Glossary

A

Accelerated Investment Incentive

The accelerated investment incentive lets corporations claim a larger capital cost allowance deduction in the year they acquire eligible property, often by suspending the half-year rule. It is designed to encourage business investment by speeding up tax write-offs.

Accounting Standards for Private Enterprises (ASPE)

ASPE is the Canadian set of accounting standards designed for private companies as a simpler alternative to IFRS. Most private Canadian businesses report under ASPE unless a lender or owner requires IFRS.

Accounts payable

Accounts payable is the money a business owes to its suppliers for goods or services received but not yet paid for. It appears as a current liability on the balance sheet.

Accounts receivable

Accounts receivable is the money customers owe a business for goods or services already delivered but not yet paid for. It appears as a current asset on the balance sheet.

Accrual basis accounting

Accrual basis accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash changes hands. It gives a more accurate picture of a business's financial position than tracking cash alone, and is the method required under Canadian accounting standards for most incorporated businesses.

Accrued expense

An accrued expense is a cost a business has incurred but not yet paid or been billed for, such as wages earned by staff before payday. It is recorded as a liability so the expense lands in the period it relates to.

Accrued revenue

Accrued revenue is income a business has earned but not yet invoiced or collected, such as work completed near period-end. It is recorded as an asset so the revenue appears in the period it was earned.

Active Business Income

Active business income is income a corporation earns from carrying on a business, as opposed to passive investment income. It is the type of income that can qualify for the small business deduction.

Adjusting entry

An adjusting entry is a journal entry made at period-end to record revenues and expenses in the correct period, such as accruals, deferrals, and depreciation. These entries align the books with the accrual basis before statements are prepared.

Aggregate Investment Income

Aggregate investment income is a CCPC's net investment income, including taxable capital gains, interest and rents, calculated under the Income Tax Act. It is taxed at a higher refundable rate and can reduce a CCPC's small business deduction.

Alberta AT1 Corporate Return

The AT1 is Alberta's provincial corporate income tax return, filed separately from the federal T2 because Alberta administers its own corporate tax. Corporations with a permanent establishment in Alberta generally must file it.

Allowance for doubtful accounts

The allowance for doubtful accounts is an estimate of the receivables a business expects not to collect. It is a contra-asset that reduces accounts receivable to a more realistic value before any specific account is written off.

Amortization

Amortization spreads the cost of an intangible asset, such as a patent or software licence, over its useful life. It is the intangible-asset counterpart to depreciation.

Annual Return (Corporate Registry)

A corporate annual return is a filing made with the corporate registry to confirm that a corporation is still active and to update basic information such as directors and registered office. It is a corporate filing requirement and is separate from the corporation's income tax return.

Articles of Incorporation

Articles of incorporation are the founding document filed to create a corporation, setting out its name, share structure, registered office jurisdiction, and any restrictions on its business or share transfers. Once accepted, they form the legal charter of the company.

Assets

Assets are the resources a company controls that are expected to bring future economic benefit, such as cash, receivables, inventory, equipment and property. They appear on the balance sheet, usually split into current and non-current.

Associated Corporations

Associated corporations are companies linked by common control or ownership under the Income Tax Act's rules. Associated corporations must share a single small business deduction limit so the benefit cannot be multiplied across related companies.

Authorized Capital

Authorized capital is the maximum number of shares a corporation is permitted to issue, as set out in its articles of incorporation. Many Canadian corporations are authorized to issue an unlimited number of shares.

Average tax rate

Your average tax rate is total tax payable divided by total income. It is always lower than your marginal rate because lower brackets tax your first dollars at lower rates.

B

Bad debt expense

Bad debt expense is the cost recorded when a customer's account receivable is judged uncollectible. It reduces profit and reflects the reality that not every invoice will be paid.

Balance Sheet

The balance sheet is a financial statement that shows what a company owns, what it owes and what is left for owners at a single point in time. It is built on the equation assets equal liabilities plus shareholders' equity.

Bank reconciliation

Bank reconciliation is the process of matching the cash balance in your accounting records to your bank statement and explaining any differences, such as outstanding cheques or pending deposits. Doing it regularly catches errors, missed transactions, and fraud.

Basic personal amount

The basic personal amount is a non-refundable credit that lets every resident earn a base level of income before federal tax applies. Provinces have their own equivalent amounts.

Beneficial Owner

A beneficial owner is the individual who ultimately owns or controls a corporation or its shares, even if the shares are legally held by someone else such as a nominee or trustee. Canadian corporations are increasingly required to record beneficial ownership in a register of individuals with significant control.

Board of Directors

The board of directors is the group of elected directors collectively responsible for supervising the management and overall direction of a corporation. The board makes major decisions, appoints officers, and is accountable to the shareholders.

Bonus Tax Method

The bonus tax method is the CRA-prescribed way to calculate income tax on a one-time payment such as a bonus or retroactive pay. It annualizes the payment to find the right withholding rather than taxing it at a flat rate. CPP and EI may still apply to the bonus.

Bookkeeping

Bookkeeping is the day-to-day recording and organizing of a business's financial transactions, such as sales, purchases, and payments. Accurate bookkeeping is the foundation for financial statements, tax filings, and management decisions.

Break-Even Point

The break-even point is the level of sales at which total revenue exactly covers total costs, so the business makes neither profit nor loss. Sales above this point generate profit; sales below it produce a loss.

Budget

A budget is a financial plan that sets out expected revenue, costs and cash for a future period, usually a year. It becomes the benchmark against which actual results are measured.

Burn Rate

Burn rate is the pace at which a company spends its cash reserves, usually quoted as a monthly figure. It is most relevant to start-ups and loss-making businesses that rely on a finite cash balance.

Business Valuation

Business valuation is the process of determining the economic value of a company or its shares using recognised methods such as discounted cash flow, earnings multiples or asset-based approaches. It is used for sales, fundraising, disputes, tax and succession planning.

Bylaws

Bylaws are the internal rules a corporation adopts to govern how it operates, covering matters like director and officer duties, meeting procedures, banking authority, and signing officers. They supplement the articles of incorporation and the governing statute.

C

Canada Business Corporations Act (CBCA)

The Canada Business Corporations Act is the federal statute that governs how federal corporations are formed, organized, and dissolved in Canada. It sets out rules for directors, shareholders, share capital, financial disclosure, and corporate governance.

Canada Pension Plan (CPP)

The Canada Pension Plan is a mandatory federal retirement program funded by deductions from an employee's pensionable earnings, matched by the employer. Employers withhold the employee's CPP contribution each pay and remit it to the Canada Revenue Agency along with their own equal portion. Quebec runs its own equivalent, the Quebec Pension Plan (QPP).

