levies
A debt to the budget for taxes and levies whose payment date has been allowed to be postponed in accordance with the law. The portion deferred for several years is kept in account 7240, and the portion payable within the next 12 months in account 6240; they correspond with accounts 6400 and 6500.
Deflation
A continuing fall in the general price level, i.e. the opposite of inflation. It should be distinguished from disinflation: under disinflation prices keep rising, only more slowly.
Demand
The quantity of a good that buyers are willing and able to purchase at various prices over a certain period. Other things being equal, when the price rises, the quantity demanded usually falls (the law of demand).
Deposit
Money placed with a bank for a certain term or until demanded. The bank uses this money in its activities and, under the contract, pays interest to the depositor.
Depreciable amount
The part of a fixed asset that is charged to expenses through depreciation over its useful life. Under NAS No. 5 it is found by deducting the residual value from the initial cost (or another amount substituted for it in the financial statements). The logic is simple: the amount recovered at the end of the period by selling or scrapping the asset is not written off to expenses. If the initial cost of the asset was later increased by capital expenditure, the calculation starts differently: the residual (carrying) amount on the day the works were completed and the asset was put back into operation is taken, and the residual value is deducted from it. Depreciation continues until this amount is fully recovered or the asset is derecognised.
Depreciation / amortization
Allocating the cost of a fixed asset or an intangible asset to expenses in portions over the period during which it is used.
Desk tax audit
An audit that the tax authority conducts at its own office on the basis of the returns and other information submitted by the taxpayer. No visit is made to the company.
Details (requisites)
Mandatory data identifying a document or an organization: name, TIN, bank account number, address, date, number, signature.
Detection risk
The likelihood that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement that exists and could be material. Unlike inherent and control risks, this risk is managed by the auditor themself: by changing the nature, timing and extent of procedures. Under the audit risk model, the higher the risk of material misstatement, the lower the acceptable detection risk must be, and therefore the more extensive substantive testing must be.
Devaluation
A fall in the value of the national currency against foreign currencies. In the narrow sense it means the state lowering the official rate under a fixed exchange rate regime; in the broad sense, any depreciation of the national currency. As a result, imports become more expensive, while exports become cheaper for foreign buyers.
Differentiated repayment
A method in which the principal is repaid in equal portions every month and interest is charged on the remaining debt. Therefore the first payment is the largest and the following ones decrease; total interest comes out slightly lower than with an annuity.
Direct tax
A tax levied directly on income or property, the burden of which falls on the taxpayer itself. Examples: corporate profit tax, personal income tax, property tax.
Disclaimer of opinion
A type of modified opinion: it is expressed when the auditor could not obtain sufficient appropriate evidence and the possible effects could be both material and pervasive. In this case the auditor does not say whether the statements are correct or incorrect.
Discount (on bonds)
The difference that arises when a bond is sold or bought at a price below its face value. The issuer transfers it, as a deferred expense (0960, current portion 3220), to expenses over the redemption period; the buyer recognizes it gradually in income as deferred income (NAS No. 21, paragraphs 164 and 263).
Discount granted to buyers
A price reduction granted to a buyer under the terms of the contract or because a defect was found in the goods sold. Account 9050 is a contra account (contra-liability type) in relation to the 9000 group: its debit turnover reduces sales revenue and it corresponds with receivable accounts.
Discounting
Bringing money to be received in the future to its present value: the future amount is divided by (1 + rate) raised to the power of the number of periods. It is the inverse of compound interest.
Disposal of assets
The removal of a fixed asset or other asset from the company's books: under NAS No. 21 (paragraph 391) these cases are: liquidation, sale, exchange, transfer free of charge, transfer to the charter capital as a contribution, transfer as a property contribution when forming the property of a non-governmental non-profit organization, transfer under a finance lease, including a leasing agreement, a shortage or loss identified, and settlement with fixed assets when a participant withdraws from the participants of a legal entity. Account 9210 is used for fixed assets and 9220 for other assets; if the result is a gain it goes to 9310/9320, if a loss, to 9430.
Diversification
Spreading money or a business across several different areas to reduce risk. If one area makes a loss, the others partly offset it.
Dividend
The part of a company's net profit distributed among its founders or shareholders.
Dividend yield
The ratio of the dividend paid per share for one year to the current market price of the share, in percent. It answers the investor's question "if I buy the share at today's price, how much will I earn from dividends alone". The indicator measures only dividend income: a rise or fall in the share price is not included in it. When the price falls, the yield appears to rise even if the dividend does not change, so it should be assessed together with the company's condition.
Dividends payable
The amount of dividends not yet paid after a decision to pay them has been declared. Under NAS No. 21 (paragraph 281), after the organization's management declares a decision to pay dividends, this amount is shown as a current liability: Dt 8710 – Ct 6610. On payment, 6610 is debited.
Double-entry bookkeeping
The basic rule of accounting: every business transaction is recorded in the debit of one account and in the credit of another account for the same amount.
Due diligence
A taxpayer's obligation to check a counterparty in advance when choosing it. The Tax Code lists what has to be checked: whether the counterparty is registered with the tax authorities as a taxpayer; its business reputation; whether it has a production base and employees; its financial condition; whether it is able to perform its obligations under the transaction. The tax consequence of this requirement is important: if the counterparty has failed to perform its obligation and the taxpayer did not exercise due diligence when concluding the transaction, the expenses (losses) under that transaction are not recognised for tax purposes. The tax authorities provide access to information on whether the counterparty is registered with a tax authority and to other information in the manner established by the State Tax Committee.
Duration (bond)
The weighted average, by their present value, of the time until all cash receipts on a bond (coupons and face value) arrive, measured in years (Macaulay duration). For a coupon bond, duration is shorter than the maturity, because part of the money arrives earlier; for a zero-coupon bond it equals the maturity. Practical meaning: the longer the duration, the more strongly the bond's price changes when the interest rate changes. A longer maturity increases duration, while a high coupon and a high yield reduce it.
Duty-free trade
A customs procedure under which goods are sold at retail in special shops at places designated by customs, while remaining under customs control, without payment of duties and taxes and without application of economic policy measures. The range of people who may buy in such a shop is limited: individuals leaving and entering the customs territory, foreigners temporarily staying in Uzbekistan, and foreigners accredited with the Ministry of Foreign Affairs. Sales to persons not crossing the state border and to non-accredited foreigners are not allowed. Goods under this procedure are declared only by the person holding the shop licence; the goods must bear a special stamp and be pre-packaged for retail sale. Its code in the CCD is 72.
E
Earmarked receipts
Non-repayable funds received on condition that they are used for a specific purpose: grants, subsidies, membership fees, tax benefits for targeted use and other earmarked receipts. Under NAS No. 21, there are three conditions for them to be shown as equity: the funds are used for their intended purpose, there are no costs associated with raising them, and they are not repayable if the conditions are met. They are kept in account 8800.
EBITDA
Profit before deducting interest expense, corporate profit tax, and depreciation and amortization of fixed assets and intangible assets (Earnings Before Interest, Taxes, Depreciation and Amortization). It is used to compare the ability of companies with different debt loads and depreciation policies to earn money from their core operations; it is not an official financial statement indicator.
Economies of scale
The decrease in the average cost per unit of output as the volume of production grows. The main reasons: fixed costs (rent, equipment, management) are spread over more output, raw materials are bought more cheaply in large volumes, and the division of labour and specialisation increase efficiency. The reverse also happens: if a company grows excessively large and becomes hard to manage, average cost may rise again (diseconomies of scale).
Electronic digital signature
An electronic attribute that confirms who signed an electronic document and that it has not been altered after signing. Tax returns and electronic invoices are signed with an EDS; the key and password must be kept secret.
Emphasis of matter
A separate paragraph in the auditor's report: the auditor draws attention to a matter that is properly disclosed in the financial statements but is so important that it is fundamental to users' understanding. This paragraph does not modify the auditor's opinion.
Engagement letter
A written document agreed between the auditor and the client before the audit begins: it records the objective and scope of the audit, the responsibilities of the auditor and of management, and the form of the report to be issued. It later prevents disputes of the "was checking this agreed?" kind.
Entity with foreign capital participation
An organization in whose charter capital a foreign investor holds a share. A company accounts for its long-term investment in such an organization separately in account 0640 (NAS No. 21, paragraph 56); the analytical accounting must provide information on investments within the country and abroad (paragraph 59).
Equipment accepted for installation
Equipment a contractor has received from the customer for installation. Because it is the customer's property, the contractor keeps it in off-balance sheet account 005 at the price in the customer's document; analytical accounting is by facility or unit.
Equipment for installation
Equipment that requires installation to start working, that is, it is assembled and fixed to a foundation, floor or building structure. Until it is handed over for installation it stays in account 0710 (domestic) or 0720 (foreign); equipment that does not require installation (vehicles, free-standing machine tools and others) is not recorded in this account but directly in 0820 (NAS No. 21, paragraphs 61–64).
Equity
The part of a company's assets that remains to the owners after all liabilities have been deducted. NAS No. 21 defines it briefly: "the difference between the assets and liabilities of an organisation". Under the standard, equity may increase or decrease both through additional investment by the owners and as a result of the company's activities. The "Equity" section of the chart of accounts consists of the following groups: 8300 "Charter capital", 8400 "Additional paid-in capital", 8500 "Reserve capital", 8600 "Treasury shares (repurchased own shares)" (contra-equity), 8700 "Retained earnings (uncovered loss)", 8800 "Targeted receipts", 8900 "Provisions for future expenses and payments". On the balance sheet it forms part of the liabilities side, but unlike debt it has no repayment date.
Equity ratio (financial independence ratio)
The ratio of equity to total assets. It shows what share of assets was formed from the company's own funds and what share from borrowings: the higher the ratio, the less the company depends on creditors.
Escrow account
An account in which money (sometimes documents or property) is held by a neutral third party, usually a bank, until a condition agreed by the parties to a transaction is fulfilled. The money has left the buyer but has not yet passed to the seller: the third party holds it and, once a document confirming that the condition has been met arrives, transfers it to the seller, or returns it to the buyer if the condition is not met. This reduces the risk for both parties: the seller is confident that the money exists, and the buyer does not fear that the money will be gone before the item is handed over. It is widely used in real estate, business acquisitions and large supply contracts. The conditions, the term and the third party's fee are written in a separate agreement.
Events after the reporting period
Events, favourable or unfavourable for the company, that occur between the end of the reporting period and the date the financial statements are authorised for issue. They are of two types: events that confirm a condition that already existed at the reporting date (the figures in the statements are adjusted) and conditions that arose after the reporting date (the figures are not adjusted; if material, they are disclosed in the notes). The auditor, for their part, performs separate procedures under ISA 560 to identify events in this period and also responds to facts that become known after the date of the report.
Exchange difference
The difference in soum that arises when an amount in foreign currency is converted into soum because the exchange rate has changed. Under NAS No. 22, it is recognised as income (9540) or expense (9620) from financing activities.
Exchange difference on formation of the charter capital
The amount arising from the difference between the Central Bank exchange rates on the date the founding documents were registered and on the date the money was actually contributed, when a founder contributes a share to the charter capital in foreign currency. A positive difference is recorded in account 8420 as additional capital; a negative difference is covered first from the positive difference in this account, and any excess from account 9620.
Excise tax
An indirect tax paid on goods designated in the Tax Code as excisable. It is included in the price, so its burden usually passes to the buyer, fully or partly depending on market conditions. Taxpayers, the list of excisable goods and the rates are established in the Tax Code.
Expense report (advance report)
A report in which an employee shows, with receipts and documents, how the money (advance) received from the company was spent. The unspent part is returned to the till.
Expenses deductible from the tax base in future periods
Expenses that are included in the tax base in the current period but are deducted from taxable profit in subsequent reporting periods. They are tracked in off-balance sheet account 012; analytical accounting must provide information on the type of expense, its amount and the deduction period.
Expenses for issuing and placing securities
The company's costs related to issuing its own shares or bonds and placing them with investors. They are recorded on the debit of account 9630 in correspondence with liability or cash accounts.
Export (customs procedure)
A customs procedure under which goods of Uzbekistan are taken out of the customs territory without an obligation to bring them back in. According to the Customs Code, goods placed under this procedure that have actually left across the border "lose the status of goods of Uzbekistan". Requirements and conditions for placement under the procedure: payment of customs payments and compliance with economic policy measures; other requirements and conditions under legislation may also be imposed. The goods must leave in the condition they were in on the day the customs declaration was registered, except for natural wear or reduction under normal conditions of transport and storage. The list of documents required for the procedure is set by the Cabinet of Ministers.
External audit
An examination of the reliability of financial statements by an independent audit firm. The result is an auditor's report for founders, banks and other users.
External confirmation
The auditor's request to a third party (a debtor, creditor or bank) to confirm in writing, directly, an amount in the company's books. The reply comes directly to the auditor rather than through the company, which is why it is considered strong audit evidence.
Externality
A benefit or harm that one person's economic activity causes to third parties who did not take part in the transaction, and that is not reflected in the price. With a negative externality the harmed party receives no compensation (for example, noise, pollution); with a positive one the benefiting party pays nothing (for example, bees feeding from a neighbour's orchard). Because the price does not take such consequences into account, the market allocates resources incorrectly: a good with a negative effect is produced more than needed, and a good with a positive effect less than needed. That is why the state intervenes through taxes, fines, subsidies or standards.
Extraordinary gain (loss)
A gain or loss arising from random and unexpected events that differ sharply from the company's ordinary activities. A gain is shown on the credit of account 9710, a loss on the debit of account 9720; at the end of the period both are closed to 9910.
F
Face value
The value stated on a security and set when it is issued. Depending on demand and supply, the market price may be above or below face value.
Factoring
A company transferring its accounts receivable (amounts to be received from buyers) under a contract to a factor (a bank or finance company) and receiving money before the payment date. As Britannica points out, in factoring the receivables are not pledged as collateral for a loan but are sold together with the responsibility for collecting them. The factor charges a discount or commission for its service, so the company receives not the full amount of the debt but less than it.
