Accounting: The process of identifying, measuring, recording, interpreting and reporting the results of the economic activity of an enterprise.

Balance sheet: A financial statement that summarizes the assets, liabilities and owners' or shareholders' equity of an enterprise, showing its financial position at a specific point.

Bookkeeping: Recording the financial transactions of an enterprise.

Cash flow statement: A financial statement summarizing the sources of cash and its uses during a specific period.

Chartered accountant (CA): An individual who meets the examination and experience requirements of the Canadian Institute of Chartered Accountants. Chartered accountants are the only accountants authorized to provide an audit opinion on an organization's financial statements.

Certified general accountant (CGA): These professionals typically work in public accounting, management accounting and financial management.

Certified management accountant (CMA): These professionals receive training in general accounting as well as specialized training in management accounting.

Disclosure documents: Financial, operational and legal information about a franchise system provided by a franchisor to a prospective franchisee prior to his or her investment in a franchise.

Expense statement: See Income statement.

Gross profit margin: The difference between net sales and the cost of goods sold, expressed as a percentage of net sales. This ratio indicates whether goods/services are priced appropriately to cover expenses and generate sufficient profits.

Goods and Services Tax (GST): Most goods and services purchased in Canada are subject to the Good and Services Tax, or GST. If an enterprise has gross sales in excess of $30,000 a year, it is required to collect and remit GST.

Income statement: A financial statement showing the revenue and expenses of an enterprise for a defined period.

Labour rate: The average hourly labour rate of an enterprise's employees.

Net profit margin: Net earnings divided by total revenue; this indicates how much profit an enterprise generates for every dollar it generates in revenue.

Provincial sales tax (PST): All provinces except Alberta charge provincial sales taxes on retail sales of many goods and services. Businesses that sell products (and sometimes services) in these provinces must register for, collect and remit PST. The PST rate varies from province to province.

Statement of earnings: see Income statement.

Statement of owners' equity: This statement shows beginning and ending owners' equity balances (the difference between a company's assets and liabilities and thus the value that accrues to the owner) as well as the items affecting owners' equity (e.g. investments, net income/loss from the income statement and withdrawals) during a specified period. Also known as 'statement of changes in owners' equity' or 'statement of retained earnings.