Canadian-Controlled Private Corporation (CCPC)

A CCPC is a private corporation resident in Canada that is not controlled, directly or indirectly, by non-residents or public companies. CCPC status unlocks tax benefits such as the small business deduction and enhanced SR&ED credits.

Capital Cost Allowance (CCA)

CCA is the tax system's version of depreciation, letting a corporation deduct the cost of depreciable property such as equipment, vehicles and buildings over time. Each type of asset is assigned to a CCA class with its own deduction rate.

Capital Dividend Account (CDA)

The CDA is a notional account that tracks the tax-free portion of a private corporation's capital gains and certain other receipts. Balances in the CDA can be paid to shareholders as a tax-free capital dividend.

Capital gain

A capital gain is the profit when you sell an asset such as shares or property for more than its adjusted cost base. Only a portion of the gain is included in taxable income under the inclusion rate.

Capital gains inclusion rate

The inclusion rate is the fraction of a capital gain that is added to your taxable income; the rest is tax-free. The exact rate is set by legislation and can change, so confirm the current rate before calculating.

Capital Loss Carryforward

A capital loss carryforward is a net capital loss a corporation could not use in the year it arose and carries forward to offset capital gains in a later year. Net capital losses can only be applied against capital gains, not ordinary income.

Capital Structure

Capital structure is the mix of debt and equity a company uses to fund its assets and operations. The chosen balance affects financial risk, cost of capital and returns to shareholders.

Capitalisation Rate

A capitalisation rate converts a single year of expected earnings or cash flow into a value by dividing it by a rate that reflects risk and growth. It is the inverse of a valuation multiple and is widely used in business and property valuation.

Cash basis accounting

Cash basis accounting records revenue and expenses only when money actually moves in or out of the bank. It is simpler than accrual accounting and common among small sole proprietors, though it can distort results when income and related costs fall in different periods.

Cash Flow Forecast

A cash flow forecast projects the cash a business expects to receive and pay out over a future period, so owners can see when balances may run short. It is a core planning tool for managing liquidity and timing decisions.

Cash Runway

Cash runway is how long a company can keep operating before it runs out of cash, found by dividing the current cash balance by the monthly burn rate. It tells founders how much time they have before they need new revenue or funding.

CCA Class

A CCA class is a category the tax rules use to group depreciable assets, with each class having its own prescribed rate and treatment. The class an asset falls into determines how quickly its cost can be deducted as capital cost allowance.

Certificate of Incorporation

A certificate of incorporation is the official document issued by the corporate registry confirming that a corporation has legally come into existence. It states the corporation's name and the date incorporation took effect.

Chart of accounts

The chart of accounts is the organized list of every account a business uses to record transactions, grouped into assets, liabilities, equity, revenue, and expenses. A well-structured chart makes reporting and tax filing easier.

Common Share

A common share is the basic class of ownership in a corporation, typically carrying the right to vote, receive dividends when declared, and share in any assets left after creditors and preferred shareholders are paid. Common shareholders usually rank last in a wind-up.

Conflict of Interest

A conflict of interest arises when a director or officer's personal interests could interfere with their duty to act in the best interests of the corporation. Those involved are generally required to disclose the conflict and refrain from voting on the affected matter.

Contra account

A contra account is paired with another account and carries the opposite balance to reduce its value, such as accumulated depreciation against a fixed asset. It lets the books show both the original amount and the offsetting reduction.

Contribution Margin

Contribution margin is revenue minus variable costs, showing how much each sale contributes toward fixed costs and profit. It is a key input for pricing decisions and break-even analysis.

Corporate Governance

Corporate governance is the system of rules, practices, and processes by which a corporation is directed and controlled. It covers how decisions are made, how directors and officers are held accountable, and how the interests of shareholders and other stakeholders are balanced.

Corporate Group

A corporate group is a set of corporations connected through common ownership, typically a parent company and its subsidiaries. Each company in the group is a separate legal entity even though they are managed under shared control.

Corporate Minute Book

A corporate minute book is the official record of a corporation's key documents, including its articles, bylaws, director and shareholder resolutions, meeting minutes, and registers of directors, officers, and shareholders. Keeping it complete and current is a legal requirement for every Canadian corporation.

Corporate Tax Instalments

Corporate tax instalments are periodic prepayments of estimated tax that many corporations must remit during the year rather than paying everything at year-end. The Canada Revenue Agency charges interest when required instalments are paid late or short.

Corporate Veil

The corporate veil is the legal separation between a corporation and its shareholders that protects owners from personal liability for the company's debts. Courts can "pierce the corporate veil" and hold owners liable in limited cases, such as fraud or improper use of the corporation.

Corporation

A corporation is a separate legal entity created by incorporation that can own property, enter contracts, sue, and be sued in its own name. Its shareholders generally enjoy limited liability, meaning they are not personally responsible for the corporation's debts beyond what they invested.

Cost of goods sold

Cost of goods sold (COGS) is the direct cost of producing or buying the products a business sold during a period, including materials and direct labour. Subtracting COGS from revenue gives gross profit.

CRA

The Canada Revenue Agency is the federal body that administers tax laws, collects income and sales taxes, and pays out benefits and credits. It processes T1 returns and issues notices of assessment.

Credit

A credit is an entry on the right side of an account. Credits increase liability, equity, and revenue accounts and decrease asset and expense accounts.

Current Assets

Current assets are resources a company expects to convert to cash or use up within one year, such as cash, accounts receivable and inventory. They are the assets that fund day-to-day operations.

Current Liabilities

Current liabilities are obligations a company must settle within one year, such as accounts payable, short-term debt and accrued expenses. They are measured against current assets to gauge short-term financial health.

Current Ratio

The current ratio measures short-term liquidity by dividing current assets by current liabilities. A ratio above one means a company has more current assets than current obligations.

D

Debit

A debit is an entry on the left side of an account. Debits increase asset and expense accounts and decrease liability, equity, and revenue accounts.

Debt Financing

Debt financing is raising money by borrowing, through loans or bonds, that must be repaid with interest. It lets owners fund growth without giving up ownership, but adds fixed repayment obligations.

Debt-to-Equity Ratio

The debt-to-equity ratio compares a company's total debt with its shareholders' equity, showing how much it relies on borrowing versus owners' funds. A higher ratio signals greater financial leverage and risk.