Fair value
The market price of an asset or liability. NAS No. 5 defines it as follows: "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". The key point: fair value looks not at how much money the company spent on the asset, but at how much the market would give for it today. In fixed asset accounting it is used in several places: the initial cost of a fixed asset received free of charge (as a gift) is determined on the basis of fair value; if the revaluation method is chosen, a fixed asset is carried at an amount based on its fair value at the revaluation date; an unrecorded fixed asset found during a stocktake is also measured at the fair value of similar assets.
Field tax audit
A tax audit in which tax officials visit the company and examine documents, property and transactions on site. The result is documented in an audit certificate (act).
FIFO method
An inventory valuation method: the cost of units issued includes first the cost of the inventories purchased earliest, while the closing balance remains at the prices of the most recent purchases. One of the methods provided for in NAS No. 4.
Final financial result
The net profit or loss at the end of the reporting year after the expenses of the main activity, financial activity and extraordinary items are deducted from their income. Expenses and losses are accumulated on the debit of account 9910 and gains on its credit; the balance shows the net result and is closed to account 8710.
Finance lease
A lease relationship in which property is provided under a contract for possession and use for a term of more than twelve months, where the contract must meet one of the following four conditions (NAS No. 6, paragraph 6). Leasing is a special type of finance lease (NAS No. 6, paragraph 8). The lessee reports such an item on its own balance sheet in account 0310, and the liability in accounts 6950 and 7910 (NAS No. 21, paragraphs 33–35).
Financial leverage
Using borrowed funds alongside own capital to finance a business, and its effect on return on equity. If the return on assets is higher than the interest rate on the debt, leverage increases the owners' return; if it is lower, it also magnifies losses.
Financial statements
A set of reports that present to users information about a company's financial position, results of operations and cash flows. Under NAS No. 1 (paragraph 12), the annual set of financial statements consists of the following reports:
Financing activities
Activities that change the size and composition of an organisation's equity and borrowed funds. Under NAS No. 9, bank loans received belong to these activities.
Fine
Money paid by a party that has breached contract terms to the other party. NAS No. 21 reflects this as follows: under paragraph 398, fines, penalty interest, surcharges and other types of penalties collected from debtors for breaching the terms of business contracts are recorded on the credit of account 9330 "Fines, penalties and surcharges collected" in correspondence with cash or receivable accounts; under paragraph 303, the company's debt for fines, penalty interest and liquidated damages it has acknowledged (or that have been recognized) is kept in account 6960 "Payments on claims"; under paragraph 410, fines and penalty interest are included in 9430 "Other operating expenses".
Finished goods
Products whose production process is fully completed, that have been delivered to the warehouse and are ready for sale. Under NAS No. 21 they are recorded in account 2810 at actual production cost.
Fiscal policy
The government's influence on the economy through public spending and taxes. When the economy slows down, increasing spending or cutting taxes (expansionary policy) may be used, and when it overheats, the opposite (contractionary policy).
Fixed asset (property, plant and equipment)
A tangible asset used for more than one year: buildings, equipment, vehicles, computers and the like.
Foreign currency account
A company's account opened with a bank in a foreign currency. Foreign currency accounts at banks within the country are accounted for in account 5210, and those abroad in account 5220 (NAS No. 21, paragraphs 227–228); on revaluation an exchange difference arises.
Founder (participant)
A person who established a company and contributed a share (stake) to its charter capital or subscribed for its shares: a shareholder of a joint-stock company, a participant of an LLC, partners of a partnership and others. The charter capital is the total of the funds contributed by the founders (participants); a share they have not yet contributed is held as a debt in account 4610 (NAS No. 21, paragraphs 196–197 and 344).
Founders' debt for contributions to the charter capital
The amount of contributions that founders have pledged to the charter capital but have not yet paid in. NAS No. 21 requires this debt to be kept on account 4610 "Founders' debt for contributions to the charter capital". The logic is simple: after the company is registered, account 4610 is debited and the charter capital accounts (8300) are credited for the amount of the declared charter capital. When a founder pays in a contribution in cash, account 4610 is credited and a cash account is debited. If the contribution is made in property, account 4610 is linked with the account recording the contributed asset: fixed assets, construction in progress or equipment to be installed, intangible assets, long-term or short-term investments, inventories. If the contribution is withheld from the founder's wages, account 4610 is linked with account 6710 "Payroll settlements with employees". Analytical records are kept separately for each founder, so it is always clear who owes how much.
Franchising
An agreement under which one company (the franchisor) grants another (the franchisee), for a fee, the right to use its brand, trademark and way of doing business. This right purchased by the franchisee is accounted for as an intangible asset in account 0460 if it meets the recognition conditions in NAS No. 7, paragraph 6.
Fraud
An intentional act involving deception to obtain an unjust or illegal advantage. In auditing, misstatements resulting from fraud are of two types: intentional misstatement of the financial statements (fraudulent financial reporting) and misappropriation of assets. Unlike fraud, an error is unintentional.
Free customs zone
A customs procedure under which goods are placed and used in a designated place or territory without payment of customs duties and taxes and without application of economic policy measures. Under the Code, any goods may be placed under this procedure; the exceptions are goods prohibited from import into the customs territory and goods of Uzbekistan prohibited from export, and in addition the procedure does not apply to goods of Uzbekistan needed to support the operation of the zone. Goods may stay under the procedure for an unlimited period. Operations within the zone and customs payments are governed by the legislation on free economic zones, and retail trade is prohibited except in the cases specified by law. Its code in the CCD is 71.
Fuel (in accounting)
Petroleum products and fuels and lubricants (petrol, diesel, oil and others), solid fuel (coal, firewood) and gaseous fuel, as well as waste used as fuel. They are accounted for in account 1030; fuel received with fuel coupons is also recorded here (NAS No. 21, paragraph 93).
G
General average
An extraordinary sacrifice or expenditure made intentionally at sea to save the ship and cargo from a common danger, together with the sharing of its loss among all the interested parties. For example, part of the cargo is thrown overboard in a storm to lighten the ship: the others were "saved" at the expense of the owner whose cargo was jettisoned, so the loss does not remain on that owner alone. The United Kingdom's Marine Insurance Act 1906 defines a general average loss as a loss caused by or directly consequential on a general average act; it includes both the property sacrificed and the expenditure incurred. Each participant (the shipowner, each cargo owner) pays a share in proportion to the value saved. This differs from particular average: in particular average the loss is borne only by the party that suffered it (or its insurer).
General ledger
The main accounting register in which monthly turnover and balances for all synthetic accounts are summarized. Financial statements are prepared from this data.
Geometric mean
The n-th root of the product of n positive numbers. It is especially needed for averaging growth rates: each year's growth is multiplied by the previous year's result, not added to it. That is why the simple arithmetic mean of percentage growth rates overstates the true average rate, while the geometric mean gives the constant annual rate that leads exactly from the initial value to the final value. In business this indicator is also called the "compound annual growth rate" (CAGR). For positive numbers the geometric mean is never greater than the arithmetic mean; the two are equal only when all the numbers are equal.
Going concern
The principle that financial statements are prepared on the assumption that the company will continue its operations in the foreseeable future. Under NAS No. 1, management assesses the ability to continue operations when preparing the statements; if it is aware of material events or conditions affecting this, it discloses them in the notes to the statements.
Goods (in accounting)
Inventories purchased for resale or for renting out. Even at a manufacturing company, an item is accounted for as goods if it was specifically purchased only for sale. They are kept in accounts 2910–2990 (NAS No. 21, paragraphs 142–143).
Goods in transit
Goods that belong to the company at the end of the reporting period but have not yet reached its warehouse. They are accounted for in account 2970 (NAS No. 21, paragraph 151); when the goods arrive, they are transferred to the relevant warehouse account.
Goodwill
An intangible asset that arises when a business is acquired, as the difference between the purchase price and the fair value of the assets acquired. Under NAS No. 21 it is recorded in account 0480 and written off monthly over its useful life.
Grant
Money or material resources given free of charge by government, non-governmental, foreign and international organizations and funds for social purposes, economic development, and scientific, technical and innovation programmes. It is used only for its designated purpose. When notice of the grant is received: Dt 4890 – Ct 8810.
Gross domestic product (GDP)
The market value of all final goods and services produced within a country's territory over a certain period. GDP is calculated by the production, income and expenditure methods; only final products are counted so that intermediate products are not counted twice.
Gross profit
The difference between net sales revenue and the cost of products sold. Period expenses have not yet been deducted.
Growth rate
The ratio of the current period's indicator to that of the previous (or base) period, in percent. Subtracting 100 from it gives the rate of increase, which shows by how many percent the indicator has changed.
H
Hedging
Entering into a transaction in the direction opposite to the main position in order to reduce the loss from changes in a price, exchange rate or interest rate. The aim is not to make a profit but to make the outcome predictable: if the main transaction makes a loss, the hedging transaction makes a profit that offsets it, and vice versa. This has a price: if the price moves in a favourable direction, the hedge also takes away the extra gain. Derivative financial instruments are often used for this; the forward contract in the example below is one of them.
Histogram
A chart showing the distribution of quantitative data by intervals: a bar is drawn for each interval; when the intervals are of equal width, its height corresponds to the number of observations (frequency) in that interval, and when widths differ, the frequency is shown by the bar's area. Unlike an ordinary bar chart, the bars touch each other, because the intervals divide a continuous scale.
I
IFRS
International financial reporting standards applied in many countries. They set out how financial statements are prepared and how the figures in them are measured.
Income from revaluation of securities
Income that arises when the value of securities the company holds as short-term investments increases. It is recorded on the credit of account 9560 in correspondence with short-term investment accounts.
Incoterms
Rules issued by the International Chamber of Commerce (ICC) that express in short three-letter abbreviations where the seller and buyer hand over the goods, at which point risk passes to the buyer, and who bears the costs of carriage, insurance and clearance. They do not replace the sale contract: matters such as payment terms, transfer of ownership and liability are agreed in the contract itself. In the CCD the delivery terms are shown with a numeric and a letter code under the classifier in Annex 7 to the instruction. The Incoterms 2020 edition contains 11 rules:
Index
A relative measure that compares the current level of an indicator with a chosen base level. Usually the base period is taken as 100 and the current period is expressed relative to it.
Indirect tax
A tax that is added to the price of goods or services and is ultimately paid by the consumer. The seller collects it and transfers it to the budget. Examples: VAT and excise tax.
Individual entrepreneur
A person who carries on business without forming a legal entity, registered as an individual. Under Presidential Decree PF-21 of 10 February 2023, individual entrepreneurs are small business entities.
Industrial design
An artistic and design solution relating to the appearance of an item: its shape, pattern, combination of colours. The exclusive right to it is certified by a patent and accounted for as an intangible asset in account 0420 (NAS No. 7, paragraph 10).
Inflation
A rise in the general level of prices. As a result of inflation, the same amount of money buys less than before.
Inherent risk
The susceptibility of an assertion about a class of transactions, account balance or disclosure to a material misstatement before consideration of any related controls. This risk stems from the nature of the company's business and of the item: for example, it is higher where there are complex calculations or large estimation uncertainty. Under ISA 200, inherent risk together with control risk makes up the "risk of material misstatement"; the auditor does not create this risk but only assesses it.
Initial cost
The total of all costs incurred to acquire a fixed asset and prepare it for use: purchase price, delivery, installation and so on.
Input VAT
VAT that a company pays to a supplier as part of the price when it buys goods, work or services. A VAT payer under the general regime, when the conditions set by law are met, deducts it from the VAT on sales and pays only the difference to the budget.
Insurable interest
The policyholder's real financial interest in the preservation of the property or person being insured: if the property is lost or damaged, the policyholder personally suffers a financial loss. This principle keeps insurance from turning into a gamble: one cannot take out insurance "betting" on someone else's house burning down. The interest may arise not only from ownership but also from a lease, pledge or debt relationship.
Insurance agent
A person or organization that, on behalf of and on the instructions of an insurer, offers insurance to clients and helps conclude contracts. The agent represents the insurer's interests and usually receives a commission from it.
Insurance broker
An intermediary who works in the interests of the client (policyholder), comparing offers from different insurers and helping choose the most suitable terms. The difference from an agent: the agent is on the insurer's side, while the broker is on the client's side.
Insurance payments (company's payable)
Amounts the company must pay, but has not yet paid, to an insurance organization under contracts insuring its own property and employees, as well as its civil liability to third parties. They are recorded on the credit of account 6510 in correspondence with expense accounts; analytical accounting is kept for each insurer and contract.
Insurance payout
The money the insurer pays under the contract when an insured event occurs. Its amount is determined on the basis of the size of the loss, the sum insured and the terms of the contract (for example, a deductible).
Insurance policy
A document confirming that an insurance contract has been concluded. It usually states who is insured, what is insured, the term, the sum insured and the premium; nowadays it is often issued in electronic form.
Insurance premium
The fee the policyholder pays the insurer for insurance cover. Although in Uzbek it is called "mukofot" (literally "reward"), it is not money the policyholder receives but money the policyholder pays.
Insurance rate
The rate of insurance premium charged per unit of the sum insured; it is usually expressed as a percentage or as so many soum per 100 soum of the sum insured. The rate is calculated by the insurer depending on how large the risk is.
Insured event
An event specified in the insurance contract whose occurrence gives rise to the insurer's obligation to pay. An event not specified in the contract is not an insured event.
Insurer
An organization that receives the insurance premium and undertakes to pay the amount agreed in the contract when an insured event occurs.
Intangible asset
An asset without physical form that nevertheless has value and brings benefits over a long period: software, licenses, patents, trademarks.
Intangible asset received under a right of use
An intangible asset the company has received for temporary use under licence, copyright and similar agreements, but of which it is not the owner: the right to use a trademark for a certain period and territory, technological software, an industrial design and so on. It is kept on the debit of off-balance sheet account 016 at the contract price and credited when returned.
