Japanese Business Glossary

薄記 (hakki) refers to the "ledger entry" or "journal entry" in accounting. It is a fundamental concept in bookkeeping and accounting, used to record business transactions systematically in the company's financial records.

In the context of Japanese accounting practices, hakki includes the date when the transaction occurred, a description of the transaction including parties involved and the nature of the transaction, the monetary value of the transaction, and the accounts affected by the transaction including debit and credit entries.

引当 (hikate) refers to provisions or reserves in accounting. These are amounts set aside from a company's profits to cover future liabilities, expenses, or losses.

In Japanese accounting, provisions ensure that financial statements reflect a more accurate picture of the company's financial health. Common examples include provisions for bad debts, warranty liabilities, or potential legal expenses.

By setting aside these amounts, companies can better manage risks and uncertainties, ensuring they are prepared for future financial obligations. This practice aligns with the conservative approach in accounting, which emphasizes caution and prudence in financial reporting.

費目 (himoku) refers to "expense items" or "cost items" in Japanese accounting. These are categories used to classify and record different types of expenses incurred by a business. Properly categorizing expenses helps in financial reporting, budgeting, and analysis.

Common expense items include rent, salaries, utilities, office supplies, travel expenses, and advertising. These categories help businesses track their spending and manage their finances effectively.

減損処理 (genson shori), impairment accounting or impairment processing, is the process of recognizing when the recoverable amount of an asset falls below its book value. This typically occurs when an asset's market value or utility significantly declines. In such cases, the asset is written down to reflect its reduced value, recording an impairment loss in the financial statements. This ensures accurate financial reporting and compliance with accounting standards.

勘定科目 (kanjou kamoku) refers to "account titles" or "account items" in English. These are the categories used in accounting to classify and record financial transactions. Each account title represents a specific type of transaction or financial item.

For example, common account titles include assets such as cash, accounts receivable, and inventory. Liabilities can include accounts payable and loans payable. Equity might include common stock and retained earnings. Revenue can be classified as sales and service revenue, while expenses might include rent expense, salaries expense, and utilities expense.

減資 (genshi) refers to the reduction of a company's capital. This process involves decreasing the company's stated capital on its balance sheet and is typically undertaken for several reasons, such as restructuring the company, offsetting accumulated losses, or returning excess capital to shareholders.

The process of genshi must be conducted according to legal procedures, including obtaining approval from shareholders and sometimes regulatory authorities. There are different methods of genshi, such as reducing the par value of shares, canceling a portion of the shares, or buying back shares and then canceling them. This reduction can improve the financial health of a company by aligning the capital structure more closely with its operational needs and market value.

While genshi can signal a company's attempt to streamline its operations and improve financial stability, it may also raise concerns among investors about the company’s past performance or future prospects. Therefore, clear communication and strategic planning are essential when a company decides to undertake a capital reduction.