Definition

Value Added Tax, the European way of making you pay incrementally for everything at each stage of production and distribution. Unlike American sales tax that hits you once at checkout, VAT is baked into the price at every step, making it simultaneously more transparent and more insidious. British tourists love explaining this to confused Americans at duty-free shops.

Example Usage

The invoice showed a 20% VAT charge, bringing the total cost of the consulting services to £12,000.

Source: Tax and accounting terminology

Related Terms

Intermediate

undervaluing

The accounting sin of assigning too low a value to an asset, which is either conservative prudence or creative bookkeeping depending on who's doing it and why. Companies engage in undervaluing to lower tax bills or appear more modest, while investors do it to snag bargains. It's the opposite of the more common corporate tendency to overvalue everything and pretend problems don't exist.

💰 Finance / Accounting
Beginner

salvage value

The estimated value of an asset at the end of its useful life, before you actually try to sell it and discover it's worth much less. Also called residual value by optimists who think depreciation schedules reflect reality.

💰 Finance / Accounting
Beginner

conservatism principle

The accounting guideline that requires recognizing expenses and liabilities immediately but only recognizing revenues and assets when reasonably certain—essentially pessimism as professional policy. It's why accountants anticipate losses but never gains.

💰 Finance / Accounting
Intermediate

trusts

Legal arrangements where one party holds property or assets for the benefit of another, creating a three-way relationship between the person who created it, the trustee managing it, and the beneficiary enjoying it. It's how wealthy families keep money in the family while minimizing taxes and preventing irresponsible heirs from blowing their inheritance on crypto. Also refers to the confidence you probably shouldn't have in said arrangements.

💰 Finance / Accounting
Intermediate

going concern

The assumption that a company will continue operating for the foreseeable future rather than liquidating, which underpins how financial statements are prepared. When auditors question this assumption, update your résumé.

💰 Finance / Accounting
Intermediate

crossfoot

To verify that the sum of row totals equals the sum of column totals in a spreadsheet, because trusting your formulas is for amateurs. It's the accounting equivalent of checking your math twice before raising your hand.

💰 Finance / Accounting

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