Interest expense
Interest the company pays on bank loans, supplier credit, borrowings and finance leases. It is an expense of financial activities and is recorded on the debit of account 9610 in correspondence with 6920 "Accrued interest" or cash accounts.
Interest income
Interest the company receives on its long-term and current investments (deposits, loans granted, bonds). It is income from financial activities and is recorded on the credit of account 9530 in correspondence with account 4830 "Interest receivable".
Interest margin
The difference between the interest income a bank earns on loans and the interest expense it pays on deposits and other attracted funds (net interest income); it is often also expressed as a percentage of interest-earning assets. It is one of the main sources of a bank's income.
Interest rate
The charge paid on a loan or deposit, expressed as a percentage of the amount. It is usually stated on an annual basis.
Internal audit
Regular review of internal control, risks and processes carried out by the company's own staff or department. It serves management.
Internal control
Rules and procedures established in a company to prevent errors and abuse: segregation of duties, signing authority, regular reconciliations.
Internal rate of return (IRR)
The discount rate at which a project's net present value equals zero. It is compared with the cost of capital or the interest rate on a loan: if IRR is higher, the project is considered attractive.
Interquartile range (IQR)
The difference between the third quartile (Q3) and the first quartile (Q1): IQR = Q3 − Q1. It shows how widely the middle 50 percent of ordered data is spread. The difference from the range (largest minus smallest): the IQR is hardly affected by very large or very small values at the extremes, so it is a more reliable measure of spread for unevenly distributed data. A rule widely used in practice: a value below Q1 − 1.5 × IQR or above Q3 + 1.5 × IQR is suspected of being an outlier. There are several methods for calculating quartiles, so software may give slightly different results; the report should state which method was used.
Inventories
As defined in NAS No. 4: tangible assets held for subsequent sale, in the process of production, or used for producing goods, performing work, rendering services or for administrative and social-cultural purposes. Which accounts they are recorded in is set by NAS No. 21 (Chart of Accounts).
Inventories accepted for safekeeping
Inventories that do not belong to the company but have been handed over to it for temporary storage. They are not included in the balance sheet and are kept in off-balance sheet account 002 at the prices in the acceptance-transfer certificate or invoice; analytical accounting is by owner, type, grade and storage place.
Inventory count (stocktaking)
Physically counting property and liabilities and comparing the results with the accounting records. If a shortage or surplus is found, the records are corrected.
Inventory turnover
An indicator that shows how many times during a period (usually a year) a company sold and replaced its inventory. Formula: cost of products (goods) sold ÷ average inventory. Average inventory is usually half the sum of the balances at the beginning and end of the period. The numerator uses cost, not revenue, because inventory is carried in the balance sheet at cost. It also gives "days of inventory": 365 ÷ turnover, that is, how many days on average goods stay in the warehouse. High turnover usually means that money does not stay tied up in inventory for long; a low figure may point to excess or obsolete goods. Comparisons between industries require care: the normal level for a bakery and for a furniture retailer is not the same.
Investing activities
Activities related to the acquisition and disposal of long-term assets and other investments not included in cash equivalents. Shown as a separate section in the statement of cash flows (NAS No. 9).
Invoice (tax invoice)
A document that a seller issues to a buyer for goods or services. It shows the amount, VAT and the details of both parties. Nowadays it is mostly issued electronically.
Issuer
An organisation that issues a security in its own name and takes on obligations to the holders of that security; a state is also the issuer of its own bonds. An issuer of shares gives the holders a stake in its capital, while an issuer of bonds undertakes to repay the debt by a set date and, as a rule, to pay interest. NAS No. 21 uses the word for the discount accounts: accounts 0960 and 3220, opened when bonds are sold at a discount, are used only by "sellers of bonds (issuers)" (paragraphs 82 and 164). A joint-stock company's own shares bought back are carried on accounts 8610 and 8620 and reduce the charter capital (paragraphs 359 and 360).
J
Journal entry
A record of a business transaction showing which account is debited and which is credited.
Journal order
An accounting register in which transactions on the credit of one account are recorded together with the debits of the corresponding accounts. The main table of the journal-order form of accounting.
K
KASKO (comprehensive motor insurance)
Voluntary insurance of the vehicle itself against damage, theft and other risks specified in the contract. Compulsory third-party liability insurance of vehicle owners covers damage caused to other persons, while KASKO covers the insured car owner's own loss; the terms and rate are agreed in the contract.
Key audit matters
Matters that, in the auditor's professional judgment, were of most significance in the audit of the financial statements of the current period; they are selected from the matters communicated to those charged with governance. In a separate section of the auditor's report, the auditor describes for each matter why it was considered significant and how it was addressed in the audit; this section does not modify the auditor's opinion.
Know-how
Technical, production or commercial knowledge that is not protected by a patent but is kept secret and has practical value: a recipe, a technological method, a work procedure. Purchased know-how is accounted for as an intangible asset in account 0410 if it meets the recognition conditions in NAS No. 7, paragraph 6.
L
Labour productivity
Output per unit of labour input: usually the volume of production or value added per hour worked or per employee. Formula: output ÷ hours worked (or number of employees). At the national level it can be measured as gross domestic product per hour worked. The indicator reflects not only the employee's skill or diligence but also the influence of the equipment, technology and organisational arrangements in use. That is why productivity growth can be a source of wage increases: if more value is created in an hour, the room for distributing it also widens.
Land improvements
Accounting for work that improves the condition of a plot of land rather than the land itself: changing the land layout, access roads, parking areas, walls, landscaping and other structures. Such expenses are first accumulated in account 0850 and, once the work is completed, transferred to account 0111 "Land improvements" (NAS No. 21, paragraphs 12 and 72).
Land tax
A tax paid for owning or using a land plot. The tax base, rates and exemptions are established in the Tax Code; the amount usually depends not on how much income the plot brought, but on the plot itself.
Large business entity
A business entity whose total income during a calendar year is 100 billion soums or more (Presidential Decree PF-21 of 10 February 2023).
Late payment interest (penalty interest)
An additional amount charged for each day of delay when a tax is not paid on time. Its amount is set by the Tax Code.
Law of diminishing returns
If we increase one factor of production (for example, the number of workers) while keeping the others (equipment, floor space) unchanged, then beyond a certain point each additional unit gives less additional output than the previous one. The law is also called the principle of diminishing marginal productivity. An important distinction: diminishing returns do not mean that total output falls; it still grows, only more slowly. If total output starts to fall, that is the "negative returns" stage. The law applies to the short run, because in the long run all factors, including equipment, can be increased. Its practical meaning: before adding staff, identify where the limiting factor (oven, machine, space) is.
Letter of credit
A form of settlement through a bank: the buyer transfers money in advance to a separate letter of credit account, and the bank pays it to the seller only when the documents agreed in the contract are presented. This protects both parties.
Liabilities and equity (sources of assets)
The sources that show where the assets came from: the company's own capital (equity) and its liabilities (debts).
Liability
A company's debt to others: an obligation to be settled in the future with money, goods or services. It is shown on the liabilities side of the balance sheet.
Liability insurance
A type of insurance that covers not the policyholder's own property or health, but the compensation the policyholder must pay for harm caused to other persons (third parties). The payment usually goes to the injured party, and the policyholder is protected from paying a large sum out of their own pocket. Separate policies are taken out depending on where the liability arises from; for example, professional liability insurance covers harm caused to a client by a specialist's error in the course of work.
License
Permission granted by a right holder to use its intellectual property item (software, technology, invention, trademark) within the scope agreed in a contract. A license purchased by a company is accounted for as an intangible asset in account 0410 if it meets all the recognition conditions in NAS No. 7, paragraph 6; the term and conditions of use are written in the license agreement.
Life insurance
Insurance against events related to a person's life: under the contract, a payment is made when the insured person dies or survives to the end of the term. Some types also serve as savings.
Liquidity
The ability to convert an asset into cash quickly and without loss of value. A company's liquidity means its ability to pay its short-term debts on time.
Loan-for-use agreement
An agreement under which one party gives property to the other for temporary use free of charge, and the same property is returned when the agreement ends. The company that received the property keeps it in off-balance sheet account 011 and writes it off when it is returned to the owner; analytical accounting is kept for each item.
Lombard loan
A loan granted against a pledge of the borrower's securities or other financial assets. The client obtains money without selling the portfolio: the shares and bonds remain their property but are pledged in favour of the bank. The bank lends not the full value of the asset but a part of it (the "lending value"); this share depends on how volatile the asset's price is and how quickly it can be sold. The main risk: if the pledged securities fall in price, the bank demands additional collateral or partial repayment of the debt, and if the client does not provide it, the bank may sell the collateral. In central banking language, "Lombard" also means a short-term loan granted to commercial banks against a pledge of securities.
Long-term bank loan
A loan received from a bank for a term longer than twelve months. The amount received is recorded on the credit of account 7810. Each time, the portion whose repayment date falls within 12 months is transferred to account 6950 "Long-term liabilities – current portion": Dt 7810 – Ct 6950.
Long-term borrowing
Money received from a non-bank lender for a term longer than twelve months. It is kept in account 7820; the portion to be repaid within the next 12 months is transferred to account 6950 and reduces the long-term borrowing amount.
Long-term investments
Funds that a company has invested for a term of more than one year in the securities of other organizations and in the charter capital of subsidiaries, associates and other organizations, as well as long-term loans it has granted. They are accounted for in accounts 0610–0690 (NAS No. 21, paragraph 53; NAS No. 8 and No. 12).
Long-term liability
A debt whose repayment date falls later than twelve months. In the chart of accounts, such liabilities are kept in accounts 7000–7900. The portion whose payment date is approaching is transferred to account 6950 "Long-term liabilities – current portion".
Loss adjuster
A specialist who, after an insured event, investigates the cause and extent of the loss and gives the insurer an opinion on how much should be paid under the terms of the policy. They usually work for the insurer or come from an independent firm hired by the insurer. Their work: inspecting the scene of the event, collecting documents and evidence confirming the loss, determining whether the loss falls within a risk covered by the policy or an exclusion, and calculating the amount of the loss. Their task is not to be the policyholder's advocate but to assess the loss under the policy; that is why in some countries the policyholder hires a separate specialist to protect their own interests.
Loss ratio (in insurance)
The ratio of an insurer's losses for a period (insurance payouts and the liabilities for them) to the insurance premiums earned in that period, in percent. It shows what part of the premium collected goes to covering losses. In some calculations the costs of handling claims are also added to the numerator, so before comparing the indicator you need to know how it was calculated. If the ratio is very high, the rate may be insufficient for the risk; if it is very low, insurance may be expensive for the customer.
M
Mandatory audit
An audit that companies of categories defined by law must undergo every year. Which companies are subject to it is set by legislation.
Market capitalisation
The total market value of all outstanding shares of a joint-stock company: the current market price of one share multiplied by the number of shares outstanding. It shows the size of the company in the eyes of investors and changes every time the share price changes. Capitalisation is not the same as the equity on the balance sheet (book value): one reflects market expectations, the other the value in the accounts. It is the value of the shares only: the company's debts are not included in it.
Market equilibrium
The situation in which the quantity demanded equals the quantity supplied. The price at this point is called the equilibrium price: at a higher price a surplus of goods arises, and at a lower price a shortage.
Material cost variance
The difference between the actual cost of materials and their accounting price. It is accumulated in account 1610 and at the end of the month allocated to production and period expenses in proportion to the accounting price of the materials used (NAS No. 21, paragraph 115).
Material damage (caused by an employee)
Damage caused through an employee's fault as a result of a shortage, theft or spoilage of the company's cash or inventories. The employee's debt for compensating it is accounted for in account 4730; when property is stolen, found short, deliberately destroyed or deliberately damaged, and in other cases, the amount of damage is calculated at market value (NAS No. 21, paragraphs 202–203).
Materiality
The level at which an error or omission in the financial statements could influence users' decisions. The auditor plans the audit with this threshold in mind.
Materials accepted for processing
Raw materials and supplies handed over by a customer for processing, for which the processing company does not pay. The processor keeps them in off-balance sheet account 003 at the contract price, while recording its own processing costs in the usual expense accounts.
Materials sent out for third-party processing
A company gives its own material to another organization for processing, and the material remains its property. The materials handed over are kept in account 1070, and the fee paid to the processor is added to the cost of the finished item (NAS No. 21, paragraph 97). The processor, in turn, keeps this material off the balance sheet in account 003 (paragraph 440).
Median
The value that sits exactly in the middle when the values are arranged in ascending order. If the number of values is even, the average of the two middle values is taken. The median is less sensitive to sharply different values than the arithmetic mean.
Medium business entity
A business entity whose total income during a calendar year is from 10 billion to 100 billion soums (Presidential Decree PF-21 of 10 February 2023).
Membership fee
A regular or one-time payment made by members of a society, association or other membership-based organization in accordance with its founding documents. When received, it is recorded on the credit of account 8830 in correspondence with cash accounts.
Micro-firm
A business entity whose founders (participants) are individuals and whose total income during a calendar year is up to 1 billion soums (Presidential Decree PF-21 of 10 February 2023). A micro-firm is one of the small business entities.
Mode
The value that occurs most often in a data set. A data set may have several modes or none at all; the mode is also used for non-numeric attributes (colour, size).
Modified opinion
The opinion the auditor issues when unable to express an unmodified opinion on the financial statements: when he concludes that the financial statements contain a material misstatement or when he cannot obtain sufficient appropriate evidence. There are three types; which one is chosen depends on how material the matter is and how pervasive it is across the financial statements.
Monetary items
Assets and liabilities to be received or paid in foreign currency in a fixed or determinable amount. As examples, NAS No. 22 gives foreign currency in the cash desk and in the bank, receivables and payables denominated in foreign currency (except advances without a repayment condition), foreign currency loans and borrowings, settlements with employees in foreign currency, cash equivalents in foreign currency and dividends payable in foreign currency. They are revalued every month.