Deemed Dividend

A deemed dividend is an amount the Income Tax Act treats as a dividend even though it was not formally declared, often arising on share redemptions or certain corporate reorganisations. It is taxed in the shareholder's hands like an ordinary dividend.

Deferred revenue

Deferred revenue is money a business has received before delivering the related goods or services, such as a prepaid annual subscription. It is recorded as a liability and recognized as revenue only as the work is performed.

Depreciation

Depreciation spreads the cost of a tangible fixed asset, such as equipment or a vehicle, over the years it is expected to be used. It matches the asset's cost to the periods that benefit from it rather than expensing it all at once.

Direct Deposit

Direct deposit is the electronic transfer of an employee's net pay straight into their bank account on payday. It replaces paper cheques and speeds up access to funds. Employers collect banking details and keep them secure as part of payroll setup.

Director

A director is a person elected by shareholders to supervise the management of a corporation and make major decisions on its behalf. Directors owe fiduciary duties to the corporation and must act honestly, in good faith, and in its best interests.

Discounted Cash Flow (DCF)

Discounted cash flow is a valuation method that estimates the value of an investment by projecting its future cash flows and discounting them to today's value. The discount rate reflects the time value of money and the risk of those cash flows.

Dividend Declaration

A dividend declaration is the formal decision by a corporation's board of directors to pay out part of its profits to shareholders. Once declared, the dividend becomes payable according to the rights of each share class.

Dividend Refund

A dividend refund is the refund a private corporation receives from its RDTOH balance when it pays taxable dividends to shareholders. It returns the refundable tax the corporation prepaid on its investment income, completing tax integration.

Dividend tax credit

The dividend tax credit is a non-refundable credit that offsets tax on dividends from Canadian corporations. It reflects tax the corporation already paid and prevents the same income being fully taxed twice.

Double-entry bookkeeping

Double-entry bookkeeping records every transaction in at least two accounts, with total debits always equalling total credits. This built-in balance makes errors easier to catch and underpins reliable financial statements.

Due Diligence

Due diligence is the careful investigation and review a party undertakes before entering a transaction, such as buying a business or investing in a corporation. It aims to confirm key facts, identify risks, and support informed decisions.

Due Diligence (Finance)

Financial due diligence is the detailed review a buyer or investor performs to verify a target company's financial health before a transaction. It examines earnings quality, cash flow, debts and risks to confirm the deal is priced and structured correctly.

E

EBIT

EBIT stands for earnings before interest and taxes, measuring operating profit after depreciation and amortisation but before financing costs and tax. It shows what the core business earns regardless of its capital structure.

EBITDA

EBITDA stands for earnings before interest, taxes, depreciation and amortisation, and approximates the cash profit a business generates from operations. It is widely used to compare companies and as a base figure in valuation.

EBITDA Multiple

An EBITDA multiple is a valuation shortcut that values a business as a multiple of its EBITDA, reflecting what buyers in its market typically pay. The multiple varies by industry, size, growth and risk.

Eligible Dividend

An eligible dividend is a dividend a corporation designates as paid out of income taxed at the general corporate rate. Shareholders receive an enhanced gross-up and dividend tax credit on it, lowering their personal tax.

Eligible dividend (personal)

An eligible dividend is paid from corporate income taxed at the general rate, typically from larger Canadian companies. On your personal return it is grossed up and qualifies for an enhanced dividend tax credit.

Employee Portion

The employee portion is the part of CPP, EI and income tax withheld directly from an employee's pay. The employer collects these amounts and remits them to the CRA on the employee's behalf. They appear as deductions on the pay statement.

Employer Health Tax (EHT)

The Employer Health Tax is a provincial payroll tax charged to employers based on their total annual remuneration, used to help fund public health care. Provinces such as British Columbia and Ontario levy it, often with an exemption threshold for smaller payrolls. It is paid by the employer, not deducted from employees.

Employer Portion

The employer portion is the share of payroll costs an employer pays on top of wages, including its matching CPP contribution and its EI premium. For EI the employer pays more than the employee. This portion is remitted to the CRA together with amounts withheld from employees.

Employment income

Employment income is what you earn as an employee, including wages, salary, bonuses, and taxable benefits. It is reported on a T4 slip and taxed in the year received.

Employment Insurance (EI)

Employment Insurance provides temporary income to workers who lose their job, take parental leave, or cannot work for certain reasons. Employers deduct EI premiums from insurable earnings and pay an employer portion that is larger than the employee's. Premiums are remitted to the CRA with other source deductions.

Enterprise Value

Enterprise value is the total value of a business to all its funders, calculated as equity value plus net debt. It represents what it would cost to acquire the whole operation regardless of how it is financed.

Equity Financing

Equity financing is raising money by selling ownership shares in the business to investors. It brings in capital without repayment obligations, but dilutes existing owners' stake.

Equity Value

Equity value is the portion of a company's value that belongs to its shareholders, found by subtracting net debt from enterprise value. For listed companies it equals the market capitalisation.

Estate Freeze

An estate freeze is a tax-planning strategy that locks in the current value of a business owner's shares, usually by exchanging them for fixed-value preferred shares, so that future growth accrues to the next generation. It is commonly used to manage the tax on a future transfer of a family business.

Estimated Tax

Estimated tax is a corporation's projection of the tax it expects to owe for the year, used to determine its required instalment payments. Underestimating it can lead to instalment interest charges from the Canada Revenue Agency.

Exempt supply

An exempt supply has no GST/HST charged on it, and the supplier cannot claim input tax credits on related costs. Many financial services, residential rent, and most health and education services are exempt.

External Audit

An external audit is an independent examination of a corporation's financial statements by an outside auditor who gives an opinion on whether they are fairly presented. It provides assurance to shareholders, lenders, and regulators that the financial reporting is reliable.

F

Federal Corporate Tax

Federal corporate tax is the income tax a corporation pays to the federal government on its taxable income, reported on the T2 return. It is calculated after applying federal reductions such as the small business deduction and general rate reduction.

Federal Incorporation

Federal incorporation creates a corporation under the Canada Business Corporations Act, giving it the right to operate and use its name across all provinces and territories. A federally incorporated company still has to register extra-provincially in each province where it carries on business.

Fiduciary Duty

A fiduciary duty is the legal obligation of directors and officers to act honestly, in good faith, and in the best interests of the corporation. It includes putting the corporation's interests ahead of their own and avoiding conflicts of interest.

Financial Modelling

Financial modelling is the practice of building a structured projection of a company's finances, usually in a spreadsheet, to test scenarios and support decisions. It underpins budgeting, fundraising, valuation and major investment choices.

