Accounting terms dictionary, part 2: letters H to M

Accounting terms dictionary, part 2: letters H to M

This dictionary gathers, in alphabetical order, the accounting, inventory, purchasing, sales, treasury and tax terms most used by a business that buys and sells goods. This part covers the letters H to M.

Each entry explains the term in one or two lines. The complete dictionary is split into three parts by letter blocks: part 1 goes from A to G, part 2 from H to M and part 3 from N to Z. Use the letter table below to find what you need quickly.

Letter index for this part:

H

• holding cost: Expenditures associated with keeping inventory, such as rent, insurance, energy, personnel and deterioration of stored goods.
• home delivery dispatch: Shipment of the sold goods to the customer's address, arranged after the order is confirmed.

I

• impairment: Loss that reduces the value of an asset when its recoverable amount is lower than its carrying amount.
• import of goods: Entry of goods coming from abroad into one's own territory, subject to procedures and controls that allow their legal admission and accounting record.
• inbound goods note: Document that supports the entry of merchandise into an establishment or warehouse, detailing the origin, quantity and characteristics of what is received.
• income statement: Report that presents the revenues, expenses and result for the period, showing the profit or loss obtained.
• Income tax: Tax levied on the income or profits obtained by individuals and companies during a period, calculated as defined by local regulations (varies by country).
• Informal economy: Set of economic activities operating outside formal registration and regulation, without complying with tax obligations as defined by local regulations (varies by country).
• intangible asset: Identifiable non-monetary asset without physical form, such as patents, trademarks, or computer software owned by the business.
• interest: Return that is paid or received for the use of money over a specified period of time.
• internal consumption: Use of goods or materials by areas of the organization itself, without sale to third parties, which reduces the stock available in the warehouse.
• International Financial Reporting Standards: Set of accounting standards of global application that seek to make the preparation and presentation of financial information uniform.
• inventory: Record and count of the goods an entity holds for sale, transformation or consumption, valued at a given moment in time.
• inventory accuracy: Degree of agreement between recorded inventory and the physically verified stock, usually expressed as a percentage of accuracy.
• inventory in transit: Goods already purchased and dispatched by the supplier that have not yet arrived at the buyer's warehouse and remain with the carrier.
• inventory movement: Any entry, issue or adjustment that changes the stock of an item and is documented to keep inventory control up to date.
• inventory overage: Positive difference arising when the quantity or value physically counted exceeds the amount recorded in the entity's books.
• inventory shortage: Negative difference arising when the quantity or value physically counted is less than the amount recorded in the entity's books.
• inventory turnover: Indicator measuring how many times inventory is renewed during a period, relating cost of sales to average inventory.
• inventory valuation: Process by which a monetary value is assigned to inventory by applying a consistent and accepted technical criterion.
• investment: Placement of resources with the expectation of obtaining a future return or benefit in exchange for accepting risk.
• Invoice booklet: Set of prenumbered invoices in a pad or booklet that the taxpayer uses to issue consecutively, as defined by local regulations (varies by country).
• Invoice voiding: Act of cancelling an invoice issued by mistake, recording it formally and preserving the register as defined by local regulations (varies by country).

J

• journal entry: Record of a transaction in the journal, stating the accounts, the amounts and whether they are debits or credits.

L

• labeling: Placing labels on products or their packaging with identification, content and handling information needed for their logistical control.
• layaway: Agreement by which the store sets aside goods for the customer while they complete payment in installments.
• Legal name: Official name by which a company is legally identified and registered before the authorities, used in commercial documents as defined by local regulations (varies by country).
• leverage: Use of borrowed funds or debt to finance investments in the expectation of increasing returns.
• Levy: General term for any compulsory monetary payment the State demands, including taxes, fees and contributions, as defined by local regulations (varies by country).
• liability: Present obligation of the entity arising from past events, whose settlement involves the transfer of economic resources.
• LIFO method: Valuation criterion whereby the last units purchased are the first sold or consumed, with the oldest ones remaining in inventory.
• liquidity: Ability of a business to meet its short-term obligations with the resources available at the moment.
• loss: Negative result that arises when the expenses and costs of the period exceed the revenues obtained.
• loyalty program: Benefit system that rewards repeat customers to encourage them to keep buying from the company.

M

• marketplace: Digital platform that brings together several sellers and offers their products to a broad buying audience.
• materiality: Criterion that determines the relative importance of an omission or misstatement able to influence the decisions of users.
• maximum stock: Upper level of inventory the entity decides to keep, set to avoid excess tied-up capital and high storage costs.
• Means of payment: Instrument through which a money transaction is carried out, such as cash, transfer, check or card, as defined by local regulations (varies by country).
• merchandise: Goods acquired from third parties intended for sale without transformation, forming the main object of the trading business.
• minimum stock: Lower level of inventory that must be kept so as not to interrupt operations or cause shortages within the entity.

How to use this dictionary

Look up your term by the letter it starts with inside this part's block. Each language version follows its own alphabetical order, so a term may fall under a different letter depending on the language you type it in: for instance, an English word may start with a letter that does not match the Spanish one.

The definitions are general reference material and explain the concept as it is used in day-to-day business. They do not replace professional advice: if a term affects your taxes, your financial statements or a legal decision, confirm it with an accountant before applying it.

How the complete dictionary is organized

The dictionary has three parts: part 1 covers the letters A to G, part 2 the letters H to M and part 3 the letters N to Z. If a term is not here, check the other two parts by its first letter. It is the same split as a paper dictionary published in three volumes: letters are never mixed between volumes.

Common mistakes when looking up an accounting term

Readers usually get lost for three reasons: looking for a plural when the entry is singular (or the other way around), typing a word without its accents and expecting to find it accented, and confusing similar terms (for example, profit and margin). If you cannot find a word, try its singular form or check the neighbouring concept: it is almost always defined next to its pair.

Key terms in this block

This block includes, among others, these essential terms: holding cost, Income tax, inventory, inventory turnover, labeling, LIFO method. All of them show up again and again in the daily work of buying, storing and selling, so they are worth mastering.

Frequently asked questions

Does the dictionary include every accounting term? No: it is a selection of the terms most used by a business that buys and sells goods. Specialized topics are explained in the Accounting Manual lessons.

Why is a term I know missing from this part? Because its first letter belongs to another block: check parts 1, 2 and 3 according to the letter the word starts with.

Are the definitions identical in the three languages? Each version explains the concept in its own language and with its own terms; it is not a word-for-word translation, although the underlying meaning is the same.

Can I use this as accounting advice? No. It is reference material to understand the vocabulary; specific decisions are discussed with an accountant.

Reference glossary from the Kardex Tauro team, the inventory software for small businesses.