Monetary policy
The central bank's influence on price stability and monetary conditions in the economy through interest rates, required reserves and other instruments. When the rate is raised, credit becomes more expensive and this helps curb inflation; when it is lowered, credit becomes cheaper and economic activity is stimulated.
Money
A medium that everyone accepts in exchange for goods and services. Money performs three functions: it measures the value of things, serves as a means of payment and makes it possible to save.
Money supply
The total amount of money available for spending in a country's economy: cash in circulation and funds in various accounts at banks. It is measured with several "monetary aggregates": a narrow aggregate covers only the money that can be spent most quickly, while a broad aggregate also includes less liquid funds such as time deposits; the composition of aggregates differs from country to country. The central bank influences the growth of the money supply through monetary policy; if it grows faster than the volume of goods and services, the risk of inflation increases.
Monopoly
A situation in which a good is offered in a market by a single seller and there is no close substitute for it. A monopolist can exert great influence on price, so states usually regulate such markets separately.
Mortgage loan
A long-term loan granted to buy a home or other real estate (or to obtain money secured on it), with that property pledged as collateral. The borrower may live in and use the property, but if the loan is not repaid, the bank has the right to satisfy its claim out of the pledged property. Usually the buyer pays part of the price from his own funds as a down payment and the bank provides the rest; the debt is repaid over many years with annuity or differentiated payments.
Moving average
A method of smoothing out random jumps in a time series: the average of a fixed number of consecutive periods is taken, then the "window" is shifted forward by one period and the calculation is repeated. The longer the window, the smoother the resulting line, but the later it shows new changes. The method partly removes cyclical and random fluctuations; a well-chosen window (for example, a 12-month one) also smooths out the seasonal effect. The resulting series has fewer observations than the original one. With an even-numbered window the average falls between periods, so it has to be centred additionally.
N
NAS (BHMS)
National standards that set the rules of accounting in Uzbekistan. Each standard is numbered and governs one topic. For business entities, NAS No. 1–12, 16, 17 and 19–24 are in force (there are no standards No. 14, 15 or 18). Standard No. 13 is a budget accounting standard (BHS) for budget organizations. Many standards were adopted in new versions in 2024.
NAS No. 1
NAS No. 1 “Presentation of Financial Statements and Accounting Policies” sets out the general requirements for presenting financial statements and the rules for selecting and applying accounting policies. Its aim is to make the statements of an organization comparable across periods and with those of other organizations. Approved by Order No. 130 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 06.08.2024, No. 3544); in force from 1 January 2025.
NAS No. 10
NAS No. 10 “Accounting for Government Assistance and Disclosure of Information about It” sets the procedure for reflecting government assistance received by an organization in accounting and financial statements. For foreign readers: broadly corresponds to IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”. Approved by Order No. 136 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 24.07.2024, No. 3534).
NAS No. 11
NAS No. 11 “Research and Development Expenditures” sets the procedure for accounting for expenditures on research and development work. The key question is whether such expenditure is recognized as an asset or treated as a period expense. Approved by Order No. 137 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 25.07.2024, No. 3535).
NAS No. 12
NAS No. 12 “Accounting for Financial Investments” sets the method of accounting for financial investments and the procedure for presenting them in the financial statements. Approved by Order No. 138 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 18.07.2024, No. 3531).
NAS No. 16
NAS No. 16 “Events Occurring in Business Activities after the Balance Sheet Date and Unforeseen Circumstances” sets the procedure for accounting for, and disclosing in the financial statements, events and unforeseen circumstances in business activities that occur after the balance sheet date. For foreign readers: broadly corresponds to IAS 10 “Events after the Reporting Period”. Approved by Order No. 139 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 31.07.2024, No. 3539).
NAS No. 17
NAS No. 17 “Capital Construction Contracts” sets the procedure by which contractors account for income and expenses under capital construction contracts. The key question is how to allocate income and expenses among the reporting periods in which the contract is performed. For foreign readers: broadly corresponds to IAS 11 “Construction Contracts” (now superseded by IFRS 15). Approved by Order No. 140 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 23.07.2024, No. 3533).
NAS No. 19
NAS No. 19 “Organization and Conduct of Inventory Counts” sets the procedure for taking an inventory of assets and liabilities and documenting the results in business entities and in organizations financed from the budget. Approved by Order No. 141 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 12.08.2024, No. 3548).
NAS No. 2
NAS No. 2 “Revenue from Main Business Activities” defines an organization's revenue from its main business activities and the procedure for accounting for it. Approved by Order No. 132 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 05.08.2024, No. 3542).
NAS No. 20
NAS No. 20 “Simplified Procedure for Accounting by Small Business Entities” sets out simplified accounting that small business entities may choose voluntarily: transactions are recorded chronologically in a journal and posted to an accounting book. It does not apply to individual entrepreneurs or farms. Approved by Order No. 70 of the Minister of Finance dated 16 July 2013 (registered with the Ministry of Justice on 14.08.2013, No. 2501).
NAS No. 21
NAS No. 21 “Chart of Accounts for Accounting of Business Entities and Instructions for Its Application” sets out the chart of accounts (asset, liability, contra-asset, contra-liability, transit and off-balance sheet accounts) and the procedure for using them. Approved by Order No. 191 of the Minister of Economy and Finance dated 14 November 2024 (registered with the Ministry of Justice on 27.12.2024, No. 3593); in force from 1 January 2025.
NAS No. 22
NAS No. 22 “Accounting for Assets and Liabilities Denominated in Foreign Currency” sets the procedure for accounting for foreign currency transactions: they are recognized in soums at the Central Bank exchange rate on the transaction date, monetary items are remeasured at the end of each month, and exchange differences are recognized as income or expenses from financial activities. For foreign readers: broadly corresponds to IAS 21 “The Effects of Changes in Foreign Exchange Rates”. Approved by Order No. 201 of the Minister of Economy and Finance dated 6 December 2024 (registered with the Ministry of Justice on 19.12.2024, No. 3587).
NAS No. 23
NAS No. 23 “Preparation of Financial Statements upon Reorganization” sets the procedure for disclosing information about a reorganization in the financial statements. There are five forms of reorganization: merger, accession (absorption), division, spin-off and transformation. Approved by Order No. 142 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 02.08.2024, No. 3540).
NAS No. 24
NAS No. 24 “Accounting for Borrowing Costs” sets the procedure for accounting for interest and other costs on bank loans and borrowings. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (an asset that takes a substantial period of time to get ready for use) are added to the cost of that asset (capitalized). For foreign readers: broadly corresponds to IAS 23 “Borrowing Costs”. Approved by Order No. 79 of the Minister of Finance dated 5 August 2009 (registered with the Ministry of Justice on 18.08.2009, No. 1996).
NAS No. 3
NAS No. 3 “Statement of Financial Results” sets the rules for preparing the statement that shows income, expenses and profit (the income statement).
NAS No. 4
NAS No. 4 “Inventories” sets the procedure for accounting for inventories owned by an organization and presenting them in the financial statements. For foreign readers: broadly corresponds to IAS 2 “Inventories”. Approved by Order No. 24 of the Minister of Finance dated 28 May 2020 (registered with the Ministry of Justice on 30.06.2020, No. 3259).
NAS No. 5
NAS No. 5 “Fixed Assets” sets the procedure for recognition, measurement, revaluation and depreciation of fixed assets. It provides for four depreciation methods: straight-line, units of production, double declining balance, and sum-of-the-years' digits (cumulative). For foreign readers: broadly corresponds to IAS 16 “Property, Plant and Equipment”. Approved by Order No. 133 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 09.08.2024, No. 3546); in force from 1 January 2025.
NAS No. 6
NAS No. 6 “Lease Accounting” establishes a uniform methodological basis for reflecting lease (leasing) transactions in accounting and financial statements. Approved by Order No. 41 of the Minister of Finance dated 6 April 2009 (registered with the Ministry of Justice on 24.04.2009, No. 1946).
NAS No. 7
NAS No. 7 “Intangible Assets” sets the procedure for accounting for intangible assets and presenting them in the financial statements. Under the standard, for an asset to be recognized as an intangible asset, the cost of one unit at the time of acquisition must be at least 50 times the base calculation amount (BCA); the head of the organization may set a lower threshold. For foreign readers: broadly corresponds to IAS 38 “Intangible Assets”. Approved by Order No. 134 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 09.08.2024, No. 3547).
NAS No. 8
NAS No. 8 “Consolidated Financial Statements and Accounting for Investments in Subsidiaries” sets the procedure by which a parent organization prepares and presents the consolidated (combined) financial statements of the group of subsidiaries it controls. Approved by Order No. 135 of the Minister of Economy and Finance dated 14 June 2024 (registered with the Ministry of Justice on 26.07.2024, No. 3537).
NAS No. 9
NAS No. 9 “Statement of Cash Flows” sets the procedure for preparing the statement of cash flows. Cash receipts and payments are classified into three categories: operating, investing and financing activities. For foreign readers: broadly corresponds to IAS 7 “Statement of Cash Flows”. Approved by Order No. 199 of the Minister of Economy and Finance dated 5 December 2024 (registered with the Ministry of Justice on 27.12.2024, No. 3592); in force from 1 January 2025.
Negative VAT difference
The difference that arises when the input VAT deductible for a period exceeds the output VAT on sales: no VAT is payable to the budget for that period, and the excess input VAT remains in the taxpayer's favour. Under Decree No. PF-100, a negative difference of up to 10 mln soum is refunded automatically.
Net present value (NPV)
The result of subtracting the initial investment from the sum of the discounted values of all future cash flows a project will generate. If NPV is positive, at the chosen rate the project creates more value than the money invested.
Net profit
The profit that remains with the company after all expenses and corporate profit tax have been deducted. Dividends to the founders are distributed from this profit.
Net realisable value
The expected current value from selling an inventory item less the estimated costs of preparing it for sale and selling it. If the carrying amount of the inventory falls below this, under NAS No. 4 it is written down to net realisable value.
Net working capital
The difference between current assets and current liabilities. It shows the "cushion" of funds that remains for day-to-day operations even after all near-term debts have been paid.
Non-monetary items
Items of the financial statements that are not monetary. As examples, NAS No. 22 gives fixed assets purchased for foreign currency, intangible assets, goodwill, equipment for installation, capital investments and inventories, the ratio of shares in the charter capital, investments in charter capital and shares, and advances received and paid without a repayment condition. They are recorded once at the rate on the transaction date and are not recalculated afterwards.
Non-performing loan
A loan on which the borrower has stopped payments for a long time or whose full repayment is in serious doubt. In World Bank statistics, the indicator covers loans on which payments of principal and interest are 90 days or more past due, or whose full repayment without selling the collateral is unlikely; the exact criterion is set by each country's banking supervision rules. The share of non-performing loans in total loans is an important indicator of the health of the banking system: if it rises, the bank creates more allowances and its profit falls.
Non-repayable financial assistance
Funds given to the company free of charge in the form of cash or cash equivalents, without a condition of repayment. They are recorded on the credit of account 9380 in correspondence with cash accounts. Property received free of charge is recorded in account 8530.
Normal distribution
The probability distribution most widely used in statistics for continuous quantities. Its graph is a symmetrical bell shape around the mean: most values are close to the mean, and they become fewer the further they are from it. It is fully defined by two parameters: the mean (centre) and the standard deviation (width). In a normal distribution about 68% of values lie within one standard deviation of the mean, 95% within two and 99.7% within three standard deviations. Quality control, sample surveys and the calculation of confidence intervals rely on this distribution.
Null hypothesis
In statistical hypothesis testing, the assumption taken as the starting point, usually the claim that "there is no difference" or "there is no effect"; it is denoted H0. The opposing claim is called the alternative hypothesis. On the basis of sample data it is decided whether to reject or not reject H0: if the observed difference is too large to be explained by chance, H0 is rejected. Not rejecting H0 does not prove that it is true; it only means that the evidence against it is insufficient.
O
Object of taxation
The circumstance or item that gives rise to taxation; the object of each tax is set separately for that tax in the Tax Code. The object answers the question "what is taxed", and the tax base answers "on what amount".
Off-balance sheet accounts
Accounts (001–016) that record property not owned by the company but temporarily at its disposal (leased, accepted for safekeeping, accepted for processing), as well as contingent rights and obligations. They are not included in the balance sheet and are kept by single entry, without double entry.
Oligopoly
A market structure in which a few large sellers dominate the market and each one's decisions on price or volume noticeably affect the others. The difference from monopoly: there is not one firm but several; the difference from free competition: there are few firms and they watch each other's actions. As Britannica notes, in oligopolistic industries market behaviour mixes monopolistic and competitive tendencies. Firms may engage in price wars as well as in open or tacit agreements, which is why such markets are under the supervision of competition authorities.
Operating activities
The main revenue-producing activities of an organisation and other activities that are not investing or financing activities. One of the three sections of the statement of cash flows (NAS No. 9).
Operating lease
Any lease of property that does not meet the conditions of a finance lease: the property is provided for temporary use and remains on the lessor's balance sheet (NAS No. 6, paragraph 7). The lessee accounts for rent paid in advance for future periods in account 3110, and the lessor accounts for the payment receivable in account 4820 (NAS No. 21, paragraphs 158 and 207).
Operations to ensure the preservation of goods
Work carried out on goods under customs control so that they do not spoil, rot or rust, but which does not change their nature. The Customs Code gives a list of such operations: cleaning, ventilation, drying (including drying with warm air); creating an appropriate temperature regime for storage (cooling, freezing, heating); wrapping in protective packaging, applying protective oil and preservatives; painting to protect against rust, coating with protective substances; applying an anti-corrosion coating. Depending on the specific properties of the goods, other operations may also be included in this category in accordance with the legislation. The term matters in practice in two ways. First, such work is permitted under the temporary storage, customs warehouse and free warehouse procedures: under temporary storage and in a customs warehouse it is carried out with notification of the customs authority. Second, this work is not regarded as processing: the Code does not include it among processing operations within or outside the customs territory.