First-in, first-out (FIFO)

FIFO is an inventory costing method that assumes the oldest stock is sold first. The cost of goods sold reflects earlier purchase prices, while remaining inventory is valued at the most recent costs.

Fiscal year

A fiscal year is the twelve-month period a business uses for accounting and tax reporting, which does not have to align with the calendar year. Canadian corporations choose their fiscal year-end when they file, while most individuals use the calendar year.

Fixed asset

A fixed asset is a long-term tangible item a business uses to operate rather than resell, such as buildings, machinery, or vehicles. Its cost is spread over its useful life through depreciation.

Fractional CFO

A fractional CFO is a senior finance executive engaged part-time to lead a company's finance strategy without the cost of a full-time hire. They handle cash flow, reporting, planning and fundraising for businesses that have outgrown bookkeeping but are not ready for a full-time CFO.

Free Cash Flow

Free cash flow is the cash a business generates from operations after funding the capital spending needed to maintain and grow it. It is the cash genuinely available to repay debt, pay dividends or reinvest.

G

Garnishment

A garnishment is a legal order requiring an employer to withhold part of an employee's pay to satisfy a debt, such as unpaid taxes, support payments, or a court judgment. The employer must follow the order and send the withheld amount to the named party. Limits protect a portion of the employee's earnings.

General ledger

The general ledger is the central record that holds every account a business uses, summarizing all transactions by account. It is the source from which the trial balance and financial statements are prepared.

General Rate Income Pool (GRIP)

GRIP is a notional account that tracks the income a CCPC has taxed at the general corporate rate. A positive GRIP balance lets the corporation designate dividends as eligible, which are taxed more favourably in the shareholder's hands.

General Rate Reduction

The general rate reduction lowers the federal corporate tax rate on income that does not qualify for other preferential treatment, such as the small business deduction or manufacturing and processing deduction. It applies to a corporation's full-rate taxable income.

Generally Accepted Accounting Principles (GAAP)

GAAP refers to the common rules and standards businesses follow to prepare consistent, comparable financial statements. In Canada, GAAP is set out in standards such as IFRS and ASPE published through CPA Canada.

Going concern

Going concern is the assumption that a business will continue operating for the foreseeable future and is not about to be liquidated. Financial statements are prepared on this basis unless there is significant doubt the business can survive.

Goodwill

Goodwill is the premium paid when buying a business above the fair value of its identifiable net assets, reflecting things like reputation and customer relationships. It is recorded as an intangible asset and tested periodically for impairment.

Gross Margin

Gross margin is gross profit expressed as a percentage of revenue, showing how much of each sales dollar is left after the direct cost of goods or services. It reveals the underlying profitability of what a company sells before overheads.

Gross Pay

Gross pay is an employee's total earnings for a pay period before any deductions — including regular wages, overtime, bonuses and taxable benefits. It is the starting figure from which income tax, CPP and EI are withheld. Net pay is what remains after those deductions.

Gross profit

Gross profit is revenue minus the cost of goods sold. It shows how much a business earns from its core products or services before operating expenses, interest, and taxes.

Gross-up

The gross-up is the step where a Canadian dividend is increased on your return to approximate the pre-tax corporate income behind it. The grossed-up amount is taxed, then partly offset by the dividend tax credit.

Group Benefits

Group benefits are employer-sponsored insurance plans — such as health, dental, disability and life coverage — offered to employees as a group. Some employer-paid premiums create a taxable benefit for the employee, while others do not. Employee-paid premiums are usually deducted from net pay.

GST

The Goods and Services Tax is a federal value-added tax applied to most goods and services in Canada. Registered businesses charge it on sales and remit the net amount to the CRA after claiming input tax credits.

GST number

A GST number, part of your business number, is the account the CRA assigns when you register for GST/HST. You must show it on invoices so customers can support their own input tax credit claims.

GST/HST registration

GST/HST registration is the process of signing up with the CRA to collect and remit the tax. Registration becomes mandatory once you exceed the small supplier threshold, and you can register voluntarily before that.

H

Half-Year Rule

The half-year rule limits a corporation to claiming capital cost allowance on only half of the normal amount in the year an asset is acquired. It applies to most newly purchased depreciable property, subject to incentives that can override it.

Holding Company

A holding company is a corporation set up mainly to own assets or shares in other companies rather than to run an active business. It is often used to hold investments, real estate, or the shares of an operating company for tax planning and asset protection.

HST

The Harmonized Sales Tax combines the federal GST with provincial sales tax into a single rate in participating provinces. It works like the GST for registration, charging, and input tax credits.

I

Income Statement

The income statement reports a company's revenue, expenses and resulting profit or loss over a period such as a month, quarter or year. It is also called the profit and loss statement.

Input tax credit

An input tax credit lets a registered business recover the GST/HST it paid on purchases used in its commercial activities. You subtract these credits from the tax you collected to find your net remittance.

Insurable Earnings

Insurable earnings are the parts of an employee's pay on which Employment Insurance premiums are calculated, up to the annual maximum. They set the EI deduction for the employee and the employer's larger matching premium. They are also reported on the Record of Employment.

Intangible asset

An intangible asset is a long-term asset without physical form, such as a trademark, patent, or software. Its cost is typically spread over its useful life through amortization.

Internal Audit

An internal audit is a review carried out by people within an organization to assess its own controls, risk management, and governance processes. It helps management find weaknesses and improve operations, and is independent of the external audit of financial statements.

Internal Rate of Return

The internal rate of return is the discount rate at which an investment's net present value equals zero, expressed as an annual percentage return. It is compared against a required rate to judge whether a project is worth pursuing.

International Financial Reporting Standards (IFRS)

IFRS is a globally used set of accounting standards required for Canadian publicly accountable enterprises. It aims to make financial statements consistent and comparable across countries.

Inventory

Inventory is the goods a business holds to sell to customers, including raw materials, work in progress, and finished products. It is recorded as a current asset until sold, at which point its cost moves to cost of goods sold.

Investment Tax Credit (ITC)

An investment tax credit directly reduces the tax a corporation owes for making certain qualifying expenditures, such as SR&ED or designated property. Unused credits can generally be carried back or forward, and some are partly refundable.

Issued Capital

Issued capital is the portion of a corporation's authorized shares that has actually been issued to and held by shareholders. It reflects the shares currently outstanding rather than the total a corporation could issue.

J

Journal entry

A journal entry is the record of a single transaction, listing the accounts affected and the debit and credit amounts. Entries are posted from the journal to the general ledger.

