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September 08th 2010.

Financial Glossary

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V  ( 28 DEFINITIONS )

Validity
Validity is the concept that information reported accurately reflects the actual events and transactions.   top

Validity (as a control objective)
Validity, as a control objective, is ensuring that recorded transactions are ones that should have been recorded.   top

Value added statements
Value added statements are statements that reflect the increase in the value of goods and services as a result of a corporation's efforts. They are part of the entity concept.    top

Value at risk
Value at risk is the loss in earnings, cash flows, or fair value resulting from future price changes sufficiently large that they have a specified low probability of occurring.    top

Value engineering
Value engineering is the process of cost reduction during the design and development phase.   top

Variable costing
Variable costing is a costing method that includes only variable manufacturing costs - direct materials, direct labour, and variable manufacturing overhead - in the cost of a unit of product.   top

Variable costs
Variable costs vary in direct proportion to changes in activity. Activity is often defined as a measure of volume, such as units of goods or services produced, but can be defined as many other operational variables called cost drivers. Variable costs are constant on a per-unit basis.    top

Variable costs method
The variable costs method is a method of assigning costs to inventory that includes variable overhead as well as direct materials and direct labour. Fixed overhead costs are excluded and treated as period costs.   top

Variable overhead efficiency variance
The variable overhead efficiency variance is a measure of the difference between actual activity (direct labour-hours, machine-hours, or some other base) of a period and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.   top

Variable overhead spending variance
The variable overhead spending variance is a measure of the difference between actual variable overhead cost incurred during a period and the standard cost that should have been incurred, based on the actual activity of the period.   top

Variance
The variance is the square of the standard deviation.    top

Velocity
Velocity is a measure of the speed with which goods move through the production process.   top

Vendee
The vendee is the buyer or purchaser of goods or services.    top

Vendor
The vendor is the seller of goods or services, usually a manufacturer or wholesaler.    top

Venture capital
Venture capital is unsecured term funds provided to a non-public firm by an outsider, often in start-up situations. Venture financing typically entails relatively high risk. Consequently, venture capitalists look for high potential returns.   top

Verbal and written representations (audit evidence)
Verbal and written representations, as audit evidence, are responses to audit enquiries given by the client's officers, directors, owners, and employees.   top

Verifiability
Verifiability is the concept that independent people using an appropriate measurement method would reach substantially the same results.    top

Vertical analysis
A vertical analysis is the study of financial statement amounts expressed each year as proportions of a base such as sales for the income statement accounts and total assets for the balance sheet accounts.   top

Vertical equity
Vertical equity means that taxpayers with a greater ability to pay tax should bear a higher burden of tax.   top

Vested benefits
Vested benefits are benefits whereby a beneficiary retains the right to receive his or her pension entitlement even if he or she leaves the employer prior to retirement age. This is usually granted after meeting certain criteria such as years of service. The funds are not actually received by the employee until retirement, but the employee has obtained the legal right to receive the contractual amount of benefits.   top

Volatility
Volatility is the change in an asset's or liability's value per unit change in the interest rate.   top

Volume variance
A volume variance is a measure of the utilization of plant facilities. It is calculated as the difference between the amount of fixed overhead cost applied to Work in progress during a period and the amount of budgeted fixed overhead.   top

Voluntary conversion
A voluntary conversion is when the holder of convertible senior securities voluntarily submits the convertible bond or preferred share for conversion into the appropriate number of common shares.   top

Voluntary disclosure
Voluntary disclosure is disclosure of information above the minimum required.   top

Voluntary disposition
A voluntary disposition is a sale, exchange, or abandonment of capital assets based on decisions of management.   top

Voucher
A voucher is an internal business paper used to accumulate other papers and information needed to control the disbursement of cash and to ensure that the transaction is properly recorded.   top

Voucher system
A voucher system is a set of procedures designed to control the incurrence of obligations and disbursements of cash.    top

Vouching
Vouching is when an auditor selects sample items from an account and goes backward through the accounting and control system to find the source documentation that supports the item selected.   top