Opportunity cost
The benefit that could have been obtained from the best alternative given up in order to make a particular choice. Because resources (money, time, land, labour) are limited, every decision means giving up something else; opportunity cost is the value of what was given up. It is not recorded in the accounts, since no money is paid, but it is decisive for making the right decision. It applies not only to money but also to time or any other opportunity.
Option
A contract that gives the right, but not the obligation, to buy or sell a certain asset (for example, a share) at a price agreed in advance, by a set date. An option giving the right to buy is called a call option, and one giving the right to sell is called a put option. The agreed price is called the strike price, and the fee paid for the right is called the premium. The holder of the option has a right, while the writer (seller) has an obligation: if the holder exercises the right, the writer must perform the contract. The holder's maximum loss is limited to the premium paid, so options are often used to protect against price changes or to profit from a price rise.
Ordinary share
A share that usually entitles its holder to vote at the shareholders' meeting and to receive dividends when profit is distributed; the specific rights are set by law and the company's charter. In the company's accounts it is kept at face value in account 8310; analytical accounting is kept for each issue.
Other operating expenses
Operating expenses that do not have the features of production, financial or extraordinary expenses. Under NAS No. 21 (paragraph 410), they include costs of staff training and retraining, payments for information, audit and consulting services, compensation and incentive payments not taken into account when calculating wages, payments for bank and depository services, losses, fines, penalty interest, and other similar expenses arising in operating activities. They are accumulated in account 9430.
Outlier
An observation that differs sharply from the other values in a data set. It may be a measurement or data-entry error or a genuine rare event, so instead of deleting it without thinking, its cause should be established.
Output VAT
VAT that a company calculates on top of the price when it sells its goods, work or services, and collects from the buyer. The general rate is 12%. The amount payable to the budget: output VAT minus deductible input VAT.
Overall audit strategy
The general approach that sets the scope, timing and direction of the audit. ISA 300 requires the auditor to establish an overall audit strategy, which guides the development of the detailed audit plan. The difference: the strategy answers the question "what will we focus on, when and with how much effort", while the audit plan describes the nature, timing and extent of each procedure in detail. The strategy is not written once and put away: if new information emerges during the audit, both the strategy and the plan are updated, and significant changes and the reasons for them are documented.
Overdraft
A type of short-term loan in which the bank allows a client to make payments up to an agreed limit even when the money in the account has run out. Subsequent receipts into the account usually go towards repaying this debt, and interest is paid on the amount used under the contract.
Overpaid tax
The amount a taxpayer has transferred to the budget in excess of its assessed liability. It remains the taxpayer's funds: in the manner set by the Tax Code, it may be offset against other payments or refunded. In the accounts, it shows up as a debit balance in account 6410.
P
Packaging (containers)
Containers and packaging for storing and transporting products or goods: crates, barrels, bottles, boxes. At a producer, packaging is accounted for in account 1060 (except packaging used as household equipment); at a trading organization, containers filled with goods and empty containers are accounted for in account 2950; glass containers in retail trade and catering buffets are accounted for in account 2920 (NAS No. 21, paragraphs 96, 146 and 149).
Patent
A document certifying the exclusive right to an invention, utility model or industrial design. NAS No. 7 includes this right of the patent holder among the items that may be intangible assets (paragraph 10), provided it meets all the recognition conditions in paragraph 6; it is accounted for in account 0410.
Payable to an accountable person
The difference the company must return to an employee who spent more than the money given to him on account (for example, on a business trip). This amount is shown on the credit of account 6970; analytical accounting is kept for each accountable person.
Payables to the budget
The company's debt to the state budget for taxes and other mandatory payments that have been assessed but not yet paid. It is recorded on the credit of account 6410; analytical accounting is kept separately for each type of tax. Advance payments made earlier are debited to 6410 from account 4400, and actual payments from the cash accounts.
Payback period
An indicator showing how long it takes for the money invested to be fully recovered from the cash flows generated by the project. It is easy to calculate, but in its simple form it ignores the time value of money and the income received after payback.
Payment order
An account holder's instruction to the bank to transfer a certain amount from its account to a specified recipient. It states the details of the payer and the recipient, the amount and the purpose of payment.
Perennial plantings
Trees and plants that bring benefits over many years: landscaping and decorative (ornamental) plants, fruit and berry trees, green walls and others. They are accounted for as fixed assets in account 0180, and their depreciation is accumulated in account 0280 (NAS No. 21, paragraphs 20 and 24).
Performance materiality
A working threshold that the auditor sets below materiality for the financial statements as a whole. According to the definition in ISA 320, its purpose is to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. The reason is simple: the auditor tests each item separately, while small errors can add up to a large amount. That is why work on individual accounts and classes of transactions is done with a lower threshold, leaving a "buffer". Where necessary, performance materiality is also set separately for particular classes of transactions, account balances or disclosures. Its amount depends on the auditor's professional judgement.
Period expenses
Expenses that are not included in the cost of products and are recognized directly as expenses in the reporting period: administrative, selling and other operating expenses.
Periodic inventory system
A method in which purchases are accumulated in account 9140 during the period, and the cost of goods sold is determined only at the end of the period after an inventory count. The change in the inventory balance is shown through account 9150: a decrease on its debit, an increase on its credit. Both accounts are closed to 9910.
Permanent accounts
Accounts that are reflected in the balance sheet and have a balance at the end of the reporting period. NAS No. 21 divides them into four types: asset (A), liability (P), contra-asset (KA) and contra-liability (KP). In an asset account the balance and increases are recorded on the debit side and decreases on the credit side; in a liability account it is the other way round: the balance and increases on the credit side, decreases on the debit side. A contra-asset account is deducted from the balance of the asset account it is linked to and shows the net value of the asset; a contra-liability account is deducted from a liability account in the same way. The opposite of permanent accounts is transit accounts: revenue and expenses are used during the reporting period and leave no balance at the end of the period. That is why a new year starts with the balances of permanent accounts, while transit accounts start from zero.
Permanent establishment
A permanent place of activity through which a foreign legal entity carries on its business in Uzbekistan wholly or partly. The list of places recognised as a permanent establishment is given item by item in Article 36 of the Tax Code. A construction site, an installation or assembly project (or supervisory activities connected with them) is also recognised as a permanent establishment if it lasts more than one hundred and eighty-three days in any consecutive twelve-month period, and so is the provision of services (including consulting services) if it lasts at least one hundred and eighty-three days in such a period. Types of activity listed in the Code that are only of a preparatory or auxiliary nature do not form a permanent establishment. Under the rules of the Code, the activity of a foreign legal entity constitutes a permanent establishment from the date the activity in Uzbekistan begins.
Perpetual inventory system
A method of inventory accounting in which every receipt and issue is recorded in the accounts immediately. The cost of each product or item is accumulated in expense accounts as it moves, so the inventory balance can be known from the records on any day. This is how it differs from the periodic system.
Personal income tax
A tax on the salaries and other income of individuals. On salaries, the employer withholds it and transfers it to the budget.
Policy rate (key rate)
An interest rate set by the central bank that is the main instrument of monetary policy. It affects rates on the interbank market and, ultimately, commercial banks' lending and deposit rates.
Policyholder
A person or company that enters into a contract with an insurer and pays the insurance premium. It may insure its own property, its liability or another person.
Population
The complete set of all units being studied. If studying it in full is expensive or impossible, a sample is taken from it.
Power of attorney
A document giving one person the right to act on behalf of another person or organization. For example, so that an employee can collect goods on behalf of the company.
Preferred share
A type of share that usually gives its holder priority over ordinary shares in receiving dividends and a share of the property when the company is liquidated, while voting rights are often limited; the specific rights are set by law and the company's charter. In the company's accounts it is kept at face value in account 8320.
Prepaid expenses (deferred expenses)
Expenses paid in the current period but relating to subsequent reporting periods. They are not expensed immediately: first they sit as an asset in account 3100 "Deferred expenses – current portion", and then they are transferred to expenses in portions in the relevant periods. Under NAS No. 21, the sub-accounts of account 3100 are as follows.
Price elasticity of demand
An indicator showing by how many percent the quantity demanded changes when the price changes by 1 percent. If its absolute value is greater than 1, demand is called elastic; if less than 1, inelastic.
Primary document
A document that records that a business transaction has taken place and serves as the basis for an accounting entry. The rule is simple: no document, no journal entry.
Primary production
Producing goods, performing work or rendering services that make up the company's main activity. Its costs are accumulated in the debit of account 2010: direct costs, auxiliary production services, production overheads and losses from defective output (NAS No. 21, paragraphs 117–119).
Prior-year profit
Income relating to previous years that is identified in the current reporting period (for example, revenue left unrecorded last year). It is recorded in the current period on the credit of account 9340 in correspondence with cash or receivable accounts.
Probable maximum loss (PML)
The underwriter's estimate of the largest loss that could occur in a single event under normal adverse conditions. It is not "the worst possible outcome" but "the largest outcome that is likely to occur": for example, in a fire it is assumed that some of the protection systems will work. There is no single definition in the industry, and companies calculate it differently. PML is not the same as the sum insured: the sum insured is the payment limit in the contract, while PML is the underwriter's internal estimate. This estimate helps the insurer decide how much risk to retain and how much to pass on to reinsurance.
Processing within the customs territory
A customs procedure under which foreign goods are brought into Uzbekistan to be processed and then taken out as finished products (processed products). On entry they are conditionally exempted from duties and taxes. The procedure is applied on the basis of a processing permit issued by the customs authority. The processing operations are listed in Article 71 (list below). Work not included in them: ensuring the preservation of the goods, preparing them for sale and transport; breeding, rearing, cloning, fattening and catching animals and obtaining their produce; growing and harvesting plants; extracting minerals; copying and reproducing information, audio and video recordings; using foreign goods (equipment, machine tools, devices) as auxiliary means in a technological process. Under Article 72 there are five conditions: identification of the imported goods in the processed products; setting the yield rate of processed products; the goods not falling under prohibitions and restrictions relating to this procedure; ensuring payment of customs payments for the imported goods (except in cases provided for by legislation); the processing operations complying with Article 71. Yield rate (Article 11): the quantity of processed product obtained from one unit of the goods used in processing (in absolute terms or as a percentage).
Production overheads
Indirect production costs that relate not to a single product but to the whole workshop. They are first accumulated in account 2510 and then allocated to accounts 2010 and 2310; the allocation method is set in the accounting policy. Paragraph 128 lists the costs reflected in this account as follows (NAS No. 21, paragraphs 127–129).
Professional skepticism
The auditor's questioning mindset: critically assessing the documents and explanations obtained and staying alert to contradictory evidence or signs of fraud. It does not mean distrusting management; it means checking every assertion against evidence.
Profitability
A ratio showing how profitably a business operates: profit relative to revenue, expenses or assets, usually as a percentage.
Progressive tax
A tax whose rate rises as the taxable amount grows. Income is often divided into brackets and each bracket has its own rate: the higher rate applies not to the whole income but only to the part above the threshold. As a result, a person with a larger income pays a larger share of it in tax. This is the opposite approach to a proportional (single-rate) tax and a regressive tax. How a particular tax is structured in a given country is checked against that country's tax legislation.
Property received free of charge
Property given to the company without any payment (other than cash): fixed assets, equipment for installation and others. It is recorded on the credit of account 8530 in correspondence with property accounts. Free assistance in the form of money is recorded in account 9380. Its taxation is determined by tax legislation.
Property tax
A tax paid on real estate belonging to the taxpayer. It is paid by both legal entities and individuals; the tax base, rates and exemptions are established in the Tax Code.
Proportional tax
A tax under which the same rate applies regardless of the size of the tax base. If the base doubles, the amount of tax also exactly doubles, but its share of the base does not change. It is easy to calculate and monitor; however, because low- and high-income payers pay the same share of the base, it does not reduce income inequality. An example of a single rate is the general VAT rate: 12% regardless of the amount of the sale.
Provision for future expenses and payments
An amount set aside in advance in the established manner so that expenses and payments are charged to expense evenly across periods. When the provision is accrued, an expense account is debited and 8910 is credited; when the actual expense occurs, 8910 is debited. Provisions are reviewed and adjusted from time to time, and always at year end.
Prudence principle
The requirement not to overstate assets and income or understate liabilities and expenses in the financial statements. Where there is uncertainty, the accountant chooses a reasonable rather than an optimistic estimate. At the same time, NAS No. 1 states clearly that this principle does not allow creating hidden reserves or deliberately understating or overstating figures: prudence does not replace neutrality. Creating an allowance for doubtful debts and writing inventories down to net realisable value are typical cases in which this principle shows up in practice.
Q
Qualified opinion
A type of modified opinion: it is expressed when the auditor finds a misstatement in the financial statements that is material but not pervasive, or cannot obtain sufficient evidence and the possible effects are material but not pervasive. The report states that the statements are fairly presented "except for the effects of the matter described".
Qualifying asset
Under the definition in NAS No. 24, "an asset that necessarily requires a substantial period of time" to get ready for its intended use or sale. Borrowing costs (interest and other costs) directly attributable to the acquisition, construction or production of such an asset are added not to period expenses but to the cost of the asset (capitalised). The standard gives as examples buildings, structures, production machinery and equipment, intangible assets, power plants and investment property. The following are not qualifying assets: assets that are ready for use or sale at the moment of acquisition; land itself (if no land development work is carried out on it); other types of investments; inventories produced repetitively in large quantities every day, even if their production takes a long time. Other borrowing costs are recognised as financing activity expenses.
Quartile
The three values that divide an ordered series into four equal parts: the first quartile (Q1), the second quartile (Q2, i.e. the median) and the third quartile (Q3). The difference between Q3 and Q1 is called the interquartile range; there are several calculation methods and the results may differ slightly.