K

Key Performance Indicator (KPI)

A key performance indicator is a measurable value that tracks how well a business is meeting a specific objective, such as gross margin, cash conversion or customer retention. Good KPIs focus attention on the few numbers that drive results.

L

Liabilities

Liabilities are the amounts a company owes to others, including suppliers, lenders, employees and tax authorities. They are reported on the balance sheet as current or long-term depending on when they fall due.

Limited Partnership

A limited partnership has at least one general partner who manages the business and bears unlimited liability, plus one or more limited partners whose liability is capped at the amount they invest. Limited partners are typically passive investors who do not take part in day-to-day management.

Liquidity

Liquidity is a company's ability to meet its short-term obligations with cash and assets that can quickly be turned into cash. Strong liquidity means a business can pay its bills as they fall due.

M

Management accounting

Management accounting produces financial information for internal use, such as budgets, cost analysis, and performance reports that help owners and managers make decisions. Unlike financial reporting, it is not bound by external standards and can be tailored to what the business needs.

Manufacturing and Processing (M&P) Deduction

The M&P deduction reduces the federal corporate tax rate on income earned from manufacturing and processing goods in Canada. It supports corporations whose profits come from qualifying production activities.

Marginal tax rate

Your marginal tax rate is the rate of tax you pay on your next dollar of income. Because Canada uses a progressive system, only income within the top bracket you reach is taxed at that rate, not your whole income.

Matching principle

The matching principle requires expenses to be recorded in the same period as the revenue they help generate. It is the basis for accruals, depreciation, and many other adjusting entries.

Materiality

Materiality is the idea that information matters if leaving it out or stating it wrong could influence the decisions of someone reading the financial statements. It guides how much precision and disclosure a given item warrants.

Month-end close

The month-end close is the routine of finalizing the books for a month by reconciling accounts, posting adjusting entries, and reviewing results. A disciplined close produces timely, reliable financial reports.

N

Net Claim Code

A net claim code is the bracket assigned from an employee's total claim amount on the TD1, used to look up how much income tax to withhold. A higher claim code generally means less tax deducted at source. Employers set it based on the employee's completed TD1.

Net Income for Tax Purposes

Net income for tax purposes is a corporation's income computed under the Income Tax Act, which adjusts accounting net income for items the tax rules treat differently. It is the starting point for arriving at taxable income.

Net Pay

Net pay is the amount an employee actually receives after all deductions are taken from gross pay, including income tax, CPP, EI and any voluntary deductions. It is the figure deposited to the employee's bank account. It is often called take-home pay.

Net Present Value

Net present value is the sum of an investment's future cash flows discounted to today, minus the initial outlay. A positive net present value means the investment is expected to create value above its required return.

Net Profit Margin

Net profit margin is net profit expressed as a percentage of revenue, showing how much of each sales dollar becomes bottom-line profit after all costs, interest and tax. It is a headline measure of overall profitability.

Non-Capital Loss

A non-capital loss arises when a corporation's deductible business and other losses exceed its income for the year. It can be carried back to recover tax paid in prior years or carried forward to reduce tax in future years, within the limits set by the Income Tax Act.

Non-Cash Benefit

A non-cash benefit is something of value an employer gives an employee in a form other than money, such as a gift, parking, or use of company property. Many non-cash benefits are taxable and must be valued and reported on the T4. Some, within CRA limits, are not taxable.

Non-Eligible Dividend

A non-eligible dividend (also called an ordinary dividend) is paid out of income taxed at lower corporate rates, such as income that received the small business deduction. It carries a smaller gross-up and dividend tax credit than an eligible dividend.

Non-refundable tax credit

A non-refundable tax credit can reduce your tax payable to zero but no further; any unused amount is not paid out to you. The basic personal amount is a common example.

Non-Voting Share

A non-voting share is a share that carries no right to vote at shareholder meetings, though it may still carry rights to dividends and a share of assets. These shares let owners raise capital or split ownership without giving up voting control.

Notice of assessment

A notice of assessment is the CRA's summary after it reviews your tax return. It confirms refund or balance owing and reports details such as your RRSP deduction limit and any carryforward amounts.

O

Officer

An officer is an individual appointed by the board of directors to handle the day-to-day running of a corporation, such as a president, secretary, or chief financial officer. Officers carry out the board's decisions and owe the corporation duties of care and loyalty.

Operating Company

An operating company is the corporation that actually carries on the active business, such as selling goods or providing services. It is frequently paired with a holding company that owns its shares and holds surplus assets away from business risk.

Operating expense

An operating expense is a cost of running the business day to day that is not tied directly to producing a product, such as rent, utilities, and office salaries. Operating expenses are subtracted from gross profit to arrive at operating income.

Operating Margin

Operating margin is operating profit as a percentage of revenue, measuring profitability from core operations before interest and tax. It isolates how well a company runs its business, separate from how it is financed.

Overtime Pay

Overtime pay is the higher rate owed when an employee works beyond the daily or weekly hours threshold set by their province or territory. The threshold and premium rate are defined by employment standards, not by the employer. Some roles are exempt from overtime rules.

P

Part IV Tax

Part IV tax is a refundable tax a private corporation pays on certain dividends it receives from other corporations. It prevents shareholders from deferring personal tax by holding investments inside a corporation, and it is refunded when the corporation pays dividends out.

Partnership

A partnership is a business carried on by two or more people who share its profits, losses, and management. In a general partnership each partner is personally liable for the partnership's debts, and income is taxed in the hands of the individual partners rather than the partnership itself.

Passive Investment Income

Passive investment income is income a corporation earns from investments rather than from running a business, such as interest, rent, royalties and portfolio dividends. Earning too much of it in a CCPC can reduce access to the small business deduction.

Pay Period

A pay period is the recurring length of time over which an employee's pay is calculated — commonly weekly, biweekly, semi-monthly or monthly. The chosen frequency affects deduction calculations and the number of pay runs per year. It is set by the employer within employment standards.

Payroll Account (RP)

A payroll (RP) account is the program account under a business's CRA Business Number used to report and remit payroll deductions. An employer must open one before its first remittance. All T4 filings and source deduction payments flow through this account.

Payroll Register

A payroll register is the detailed record of each pay run, listing every employee's gross pay, deductions, employer costs and net pay. It supports remittances, year-end slips and the general ledger. Employers must keep payroll records for the period required by the CRA.

Payroll Remittance

A payroll remittance is the payment an employer sends to the Canada Revenue Agency covering withheld income tax, CPP and EI plus the employer's share. It is filed against the business's payroll (RP) account. The amount and the matching report must reach the CRA by the employer's remittance due date.