Quick ratio
A ratio showing whether a company can cover its short-term debts without selling inventory, using only assets that quickly turn into cash. Formula: (cash + short-term investments + accounts receivable) ÷ current liabilities. The difference from the current ratio: inventories are not included in the numerator, because selling them takes time and their price may fall. Many finance textbooks regard a value of around 1 as comfortable, but a single ratio does not give a sufficient conclusion: it should be compared with companies in the same industry and with previous periods.
R
Range
The difference between the largest and the smallest value in a data set. It is easy to calculate, but because it relies only on the two extreme values, a single unusual value changes it sharply.
Raw materials and basic materials
Materials that become part of the finished product or form its basis; this account also covers auxiliary materials, agricultural products prepared for processing, feed and bedding. Account 1010 (NAS No. 21, paragraph 90).
Re-export
The procedure under which goods previously brought into the customs territory (or products obtained from goods under the procedure of processing within the customs territory) are taken back abroad without payment of customs duties and taxes and without application of economic policy measures; in the cases specified in Article 35 of the Code, duties and taxes paid on entry are refunded. The goods must actually be taken out no later than six months from the day the declaration is accepted. Its code in the CCD is 11.
Re-import
The procedure under which goods previously taken out of the customs territory are brought back within the time limits set by the Code, without payment of customs duties and taxes and without application of economic policy measures. Re-imported goods are treated as goods released for free circulation. For damaged goods this procedure applies only if it is confirmed that the damage occurred as a result of an accident or force majeure. Its code in the CCD is 41.
Real income
Income cleared of the effect of price changes (inflation), that is, income showing how many goods and services can be bought with the money. Nominal income is the number of soum written on the payslip; real income is the purchasing power of those soum. Approximate calculation: real income = nominal income ÷ price index (base period = 1). If nominal income grows faster than prices, real income rises; if it grows more slowly, a person actually becomes poorer even though the salary has increased. That is why wage growth should be assessed against the consumer price index.
Receivables turnover
The ratio of sales revenue to average accounts receivable: it shows how many times during the period the receivables were collected and renewed. Dividing the number of days in the period by this ratio gives how many days, on average, it takes customers to pay.
Recession
A general decline in economic activity lasting several months: production, incomes and employment fall. Popular texts often cite the rule "real gross domestic product shrinks for two consecutive quarters" as an approximate sign. But this is not an official definition, only a rough guide: whether there is a recession is usually judged not by a single indicator but by the dynamics of employment, incomes and production taken together.
Red storno
A method of cancelling a wrong journal entry: the wrong entry is recorded again with exactly the same accounts but with a minus amount (in red on paper), and then the correct journal entry is made. As a result, no excess amount remains in the account turnover.
Refinancing
Repaying an existing loan with a new loan, usually on more favorable terms (lower interest, longer term). Before refinancing, you should also take into account the fee and other costs of the new loan and compare whether there is an overall benefit.
Regression
A statistical method that expresses as an equation how one indicator (the outcome) depends on one or more other indicators (factors). The simplest form is linear regression: y = a + b·x, where b shows how much the outcome changes on average when the factor changes by one unit. Regression shows a relationship but does not by itself prove cause and effect.
Reinsurance
An insurer's transfer of part of a large risk it has taken on to another insurance (reinsurance) company. This is done so that a single major event does not upset the insurer's financial position.
Related parties
Persons who, for tax purposes, can influence the terms of each other's transactions or the results of each other's activities. Under Article 37 of the Tax Code, influence may be exercised through participation in capital or another ability to determine decisions, and it is taken into account whether it is exercised directly or jointly with other related parties. The cases that the Code recognises as related are in the list below (11 items). There are also cases that do not create a relationship: influence arising from a dominant position in the market or a similar situation; the state's participation in legal entities of Uzbekistan, by itself. A relationship on other grounds not in the list is recognised by a court.
Release for free circulation (import)
A customs procedure under which goods brought in from abroad stay in the country permanently, that is, there is no obligation to take them back out. For goods to be placed under this procedure, customs payments must be paid and economic policy measures must be complied with; after that they can be freely sold and used like any other goods on the domestic market. In everyday language, "import" means exactly this procedure. Its code in the CCD is 40.
Release of goods
The action of the customs authority that completes clearance and means that permission has been given to use or dispose of the goods under the conditions of the chosen customs procedure (Customs Code, Article 15). In other words, filing a declaration does not yet mean the goods may be used: only after the goods have been "released" may they be used within the procedure. If the permission depends on the person's obligation to meet certain requirements and conditions, this is called conditional release (Article 22). The goods that the Code treats as conditionally released are in the list below. Unless legislation provides otherwise, such goods are considered conditionally released until the obligations under the conditions are fulfilled.
Rental items (items for rent)
Items provided for temporary use (rent) for a fee: costumes, bicycles, sports equipment and others. Items acquired for this purpose are accounted for in account 2940 "Items for rent" (NAS No. 21, paragraph 148).
Required reserves
The share, set by the Central Bank, of the funds a commercial bank has attracted that it must keep with the Central Bank instead of lending it out. This strengthens banks' solvency and is one of the Central Bank's monetary policy instruments.
Reserve capital
The part of equity kept in account 8500. The reserve fund within it is formed from retained earnings in accordance with the founding documents and legislation: Dt 8710 – Ct 8520. Under NAS No. 21, the sub-accounts of account 8500 are as follows.
Residual value (salvage value)
As defined in NAS No. 5: the expected amount of assets to be received when a fixed asset is retired at the end of its expected useful life, net of the expected costs of its disposal. It is deducted from the initial cost when determining the depreciable amount.
Retained earnings
Net profit that the company has accumulated over the years and has not distributed to its founders as dividends.
Return of goods (products) sold
The return by a buyer of goods or products it has bought. Account 9040 is a contra account (contra-liability type) in relation to the 9000 group: its debit turnover reduces sales revenue. In this case the cost of the returned goods (products) is recorded on the debit of an inventory account and the credit of the cost-of-goods (products)-sold account (9120 or 9110).
Return on assets (ROA)
A ratio that shows how much net profit every 100 soum of assets at the company's disposal brought in over a year. Formula: net profit ÷ assets × 100%. If assets changed considerably during the year, the average of the values at the beginning and end of the period is used; when comparing ROA from different sources, check how the denominator was taken. The difference from return on equity (ROE): ROA does not depend on how the assets were financed (owners' money or debt), so it shows how efficiently management uses resources. In asset-intensive industries (factories, transport), ROA is naturally lower than in service companies.
Return on equity (ROE)
An indicator showing how much net profit every 100 soum of equity, contributed by the owners and retained in the company, earned in one year. Formula: net profit ÷ equity × 100%. If equity changed considerably during the year, the average of the values at the beginning and end of the year is taken as the denominator. The difference from return on assets: it takes into account only the owners' money. Therefore, if a company works with more borrowed money, equity stays small and ROE may come out high; along with a good result this also signals a high debt risk. For this reason ROE should be read together with financial leverage.
Revaluation of long-term assets
Bringing the value of fixed assets and other long-term assets into line with their current value. An increase in value is recorded on the credit of account 8510. If the value decreases, it is first reduced within the amount of the earlier increase for this asset in 8510, and any excess becomes an expense in account 9430.
Right to use land and natural resources
The right to use a land plot, subsoil resources and other natural resources. It is not the land itself but the right to use it that is an intangible asset (NAS No. 7, paragraph 10), accounted for in account 0440; land held in ownership is accounted for in account 0110.
Risk pooling
The basic mechanism of insurance: many people exposed to a similar risk pay a relatively small premium and form a common fund, from which payments are made to the minority who actually suffer a loss. For each individual it is unknown in advance whether a loss will occur, but in a large group the number of losses becomes fairly stable and predictable (the law of large numbers). That is why the insurer can set the rate using actuarial calculations. The larger the group and the more it consists of risks independent of one another, the more reliable the result; very large risks are spread among several insurers through reinsurance.
Royalty
A fee paid regularly to the owner of an intangible asset such as a patent, license, trademark or copyright for its use; it is often set in relation to the volume of sales or production. The right holder reports the royalty receivable in account 4850 and the income in account 9510 (NAS No. 21, paragraphs 212 and 414).
S
Sale (realization)
Selling goods, products or services to a buyer. Revenue from sales is recorded in the accounts of the 9000 group.
Sample
The part selected from a population for study. If the sample is random and large enough, a conclusion drawn from it can be applied more reliably to the whole population.
Sampling risk
The risk that the auditor's conclusion based on a sample may differ from the conclusion that would be reached if the same procedure were applied to the entire population. ISA 530 defines it separately and distinguishes it from the risk of reaching a wrong conclusion for reasons unrelated to sampling (non-sampling risk). Sampling risk can lead to two kinds of error. The first: the auditor concludes that controls are working better than they actually are, or that no material misstatement exists; this affects audit effectiveness and may lead to an inappropriate opinion, so it is the more dangerous one. The second: the auditor concludes that controls are working worse, or that the misstatement is larger, than it actually is; this usually leads to additional work, that is, it affects audit efficiency. Increasing the sample size reduces sampling risk but does not bring it down to zero.
Seasonal adjustment
A statistical method that removes from an economic time series the effects that recur every year at roughly the same time and with similar strength (for example, the effects of weather or holidays). The aim is to see whether the underlying trend, not the season, has changed. Special statistical models and software are used for the adjustment. In the adjusted series the trend and the business cycle are seen more clearly.
Security
A document (often an electronic record) that gives its holder property rights: a share, a bond, a bill of exchange and others. In accounting, depending on the term for which it was acquired, it is accounted for in account 0610 if more than one year, and in account 5810 if short-term (NAS No. 21, paragraphs 55 and 241).
Security for obligations and payments
Guarantees received or issued to secure the performance of obligations and payments. Security received is kept in off-balance sheet account 008, security issued in account 009. If the guarantee does not state an amount, it is determined from the terms of the contract; as the debt is settled, the security is written off.
Segregation of duties
Assigning the different stages of a single transaction (authorization, execution, recording, control) to different employees. A key principle of internal control.
Selling expenses
Expenses related to delivering products to the consumer: transportation, loading onto transport, the costs of staff and departments engaged in marketing, and others. They are period expenses, accumulated in account 9410 and closed to 9910 at the end of the period.
Semi-finished goods
Products that have passed one stage of production at the company itself but are not yet finished goods and are processed further at the next stage (or may be sold to outsiders): spun yarn, grey calico, pig iron and others. They are accounted for in account 2110 (NAS No. 21, paragraph 121).
Separate division
A branch or representative office of a company: it operates in another location, and its accounting figures are included in the company's overall balance sheet. The head company keeps internal settlements with it in accounts 4110 (receivables) and 6110 (payables) (NAS No. 21, paragraph 176).
Service facilities
Production units and facilities on the company's balance sheet that are not related to its main activity: NAS No. 21 (paragraph 133) lists among them healthcare facilities, kindergartens, housing and utility facilities, sports and cultural facilities, tailoring and other consumer service workshops, canteens and buffets, and separate research and development units. Their costs are accounted for in account 2710 (NAS No. 21, paragraphs 133–134).
Settlement (current) account
A company's account opened with a bank in national currency: receipts come into it and payments are made from it; if there are several, analytical accounting is kept for each one. Money coming in is reported in the debit of account 5110 and money going out in its credit; erroneous amounts in a bank statement are corrected through accounts 4860 or 6960 (NAS No. 21, paragraphs 224–225).
Share
A security confirming a stake in the capital of a joint-stock company. A shareholder becomes a part-owner of the company: when profit is distributed, the shareholder is entitled to a dividend, but also bears the risk of the share's value falling. In accounting, ordinary shares are kept in account 8310 and preference shares in account 8320.
Share of a withdrawing founder
The value of the share the company must return to a participant leaving the body of founders. This debt is recorded on the credit of account 6620 in correspondence with accounts 8330, 8610 or 8620. If the share is given in the form of a fixed asset instead of money, the asset is disposed of through account 9210.
Share premium
Funds received from the initial sale of shares at a price above their face value. Under NAS No. 21 it is recorded in the credit of account 8410; its analytical accounting is kept separately for ordinary and preference shares (paragraph 350). Although the Uzbek name contains the word "income", it is not profit but part of capital.
Shareholder
The owner of a share in a joint-stock company, that is, the owner of a stake in that company's capital. A shareholder has not lent money to the company but owns part of it: when profit is distributed they may receive a dividend, they usually take part in management by voting, and they bear the risk of losing the money put into the shares. The exact scope of rights is set by legislation and the company's charter. In accounting, NAS No. 21 mentions shareholders among the founders of an entity: their debt for subscription to the charter capital is recorded on account 4610 separately for each founder.
Shipping documents for goods
Papers that travel with a cargo crossing the border and confirm the transaction and the fact of carriage. The Customs Code divides them into two types: commercial documents and transport documents. Commercial documents include the invoice, the dispatch note, the packing list and other documents proving that a transaction concerning the movement of the cargo across the border has been concluded. Transport documents include the bill of lading, the waybill or another document confirming the existence of a contract of carriage and accompanying the cargo during carriage. Put simply: a commercial document answers the question "what was bought, from whom and for how much", while a transport document answers "who is bringing it, by what means and to where".
Short-term bank loan
A loan received from a bank for a term of up to twelve months. The amount received is recorded on the credit of account 6810, and the amount repaid on its debit. Analytical accounting is kept for each bank, loan amount and term. Money received from a lender other than a bank is recorded in account 6820 "Short-term borrowings".
Short-term borrowing
Money received from a non-bank lender (another company, an individual, a foreign lender) for a term not exceeding twelve months. It is kept in account 6820; analytical accounting is by lender and repayment date.
Short-term investments
Financial investments made for a term not exceeding one year: securities of other organizations, interest-bearing government bonds, short-term loans granted to other organizations, bank deposits. They are accounted for in accounts 5810, 5830 and 5890 (NAS No. 21, paragraphs 240–243).
Shortage
A situation in which the actual quantity of property found during an inventory count is less than in the records. The cause is investigated, and if someone is at fault, the amount is recovered from them.
Simple partnership (joint activity)
An agreement under which several persons work together for a common goal by making contributions, without forming a legal entity. The property contributed by the participants is kept by the authorized representative of the joint activity in off-balance sheet account 015 and is written off when returned to its owner.
Simplified VAT regime
A voluntary regime introduced by Decree No. PF-100: companies in trade, catering and services may pay VAT at a rate of 6% from 1 June 2026 to 1 January 2030. In this case corporate profit tax is 0%, but input VAT on purchased goods and services is not deducted.
Skewness coefficient
An indicator measuring how asymmetric a distribution is around its mean. In a symmetric distribution (for example, the normal distribution) it equals zero, and the mean and median coincide. With positive skewness the right "tail" of the distribution is long: a few very large values pull the mean above the median. With negative skewness it is the opposite: the left tail is long. The practical conclusion: if skewness is strong, the median is more reliable than the mean for showing the "typical" value.
Small business entity
One of the three categories of business entities under Presidential Decree PF-21 of 10 February 2023. It covers three types: individual entrepreneurs, micro-firms and small enterprises.
Small enterprise
A business entity whose total income during a calendar year is from 1 billion to 10 billion soums and whose founders (participants) are legal entities (Presidential Decree PF-21 of 10 February 2023). A small enterprise is one of the small business entities.
Social tax
A tax that an employer pays at its own expense on the wages accrued to employees. It is not withheld from the employee's salary.
Software (as an intangible asset)
A computer program and a database. If the program is not an integral part of a fixed asset and the exclusive right to it belongs to the company, it is an intangible asset; if it is an inseparable part of a fixed asset, it is accounted for together with that asset (NAS No. 7, paragraph 11). It is accounted for in account 0430.
Spare parts
Parts bought or made for repairing machinery, equipment and vehicles and replacing worn components, as well as spare car tyres kept in stock. They are accounted for in account 1040 (NAS No. 21, paragraph 94).
Specific identification method
A valuation method in which each unit of inventory is written off at its own actual purchase or production cost. Under NAS No. 4, it is applied to inventories that are not interchangeable and are used in a separate order, and to products intended for specific projects.
Stagflation
A situation in which economic growth has stopped or declined and unemployment is high while prices are rising rapidly at the same time. The word is formed from "stagnation" and "inflation"; it is hard to overcome, because measures against inflation can slow economic growth even further.
Standard deviation
The square root of the variance. It shows the spread in the same unit of measurement as the original data, which makes it easier to understand than the variance.
State trust funds
State trust funds to which the company pays contributions. Under NAS No. 21 (paragraph 278), account 6520 is used to summarize information on the organization's payables to state trust funds for contributions. An assessed contribution is recorded on the credit of 6520 in correspondence with expense accounts (a contribution made at the employee's expense, with 6710), and 6520 is debited on payment. Analytical accounting is kept separately for each fund for which the company is a payer.
Statement of cash flows
The part of the financial statements that shows where cash and cash equivalents came from and where they went during the reporting period. Under NAS No. 9, receipts and payments are divided into three categories: operating activities, investing activities and financing activities. Bank loans received belong to financing activities. Movements between cash and cash equivalents (for example, placing surplus cash in cash equivalents) are not shown in the statement as cash flows. The difference from the profit and loss statement: this statement shows not accrued amounts but the money that actually came in and went out.
Stock exchange
An organised market (a place or an electronic system) where company shares and other securities are bought and sold under set rules. Trading on an exchange usually goes through brokers, and the price is formed where buyers' and sellers' orders meet and is published openly for everyone. The exchange is the centre of the secondary market: investors sell previously issued securities to each other there, and the issuer receives no money from these trades. For a security to be admitted to exchange trading, the issuer must meet the exchange's requirements and keep disclosing information.
Stock index
An indicator that combines the prices of a selected group of shares into a single number and shows whether the market, or part of it, is generally rising or falling. Indices differ in composition and calculation method: in a price-weighted index an expensive share has more influence, while in an index weighted by market capitalisation (price × number of shares) a large company does. For example, Britannica describes the Dow Jones Industrial Average as based on the prices of the shares of 30 industrial companies, and the S&P 500 as capitalisation-weighted and the chief benchmark of the US market. An index measures not an individual share but the general mood.
Stock split
An operation in which a joint-stock company reduces the face value of each share and increases the number of shares in proportion. Under paragraph 345 of NAS No. 21 it is used to increase the liquidity of shares; since the amount of shareholders' capital does not change, no journal entry is made for this operation, and the change is recorded in the analytical registers opened for account 8310 "Ordinary shares". Each shareholder's stake does not change either: they have more shares, each with a lower face value. The difference from issuing new shares is that a split brings in no new money and does not reduce existing shareholders' stakes.
Strict-reporting forms
Forms that are stored and issued on an accountable basis and whose number is strictly controlled. NAS No. 21 (paragraph 443) lists them as follows: receipt books, certificate forms, diplomas, various season tickets, coupons, sheets of documents accompanying goods, and the like. The company itself sets the exact list and the procedure for storage and use. They are kept in off-balance sheet account 006 at nominal values.
Subrogation
The transfer to an insurer that has made an insurance payout of the right to recover the amount paid from the person responsible for the loss. This way the policyholder does not receive money twice for one loss, and the person at fault does not escape liability.
Subsidiary
A company whose decisions another (parent) company can determine by virtue of its predominant share in the charter capital, an agreement between them or otherwise (NAS No. 8, paragraph 4). The parent organization keeps its investment in it in account 0620 and current settlements with it in account 4120 (NAS No. 21, paragraphs 56 and 177).
Subsidy
Assistance in cash or in kind that the state gives to a company, on set conditions, for the purpose of economic development. It may take the form of an additional payment, a subvention and other forms. It is accounted for in account 8820.
Substantive procedures
Audit procedures aimed directly at detecting whether there is a material misstatement in the amounts in the financial statements. They are of two types: tests of details of transactions, balances and disclosures, and substantive analytical procedures.
Substitute goods
Goods that a buyer can choose one instead of the other to satisfy the same need. Their main feature is a positive cross elasticity of demand: if the price of one good rises, demand for the other increases. Cross elasticity = percentage change in demand for the second good ÷ percentage change in the price of the first good. The larger the coefficient, the more closely the goods replace each other. The term is the opposite of complementary goods: with complements (for example, a printer and its cartridge), if the price of one good rises, demand for the other falls, and the cross elasticity is negative.
Sum insured
The maximum amount agreed in the contract that the insurer may pay for a single insured event or for the whole contract. The payment does not exceed it, even if the loss is larger.
Supplier
An organization or entrepreneur that sells goods, materials or other assets to the company, or provides it with services. When the value is received but not yet paid for, the company's debt to the supplier is recorded on the credit of account 6010; analytical accounting is kept separately for each supplier.
Supply
The quantity of a good that producers are willing to sell at various prices over a certain period. Other things being equal, when the price rises, the quantity supplied usually increases.
Surplus (in an inventory count)
A situation in which the actual quantity of property found during an inventory count is greater than in the records. The surplus is recorded as received and the reason for it is investigated.
Syndicated loan
A loan granted jointly to one borrower by several banks (a syndicate). It is used for amounts that are too large for one bank or that one bank does not want to take on alone. The syndicate is usually put together by a lead bank (the arranger): it negotiates the terms, prepares the documents and may later manage the distribution of payments among the banks. Each bank finances its own share of the loan and bears the risk on that share, so a single bank's exposure to the borrower is reduced. The loan may take the form of a fixed amount, a credit line or a mix of both. A loan provided by a small group of a few banks, without wide syndication being planned, is called a "club deal".
T
Tax
A mandatory, non-refundable payment that the state collects from individuals and legal entities on the basis of law. Taxes form the state budget.
Tax accounting
Collecting information under the rules of the Tax Code in order to calculate taxes correctly and prepare tax returns. It is based on accounting data, but the rules for recognizing income and expenses sometimes differ, so accounting profit and the tax base are not always equal.
Tax agent
A person obliged to withhold tax from another person's income and transfer it to the budget. For example, an employer is a tax agent for its employees' personal income tax.
Tax arrears
A tax amount not paid by the set deadline. Late payment interest (penya) is charged on overdue tax, so paying off the debt sooner costs less.
Tax base
The amount or quantity on which a tax is calculated. Tax amount = tax base × rate.
Tax benefit (tax relief)
Relief granted to certain taxpayers under conditions set by law. The form and conditions of each benefit are set by the relevant article of the Tax Code, so read that article itself before applying the benefit.
Tax benefit for targeted use
An amount of tax the company has been exempted from paying on condition that it carries out a specific targeted task. This amount is shown on the debit of the account for payables to the budget and the credit of account 8840, that is, instead of a debt to the budget it becomes earmarked funds.
Tax burden
The ratio of all taxes a company pays to its revenue (or another chosen indicator). It is an analytical indicator used to compare different tax regimes or years.
Tax control
The activity of tax authorities in checking compliance with tax legislation by taxpayers, tax agents and other persons. Its forms, procedure and time limits are set by the Tax Code; desk and field tax audits are also carried out within this control.
Tax liability
A taxpayer's duty to the state to calculate a particular tax, report it and pay it within the set deadline. In accounting, tax that has been calculated but not yet paid appears in the credit of account 6410.
Tax monitoring
A voluntary form of control in which the tax authority follows, throughout the year and through an exchange of information agreed with the company, whether a legal entity calculates its taxes correctly and pays them on time. The main rules under the Tax Code: monitoring covers all taxes and levies for which the legal entity is a payer or agent; a legal entity whose income for the previous year was at least five billion soum according to its annual financial statements is entitled to apply; the application is submitted no later than 1 July of the year preceding the monitoring period, and the tax authority makes a decision by 1 November; the period for which monitoring is conducted is the calendar year following the year in which the application is submitted; monitoring starts on 1 January of that year and ends on 1 July of the following year. The application is accompanied by the information interaction regulations, information on persons with a 25 percent participation interest, and the tax accounting policy. If the tax authority finds an error during monitoring, it sends a "reasoned opinion"; if the company disagrees, it files an objection and the matter is considered under the mutual agreement procedure.
Tax period
The period for which the tax base is determined and the tax amount is calculated: a month, a quarter or a year. It is set for each tax by the Tax Code.
Tax rate
The amount of tax per unit of the tax base. Most often it is set as a percentage (what percent of the base), and sometimes as a fixed amount. Tax amount = tax base × rate.
Tax resident
An individual or legal entity recognized as a resident of a country for tax purposes. As a rule, a resident pays tax in that country on income earned worldwide, while a non-resident pays only on income from sources in that country. Residency criteria are set by the Tax Code and are not the same as citizenship.
Tax return
A document that a taxpayer submits to the tax authority by the established deadline. It shows the amount of tax calculated and how it was calculated.
Tax secrecy
Information about a taxpayer obtained by the competent authorities whose disclosure is prohibited. Article 29 of the Tax Code separately lists information that does not constitute a tax secret: information that is publicly available (including information made public with the owner's consent); the taxpayer identification number; violations of tax legislation and liability measures; the tax regimes applied and registration as a VAT payer; the amounts of taxes paid and of tax arrears; participants of a legal entity; the average number of employees on the payroll; the amounts of income and expenses according to the financial statements. A tax secret may not be disclosed by state bodies, their officials, or the specialists and experts involved (except in cases provided for by law); providing information to foreign tax authorities under an international treaty is not considered disclosure.
Taxpayer
A legal entity or individual on whom tax legislation imposes the obligation to pay tax. For example, even if another person (a tax agent) withholds and pays the tax on income, the taxpayer is still the owner of that income.
Taxpayer's personal account (online cabinet)
An information resource on the official website of the State Tax Committee through which the taxpayer and the tax authority exchange electronic documents. The main rules under the Tax Code: the personal account is created after the taxpayer is registered with a tax authority; information exchange between legal entities and individual entrepreneurs and the tax authorities takes place only through the personal account, while for other individuals its use is voluntary; one personal account is opened for an individual, whether or not he or she is an individual entrepreneur; access to the personal account is through the single identification system with an electronic digital signature; when the tax authority sends a document to the personal account, an SMS message is sent to the phone number indicated by the taxpayer.
Taxpayer's representative
A person who acts on behalf of a taxpayer in tax relations. Under the Tax Code, there are two kinds of representative. Legal representative: for a legal entity, the persons authorised to represent it on the basis of law or its constituent documents (usually the head); for an individual, his or her representatives under civil legislation. The action (inaction) of a legal entity's legal representative in tax relations is considered an action of that legal entity. Authorised representative: organisations of tax consultants or other persons whom the taxpayer has entrusted with representing its interests in relations with tax and customs authorities and other participants. A legal entity's authorised representative acts on the basis of a contract or a power of attorney, and an individual's on the basis of a notarised power of attorney. A person serving as an official in a state body (including a tax, finance or customs authority) cannot be an authorised representative.
Temporary admission
A customs procedure under which goods are brought into the country for a certain period and then taken back out. During this period the goods are conditionally exempted from customs payments or periodic customs payments are made, and economic policy measures are not applied. The goods must be identifiable by customs and remain unchanged: minor repairs to keep them in working order are allowed, but major repairs and modernisation are not. Under the Code, the period is two years from the date of placement under the procedure; in the cases listed in Article 64 of the Code, the customs authority may extend it on the application of the authorised person. The procedure does not apply to five groups of goods: goods whose import is prohibited altogether; waste; oil and gas supplied by pipeline, as well as electricity, water and fuel; consumables, consumable samples, raw materials and semi-finished products; motor vehicles imported by legal entities and individuals of Uzbekistan (except for international carriage of goods and cases established by legislation and international treaties). Consumables and consumable samples may be temporarily imported only as a single item for advertising, demonstration and research purposes. Its code in the CCD is 42.