Payroll Year-End

Payroll year-end is the process of closing the calendar year's payroll — reconciling remittances, preparing T4 and T4A slips, and filing summaries with the CRA. Slips must generally be issued to employees and filed by the end of February. Accurate records throughout the year make year-end smoother.

Pension Adjustment

A pension adjustment measures the value of pension or deferred profit-sharing benefits an employee earned in a year through their employer's registered plan. It is reported on the T4 and reduces the employee's RRSP contribution room for the following year. This keeps total tax-assisted retirement savings within CRA limits.

Pensionable Earnings

Pensionable earnings are the portions of an employee's pay subject to Canada Pension Plan contributions, after the basic exemption and up to the annual ceiling. They determine how much CPP an employee and employer must each contribute. Not all income types are pensionable.

Personal Services Business

A personal services business exists when an individual provides services through a corporation in circumstances that would otherwise make them an employee of the client (an incorporated employee). Its income is denied the small business deduction and faces restricted deductions plus a higher tax rate.

Place of supply rules

Place of supply rules determine which province's GST/HST rate applies to a sale. They look at factors such as where goods are delivered or where a service is performed, which matters when you sell across provinces.

Preferred Share

A preferred share is a class of share that ranks ahead of common shares for dividends and for the return of capital if the corporation is wound up. Preferred shares often carry fixed dividend entitlements but limited or no voting rights.

Prepaid expense

A prepaid expense is a payment made in advance for goods or services to be received later, such as insurance paid up front for the year. It is recorded as an asset and expensed gradually as the benefit is used.

Principal residence exemption

The principal residence exemption can eliminate the capital gains tax on the sale of your main home for the years it qualifies. The sale must still be reported on your T1 even when fully exempt.

Professional Corporation

A professional corporation is a corporation through which a regulated professional, such as a doctor, lawyer, or accountant, carries on their practice. It must follow both corporate law and the rules of the relevant professional regulator, and incorporating does not shield the professional from liability for their own professional conduct.

Provincial Corporate Tax

Provincial corporate tax is the tax a corporation pays to the province or provinces where it has a permanent establishment, in addition to federal tax. Most provinces have the Canada Revenue Agency collect their tax, while a few such as Alberta and Quebec administer their own.

Provincial Incorporation

Provincial incorporation creates a corporation under a single province's business corporations statute, such as Ontario's Business Corporations Act. The corporation's home rights are tied to that province, and it must register elsewhere to operate in other jurisdictions.

Provincial sales tax

Provincial sales tax is a retail tax levied by individual provinces that have not harmonized with the GST. Rules, rates, and registration differ by province, and it is usually charged on top of the GST.

PST

Provincial Sales Tax is a separate retail sales tax charged by certain provinces on top of the GST. Unlike the GST/HST it generally does not allow input tax credits, so it is often a real cost to business.

PST (British Columbia)

BC PST is the provincial sales tax charged in British Columbia in addition to the federal GST, since BC is not an HST province. Businesses register separately with the province to collect and remit it.

Q

Quick method (GST/HST)

The quick method is a simplified way for eligible small businesses to calculate GST/HST owing. You remit a set percentage of tax-included sales instead of tracking every input tax credit, which cuts paperwork.

Quick Ratio

The quick ratio measures whether a company can meet its current liabilities using only its most liquid assets, excluding inventory. It is also called the acid-test ratio and is a stricter test than the current ratio.

R

Reassessment

A reassessment is a revised tax assessment the Canada Revenue Agency issues after reviewing or auditing a return it originally accepted. It can increase or decrease tax owing, and corporations can object to a reassessment they disagree with within set time limits.

Recapture of CCA

Recapture occurs when a corporation sells depreciable property for more than its undepreciated capital cost, having claimed too much capital cost allowance. The excess CCA previously deducted is added back to income in the year of sale.

Record of Employment (ROE)

A Record of Employment documents an employee's work history and earnings when an interruption of earnings occurs, such as a layoff, leave, or termination. Service Canada uses it to determine Employment Insurance eligibility and benefit amounts. Employers must issue the ROE within set timelines after the last day worked.

Refundable Dividend Tax on Hand (RDTOH)

RDTOH is a notional account that tracks refundable tax a corporation has prepaid on its investment income. The corporation recovers this tax as a dividend refund when it pays taxable dividends to shareholders, supporting tax integration.

Refundable tax credit

A refundable tax credit can be paid to you even if it exceeds the tax you owe. If the credit is larger than your tax payable, the CRA refunds the difference.

Registered Office

A registered office is the official address a corporation maintains in its home jurisdiction for receiving legal and government correspondence. It must be kept current with the corporate registry and is where key corporate records are often held.

Related Corporations

Related corporations are companies connected to each other through ownership or control, such as a parent and its subsidiary or two companies controlled by the same person. The relationship can affect how they are treated for tax and disclosure purposes.

Remittance

A remittance is the payment a registered business sends the CRA for the net GST/HST it collected after subtracting input tax credits. Remittances are due on a monthly, quarterly, or annual schedule based on your filing period.

Remittance Frequency

Remittance frequency is how often an employer must send payroll deductions to the CRA — for example monthly, quarterly, or more often for larger payrolls. The CRA assigns a frequency based on the employer's average monthly withholding amount. A growing payroll can move an employer to a more frequent schedule.

Retained Earnings

Retained earnings are the cumulative profits a company has kept rather than paid out as dividends. They sit within shareholders' equity and fund reinvestment in the business.

Retroactive Pay

Retroactive pay is compensation owed for past pay periods, often from a delayed raise or a corrected error. It is added to current pay and is subject to income tax, CPP and EI. The CRA's bonus tax method is commonly used to calculate the tax on it.

Return on Equity

Return on equity measures how much profit a company generates for each dollar of shareholders' equity, expressed as a percentage. It shows how effectively owners' capital is being put to work.

Return on Investment

Return on investment measures the gain or loss from an investment relative to its cost, expressed as a percentage. It is a simple, widely used way to compare the payoff of different uses of money.

Revenue recognition

Revenue recognition is the set of rules that determine when a business can record income, generally as it delivers goods or services rather than when cash arrives. Consistent recognition keeps financial statements comparable and accurate.

RRSP

A Registered Retirement Savings Plan is a tax-deferred account for retirement savings. Contributions are deductible from income, investments grow tax-free inside the plan, and withdrawals are taxed as income when taken out.

RRSP contribution room

Your RRSP contribution room is the maximum you can put into an RRSP in a year without penalty. It builds based on earned income, is reduced by pension adjustments, and unused room carries forward. The CRA reports your current room on your notice of assessment.