Temporary difference
A difference between accounting profit and taxable profit that disappears over time. For example, an expense is recognized in one year in accounting and in another year for tax purposes. Such a difference gives rise to deferred corporate profit tax (accounts 6250, 7250; the asset side is account 0950).
Temporary export (customs procedure)
A customs procedure under which goods in free circulation are taken out of the customs territory for temporary use outside it. The goods are conditionally exempted from customs duties and taxes, and economic policy measures are not applied. Under Article 37, the conditions for placement under the procedure are: the customs authority must be able to identify the goods; if the goods are under the control of authorised bodies, their permits must be available in the information system of the customs authorities; the person placing the goods under the procedure must be a legal entity or individual of Uzbekistan or a foreign person accredited with the competent state bodies. The goods taken out must remain unchanged. Under Article 39 of the Code, the general period is two years from the date of placement under the procedure; for the goods listed in that article (goods used at Uzbekistan's facilities abroad and at diplomatic and consular missions; leased railway and air transport vehicles; goods exported under leasing; goods exported to provide service and remedy defects within the warranty period under the terms of an export contract; goods for which a longer period is set by a resolution of the Cabinet of Ministers) the customs authority may extend the period on the application of the authorised person. By the end of the period the goods must be brought back in or transferred to another procedure (for example, export); otherwise duties and taxes are paid on the customs value at the time of export (except for the two cases listed in Article 41: destruction of the goods as a result of an accident or force majeure; the goods leaving the possession of the authorised person as a result of decisions of bodies, or actions (inaction) of officials, of the foreign state where the goods are located). Under Article 37, the goods on the following list are not placed under this procedure; the Code allows goods on this list to be temporarily exported only as a single item for advertising, demonstration and research purposes.
Temporary tax and customs benefits
Funds released as a result of a temporary exemption from tax or customs payments, which are not required to be used for a specific purpose. They are kept on the debit of off-balance sheet account 013 for each type of payment, do not affect the statement of financial results and are written off when the benefit period ends.
Tests of controls
Procedures performed to check that the company's internal control actually operated effectively throughout the period on which the auditor relies. If controls are reliable, the auditor may reduce the extent of substantive procedures.
Those charged with governance
The person or body responsible for overseeing the strategic direction of the entity and its accountability obligations, including oversight of the financial reporting process. ISA 260 gives this term in its definitions paragraph and requires the auditor to communicate with them: the auditor's responsibilities, the planned scope and timing of the audit, and significant findings are communicated to them, and for listed entities, independence matters as well. Those charged with governance differ from day-to-day management: management runs the business, while those charged with governance oversee it. According to the standard, in some entities they may also include management, for example in a small company where the owner is also the director.
Time series
The values of one indicator arranged by successive periods or dates. It is used to determine the absolute change, the growth rate and the trend.
Time value of money
The financial principle that money in hand today is worth more than the same amount received in the future: today's money can be used or invested to earn income, while future money is affected by inflation and the risk of not being received.
TIN
A unique number assigned to each taxpayer. It is shown in tax returns, contracts and invoices.
Tools, implements and household supplies
Means of labour included in current assets: tools, household equipment, small implements. They are accounted for in account 1080; when issued for use, their cost may be transferred to expenses in full, while to control their safekeeping they are recorded off the balance sheet in account 014 (NAS No. 21, paragraphs 98–99).
Tools, implements and household supplies in use
Small tools and household supplies that have been put into use and whose cost has been fully charged to production or period expenses. They are tracked in off-balance sheet account 014 to control their safekeeping and are written off on the basis of a certificate when they become unusable.
Trade markup
The amount added to the purchase cost of goods to form the selling price. When goods are carried at selling prices in retail trade and catering, the markup is accounted for separately in account 2980; this account is a contra account to goods, and the markup on goods sold is written off to 9120 (NAS No. 21, paragraph 152).
Trademark
A sign that distinguishes one company's goods or services from those of others: a name, logo, image. The right holder's exclusive right to a trademark and a service mark can be an intangible asset (NAS No. 7, paragraph 10); it is accounted for in account 0420.
Transfer price
The price used in a transaction between related parties, including between a parent and a subsidiary company. If such a price is set artificially lower or higher than the market price, profit can be "shifted" to where the tax is lower; that is why tax authorities check whether the price of such transactions matches market conditions; the procedure is set by tax legislation.
Transit (temporary) account
An account that accumulates income or expenses during a period and is closed at period end to the final financial result account (9900). Therefore it has no balance at period end and does not appear in the balance sheet.
Transmission equipment
Fixed assets that carry energy or substances from one place to another: power transmission systems, pipelines, heating and gas networks, transmissions and the like. They are accounted for in account 0120 together with buildings and structures (NAS No. 21, paragraph 14).
Treasury (repurchased own) shares
A joint-stock company's own shares bought back from its shareholders for later resale or cancellation. Account 8600 is contra-equity in relation to the charter capital: on the balance sheet it is deducted from the charter capital. They are recorded at the actual purchase price on the debit of 8610 (ordinary) or 8620 (preferred). An LLC also keeps in this account a share it has bought in order to transfer it to another participant.
Trial balance
A table showing, for all accounts, the opening balance, debit and credit turnover for the period and the closing balance. Total debits and total credits must be equal.
Turnover (account activity)
The sum of all amounts recorded on the debit or the credit side of an account during a certain period.
Turnover tax
A simplified tax for small businesses: it is calculated not on profit but on total sales revenue (turnover). The conditions for applying it are set by the Tax Code.
U
Unchanged condition of goods
The requirement that goods keep, until the customs procedure ends, the properties they had on the day they were placed under it, to the same extent. The Customs Code sets apart two kinds of change from this condition: natural wear and tear of the goods, and losses that occur under normal conditions of carriage or storage. These two are not regarded as a "change". The requirement appears in several procedures: goods under temporary export and goods under temporary admission must both remain in unchanged condition. Goods under temporary admission may receive maintenance and minor repairs, but major overhaul and modernisation are not allowed. In addition, the servicing must not raise the value of the goods above their value at the moment they were placed under the procedure. In short, the goods must leave the procedure in the same condition in which they entered it.
Unclaimed (deposited) wages
Wages that have been accrued but not collected by the employee on the set day. The company holds this money in account 6720 as a debt to the employee and pays it when the employee comes. Analytical accounting is kept for each employee.
Uncorrected misstatements
Misstatements that the auditor identified and accumulated during the audit, but that the company's management did not correct in the financial statements. ISA 450 defines them as a separate term, because it is exactly this remainder that affects the auditor's opinion: a corrected error is no longer in the statements, while an uncorrected one remains. The auditor accumulates all misstatements except those that are clearly trivial (very small), asks management to correct them and, at the end, evaluates the combined effect of those left uncorrected by comparing it with materiality. If the effect is material, it may affect the type of opinion in the auditor's report. Each misstatement and whether it was corrected or not is recorded in the audit documentation.
Uncovered loss
A loss the company has incurred that has not yet been covered from profit or another source. It sits in account 8700 as a debit balance, the reverse of retained earnings, and reduces equity. At year end, the loss is transferred from account 9910 to the debit of 8710.
Underwriting (in insurance)
The process by which an insurer selects which risks to accept and on what terms. Britannica distinguishes two closely related main functions in insurance: underwriting (selecting risks) and rate-making (determining the price of the accepted risk). The underwriter studies information about the risk and decides whether to accept it, decline it or accept it with additional conditions.
Unemployment
The existence of people who want to work and are able to work, are actively looking for work, but do not have a job. The unemployment rate is the ratio of the number of unemployed to the labour force (the sum of the employed and the unemployed), as a percentage.
Units and shares
A founder's part in the charter capital of companies that are not joint-stock companies (LLCs, partnerships and others). After the company is registered, the shares set in the founding documents are recorded on the credit of account 8330 and the debit of account 4610; analytical accounting is kept for each founder.
Unmodified opinion
The opinion the auditor expresses on concluding that the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. This does not mean "there is not a single error in the statements": the auditor has only obtained reasonable assurance that there is no material misstatement. Even if an "Emphasis of matter" paragraph is added to the report, the opinion remains unmodified, because that paragraph does not change the opinion but only draws the reader's attention to a particular note in the statements. If a material misstatement is found or sufficient evidence cannot be obtained, the auditor moves to a modified opinion.
Useful life
The period over which a company expects to use a fixed asset, measured in years or in the volume of output to be produced. The company determines it itself.
Uzbek goods and foreign goods
The Customs Code gives every item of goods a "status": it is either Uzbek goods or foreign goods. Three kinds of goods are recognised as Uzbek goods: goods produced in Uzbekistan; goods released for free circulation in the customs territory; goods that have this status under the Code. Any goods that do not fall under this definition, as well as goods that have obtained the status of foreign goods under the Code, are foreign goods. The status can change. Imported goods are placed under the release for free circulation (import) procedure provided that customs payments have been paid and economic policy measures have been complied with, and they obtain the status of goods in free circulation. Conversely, goods placed under the export procedure and actually taken out of the customs territory lose the status of Uzbek goods. The status also affects the choice of procedure: under the Code, export is the procedure for taking Uzbek goods out without an obligation to bring them back.
V
Variance
A measure of how widely values are spread around the mean: the difference of each value from the mean is squared, and the average of these squares is taken. For a population the sum is divided by the number of values n, and for a sample usually by n − 1.
VAT
A tax levied on the value added when goods and services are sold. The seller adds it to the price, collects it and pays it to the budget. Ultimately, the consumer bears this tax.
VAT payer
A taxpayer registered with the tax authority who charges VAT, pays it to the budget and has the right to offset VAT paid on purchases.
Venture capital
Funds invested, in exchange for a stake (shares or equity interests), in new companies that do not yet have a track record or stable income but have high potential for rapid growth. Many such companies may fail, so the investor puts money into several projects and hopes that the strong growth of one or two will cover the remaining losses. A venture investor usually provides not only money but also advice and connections, and the exit comes by selling the stake when the company is sold or goes public on a stock exchange. The difference from a bank loan: there is no obligation to repay or pay interest; the investor bears the risk together with the owner.
Voluntary self-adjustment of transfer pricing
A taxpayer's own correction, without waiting for tax control, of a case where a price set for a related party that differs from the market price reduced the amount of tax or increased a loss. Article 177 of the Tax Code gives the taxpayer the right to do this (it does not oblige them). The adjustment is made after the end of the calendar year that includes the relevant tax periods. Legal entities do it within the deadlines for filing the corporate profit tax return, and individuals within the deadlines for filing the annual income declaration. Which transaction was adjusted is stated in the explanation attached to the amended return. If the adjustment results in unpaid tax, it is paid no later than the date on which corporate profit tax (for individuals, personal income tax) for that period is due; no late-payment interest is charged for the period up to that date. The basic concept of the transfer price is covered in a separate term (transfer price).
W
Wages (salary)
The pay the company calculates for an employee for the work performed: all types of wages, bonuses, vacation pay and others. Accrued wages are recorded on the credit of account 6710, and their payment and deductions from them on the debit of this account. Analytical accounting is kept for each employee.
Warranty obligation
The obligation of a company that sold products with a warranty to repair or replace them free of charge during the warranty period. Based on its own experience, the company may calculate the average cost of warranty service per unit of product and record it as an expense and on the credit of account 6940 in the period of sale.
Weighted average
An average in which each value is taken into account with its weight (for example, its quantity): the values are multiplied by their weights, added up and divided by the sum of the weights.
Weighted average cost method (AVECO)
An inventory valuation method: the total cost of identical units in the opening balance and those received during the period is divided by their total quantity, and units issued are written off at this average price. The average price may be calculated at the end of the period or each time a new batch arrives.
Weighted average cost of capital
A rate showing how much, on average, a company "pays" for its equity and borrowed funds: the cost of each source is weighted by its share in the financing. If the return on an investment project is below this rate, the project does not increase the value of the company.
Work in progress
Products on which processing has begun but which have not yet become finished goods, and work not yet completed. Under NAS No. 21, the month-end balance of account 2010 "Primary production" shows exactly the cost of work in progress.
Working and productive animals
Animals accounted for as fixed assets: those used for labour or for carrying loads (horses, oxen, camels, mules, donkeys and others) and those that yield produce (offspring, milk, wool and others) (cows, mares, sheep, goats and others). They are kept in account 0170 (NAS No. 21, paragraph 19).
Working capital (current assets)
Assets used or converted into cash within one year or one operating cycle: inventories, receivables, cash.
Working chart of accounts
The list of accounts that a company draws up for itself and actually uses. Under NAS No. 21, organisations draw up a working chart of accounts for their financial and business transactions on the basis of the chart of accounts in Appendix 1 to the standard, and it must be reflected in the accounting policy. The general chart is written for all industries and contains hundreds of accounts: for farm animals, construction and securities alike. The working chart picks out what the company needs. Then the accountant does not post an entry to an unnecessary account by mistake, and a new employee quickly understands where each transaction is recorded.
Write-off of payables and unclaimed (deposited) amounts
Writing off debts whose limitation period has expired, that is, which the creditor no longer claims (including uncollected, deposited wages). Such an amount is income for the company and is recorded on the credit of account 9360 in correspondence with payable accounts.
Written representations from management
A letter that the company's management gives the auditor at the end of the audit: in it, management confirms in writing its responsibility for the financial statements and that it has provided the auditor with all necessary information. This letter is additional evidence but does not replace other evidence.
Written-off debt of an insolvent debtor
A receivable written off to losses and removed from the balance sheet because the debtor could not pay. It stays in off-balance sheet account 007 for the set period to monitor the possibility of collection if the debtor's financial position changes. If it is later collected: Dt 5110 – Ct 9390 and, at the same time, Ct 007.
Y
Z
Definitions are written by the Hisobchi authors as general explanations. Official definitions are given in the relevant laws and standards of the Republic of Uzbekistan.