RRSP deduction limit

The RRSP deduction limit is the most you can claim as an RRSP deduction on your T1 for the year. It equals your accumulated contribution room and appears on your CRA notice of assessment.

RRSP Matching

RRSP matching is a benefit where an employer contributes to an employee's Registered Retirement Savings Plan, often matching the employee's own contributions up to a set percentage. The employer's contribution is generally a taxable benefit for payroll purposes. It is a common way to support employee retirement savings.

S

Safe Income

Safe income is the after-tax retained earnings of a corporation that have already been taxed and can support a tax-free inter-corporate dividend. It is a key concept when planning dividends between related corporations to avoid anti-avoidance rules.

Salary vs dividends

Owner-managers of a corporation can pay themselves salary, dividends, or a mix. Salary is deductible to the company and creates RRSP room and CPP, while dividends are not deductible and carry a dividend tax credit personally; the best mix depends on your situation.

Salary vs. Hourly Pay

Salary is a fixed annual amount paid in equal instalments regardless of hours, while hourly pay is calculated from hours actually worked. The distinction affects overtime, statutory holiday pay and how each pay run is computed. Both are subject to the same source deductions.

Scientific Research and Experimental Development (SR&ED) Tax Credit

The SR&ED program gives corporations tax credits and deductions for eligible research and development carried out in Canada. CCPCs can often earn an enhanced, partly refundable credit, making it one of the country's largest support programs for innovation.

Second Additional CPP (CPP2)

CPP2 is a higher tier of Canada Pension Plan contributions that applies to earnings above the first CPP ceiling, up to a second, higher ceiling. Like base CPP, it is split equally between employee and employer and remitted to the CRA. It was phased in to raise future retirement benefits for higher earners.

Section 85 Rollover

A section 85 rollover lets a taxpayer transfer eligible property to a corporation on a tax-deferred basis in exchange for shares. It is commonly used to incorporate a business or reorganise ownership without triggering an immediate capital gain.

Self-employment income

Self-employment income is what you earn running an unincorporated business or as an independent contractor. You report gross revenue less eligible expenses on your T1 and pay both shares of CPP on the net amount.

Severance Pay

Severance pay is compensation an employer may owe an employee whose job ends, recognizing service and lost employment. Depending on how it is paid, it can be eligible for transfer to an RRSP or taxed as income. It is separate from termination pay given in lieu of notice.

Share

A share is a unit of ownership in a corporation that represents a portion of its capital. The rights attached to a share, such as voting, dividends, and a claim on assets, depend on the class of share and the corporation's articles.

Share Certificate

A share certificate is a document issued by a corporation that confirms a shareholder owns a stated number of shares of a particular class. It serves as evidence of ownership, though many corporations now record holdings electronically instead.

Shareholder

A shareholder is a person or entity that owns one or more shares in a corporation, giving them an ownership stake. Depending on the share class, this can carry rights to vote, receive dividends, and share in remaining assets if the corporation is wound up.

Shareholder Agreement

A shareholder agreement is a contract among some or all of a corporation's shareholders that governs their relationship, covering matters like share transfers, dispute resolution, and how decisions are made. It supplements the corporation's articles and bylaws.

Shareholder Loan

A shareholder loan is money a corporation lends to a shareholder or that a shareholder lends to the corporation. Loans to shareholders that are not repaid within the time the Income Tax Act allows can be included in the shareholder's income.

Shareholders' Equity

Shareholders' equity is the owners' residual claim on a company after subtracting all liabilities from all assets. It includes share capital, retained earnings and reserves.

Small Business Deduction

The small business deduction lowers the federal corporate tax rate on a CCPC's active business income up to an annual limit. It is a key reason many Canadian owner-managed businesses incorporate.

Small supplier threshold

The small supplier threshold is the level of taxable revenue below which you are not required to register for GST/HST. Once your sales exceed it, registration becomes mandatory. Confirm the current threshold with the CRA before relying on it.

Sole Proprietorship

A sole proprietorship is an unincorporated business owned and run by one person, with no legal separation between the owner and the business. The owner reports business income on their personal tax return and is personally liable for all debts and obligations.

Solvency

Solvency is a company's ability to meet its long-term obligations and continue operating into the future. A solvent business has assets and earnings sufficient to cover its total debts over time.

Source Deductions

Source deductions are the amounts an employer withholds from each pay cheque — income tax, CPP contributions and EI premiums — before paying the employee. The employer holds these amounts in trust and remits them to the Canada Revenue Agency. Failing to remit on time triggers penalties and interest.

Specified Investment Business

A specified investment business is a corporation whose principal purpose is earning income from property, such as rents, interest or dividends, without enough full-time employees. Its income is treated as passive and does not qualify for the small business deduction.

Statement of Cash Flows

The statement of cash flows shows how cash moved in and out of a business over a period, split into operating, investing and financing activities. It explains the gap between reported profit and the actual change in the cash balance.

Statement of Changes in Equity

The statement of changes in equity reconciles the opening and closing balances of shareholders' equity over a period. It captures movements such as profit retained, dividends paid and new shares issued.

Statutory Deduction

A statutory deduction is an amount an employer is legally required to withhold from pay — income tax, CPP contributions and EI premiums. These differ from voluntary deductions like group benefit premiums or RRSP contributions. Statutory deductions must be remitted to the CRA.

Statutory Holiday

A statutory holiday is a public holiday recognized under federal, provincial, or territorial law on which eligible employees are entitled to time off or premium pay. The list of holidays differs by jurisdiction. Employment standards set the pay and eligibility rules.

Statutory Holiday Pay

Statutory holiday pay is the wage an eligible employee receives for a public holiday they do not work, calculated under provincial or territorial employment standards. Employees who work the holiday are often entitled to premium pay on top. The exact formula and eligibility rules vary by jurisdiction.

Statutory Holiday Pay Eligibility

Stat pay eligibility is the set of conditions an employee must meet to qualify for statutory holiday pay, such as minimum days worked or working the scheduled shifts around the holiday. The exact tests are defined by each province's or territory's employment standards. Employees who do not meet them may receive reduced or no holiday pay.

Succession Planning

Succession planning is the process of preparing for the orderly transfer of ownership and leadership of a business to new owners or managers. For incorporated businesses it often involves share transfers, shareholder agreements, and tax planning to ease the handover.

T

T1 return

The T1 is the personal income tax return individuals file with the CRA each year. It reports all sources of income, claims deductions and credits, and calculates whether you owe a balance or get a refund.

T2 Corporate Tax Return

The T2 is the federal corporate income tax return that every resident corporation must file with the Canada Revenue Agency each tax year, even if no tax is owed. It reports the corporation's income, deductions and tax payable.

T4 Slip

A T4 is the year-end slip an employer issues to each employee reporting employment income and the amounts deducted for income tax, CPP and EI. Employees use it to file their personal tax return. Employers must issue T4s and file them with the CRA by the end of February for the prior calendar year.

T4 Summary

The T4 Summary is the form that totals all the T4 slips an employer issued for the year, reconciling reported earnings and deductions against what was remitted to the CRA. It is filed together with the T4 slips. Differences between the summary and remittances can prompt a CRA review.

T4A Slip

A T4A reports other income such as pension payments, certain self-employed commissions, fees for services, and some taxable benefits not covered by a T4. Businesses issue T4As to recipients and file them with the CRA. It is distinct from the T4 used for regular employment income.

Tax bracket

A tax bracket is a band of taxable income taxed at a set rate. As income rises into a higher bracket, only the portion inside that band is taxed at the higher rate. Canada has both federal and provincial brackets.

Tax credit

A tax credit reduces the tax you owe rather than the income you are taxed on. Credits are applied after tax is calculated, and may be refundable or non-refundable.

Tax instalments (personal)

Tax instalments are periodic prepayments toward your income tax, required when too little is withheld at source. The CRA sends instalment reminders, and missed or late payments can trigger interest.

Tax Integration

Tax integration is the principle that income earned through a corporation and then paid out to a shareholder should bear roughly the same total tax as income earned directly. Mechanisms like the dividend tax credit and RDTOH exist to make integration work.

Tax integration (personal)

Integration is the principle that income earned through a corporation and paid out should bear roughly the same total tax as income earned directly. The gross-up and dividend tax credit are the mechanisms that aim to make this neutral.

Tax Year-End

A corporation's tax year-end is the date that closes its fiscal period and determines when its T2 return and tax payments are due. A corporation can choose a non-calendar year-end, but it generally cannot exceed 53 weeks.

Taxable Benefit

A taxable benefit is a good, service, or perk an employer provides that has personal value to the employee and must be added to their income. Examples include personal use of a company vehicle or certain insurance premiums. The benefit's value increases the employee's taxable pay and may affect CPP and EI.

Taxable Income (Corporate)

Corporate taxable income is the amount a corporation actually pays tax on, calculated by starting with net income for tax purposes and applying deductions such as loss carryovers and dividends from other taxable Canadian corporations. Corporate tax rates are applied to this figure.

Taxable income (personal)

Taxable income is the amount left after subtracting allowed deductions from your total income. It is the figure the tax brackets are applied to when calculating what you owe.

Taxable supply

A taxable supply is a good or service on which GST/HST applies, whether at the standard rate or zero-rated. Making taxable supplies is what allows a business to claim input tax credits.

TD1 Form

The TD1 is the Personal Tax Credits Return an employee completes so the employer can calculate the right amount of income tax to withhold. There are federal and provincial or territorial versions. Employees update it when their tax credits change, such as a new dependant.

Terminal Loss

A terminal loss arises when a corporation disposes of all assets in a CCA class and a positive undepreciated capital cost balance remains. That remaining balance is deductible in full against income in the year of disposal.

Termination Pay

Termination pay is the amount an employer pays in place of the working notice required by employment standards when ending employment. It is treated as employment income and subject to source deductions. Minimum notice and pay rules vary by province or territory.

TFSA

A Tax-Free Savings Account lets investments grow and be withdrawn completely tax-free. Contributions are not deductible, but neither growth nor withdrawals are ever taxed.

TFSA contribution room

TFSA contribution room is the amount you can deposit without over-contribution penalties. Unused room carries forward, and amounts you withdraw are added back to your room the following calendar year.

Trial balance

A trial balance lists the closing balance of every general ledger account to confirm that total debits equal total credits. It is a checkpoint before preparing financial statements, though a balanced trial balance does not guarantee the books are error-free.

U

Unanimous Shareholder Agreement

A unanimous shareholder agreement is a special agreement signed by all shareholders that can transfer some or all of the directors' powers and responsibilities to the shareholders themselves. Where it shifts a director's powers, it also shifts the related duties and liabilities to the shareholders.

Undepreciated Capital Cost (UCC)

UCC is the remaining balance in a CCA class after deducting capital cost allowance claimed in prior years. The annual CCA deduction is generally calculated on the UCC balance, which falls as assets are depreciated or sold.

V

Vacation Pay

Vacation pay is the percentage of earnings an employer must pay employees for time off, set by each province's or territory's employment standards. It can be paid out when vacation is taken or accrued and paid on each cheque. The minimum percentage rises with length of service in most jurisdictions.

Variance Analysis

Variance analysis compares actual financial results against budget or forecast and explains the differences. It helps managers find where performance diverged from plan and decide what to do about it.

Voting Share

A voting share is a share that entitles its holder to cast votes at shareholder meetings, including on the election of directors and major corporate decisions. The number of votes per share is set out in the corporation's articles.

W

Weighted Average Cost of Capital (WACC)

WACC is the blended cost of a company's debt and equity, weighted by how much of each it uses to fund the business. It is commonly used as the discount rate in valuation and as a hurdle for new investments.

Weighted-average cost

Weighted-average cost is an inventory method that values each unit at the average cost of all units available during the period. It smooths out price fluctuations between purchases.

Workers' Compensation (WCB/WSIB)

Workers' compensation is provincial coverage that pays benefits to workers injured or made ill on the job, funded by employer premiums. It is run by a provincial board such as WorkSafeBC, Alberta's WCB, or Ontario's WSIB. Premiums are based on payroll and industry risk classification.

Working Capital

Working capital is current assets minus current liabilities, showing the short-term funds available to run the business. Positive working capital means a company can cover its near-term obligations; negative working capital can signal a cash squeeze.

Write-off

A write-off removes an asset's value from the books when it can no longer be recovered, such as an uncollectible customer account or obsolete inventory. The amount becomes an expense in the period the write-off is recorded.

Z

Zero-rated supply

A zero-rated supply is taxable at a rate of 0%, so no GST/HST is charged to the customer. The supplier can still claim input tax credits on related purchases. Basic groceries and exports are common examples.

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13-Week Cash Flow

A 13-week cash flow is a short-term, week-by-week forecast covering roughly one quarter, used to manage liquidity closely. It is a standard tool in turnaround and tight-cash situations where daily timing matters.