Accountant The person responsible for producing the accounts.
Accounting Reference Date – The date which, for a company, determines the year end.
Accounts – A statement of the position of the business, or company at the end of a year, or other period, of trading. Generally, the accounts will consist of a Profit & Loss Statement and may include a Balance Sheet.
Accounts Payable – Amounts owed by the business for goods or services (also called creditors).
Accounts Receiveable – Amounts owed to the business by its customers (also called debtors).
Accruals – An expense incurred by the business which hasn’t been invoiced to the business yet
Amortisation – A type of depreciation for intangible assets
Articles of Association – Papers owned by a company setting out a shareholder’s rights.
Assets – Things owned by the business, such as equipment and intellectual property
Audit Threshold – The limit whereby a company must have an audit.
Audit – An independent examination of the accounts of a company or charity.
Bad Debt – A debt owed by a customer of the business that is unlikely to be paid and therefore is written off as an expense.
Balance Sheet – A statement of what the business owns and owes at a given date.
Bank Reconciliation – The checking of transactions made through the bank to the bookkeeping record.
Capital – Money owed to the business owner.
Cash Book – A record of what payments the business has made.
Cashflow – How much money is flowing (going in and out) of the business.
Cashflow Forecast – An estimate, or forecast, of how much money will flow into and out of the business in the future.
Chart of Accounts – A list of all the categories used in a bookkeeping programme.
Cloud Accounting – A bookkeeping system that uses the internet.
Contra Entry – An entry used to cancel another entry.
Cost of Sale – The goods, or services, used up in supplying sales, or the goods and services which are sold by the business.
Credit Note – The opposite of an invoice. This can be issued to cancel, or reduce, an invoice.
Creditors – The people, or businesses, that the business owes.
Debtor – A person, or business, that owes money to the business.
Depreciation – The cost of a fixed asset spread out over the number of years it is believed to be used.
Director – A person responsible for running the company.
Director’s Loan Account – The amount owed by a director to the company, or the amount a company owes to a director.
Dividend – A financial reward given to the shareholders of a company when it makes a profit.
Dod-dle – A simple to use, easy to understand online bookkeeping system.
Double Entry – A basic concept of bookkeeping, where one entry must be accompanied by an equal and opposite entry.
Drawings – Cash taken out of a business for personal reasons.
Expense – A cost of running the business that isn’t a cost of sale.
Expense Sheet – A list of expenses paid for privately by an employee of a company that is then submitted to the company for repayment.
Factoring – A way of getting money from customers quicker by using a factoring company who pays in advance and then collects from the customer for a fee.
Fixed Asset – An item of equipment, land, building or a vehicle that will be used by the company for more than one year.
Goodwill – The balance between what is paid for a business and its value in assets.
Going Concern – The treatment of a business expected to continue trading.
Gross Profit – A company sales less its cost of sales.
In the Cloud – Data stored on remote servers that is accessed via the internet.
Intangible Asset – An asset that cannot be physically touched, such as goodwill.
Interim Accounts – Accounts prepared before the year end to show the position of the business.
Inventory – A list of stock held by the business for sale.
Invoice – A note to the customer of how much it must pay for goods or services.
Lease Agreement – The document provided by leasing companies when an asset is bought using finance over a period of time.
Ledger – A book, or section of record keeping software, where a record of expenses, or sales, are kept.
Liabilities – Debts owed by the business.
Micro-Entity Company – A company which has a turnover of less than £632,000, a balance sheet total of less than £316,000 and an average of less than 10 employees.
Net Assets – Assets less liabilities.
Net Profit – The gross profit less the expense of the business.
Opening Balances – The balances brought forward from the last set of accounts and shown on the first day of the new financial period.
Overheads – The ongoing expenses of running the business.
Partnership – Two, or more, people (or companies) in business together.
Petty Cash – Cash held by the business to pay for small cash expenses.
Prepayment – The amount paid by a business in advance of incurring a cost.
Profit – Sales (income) less expenses.
Profit & Loss Account – A statement of the income and expenses of a business which forms all, or part, of the accounts.
Reconciliation – The comparison of one account, or ledger, to another to ensure they agree. An example is checking the bank statement to the cashbook.
Remittance Advice – A notice of a payment being made.
Share Capital – The amount of money the shareholders have contributed to the company.
Shareholder – A person who owns shares in a company.
Small Company – A company which has a turnover of less than £10.2 million, assets of less than £5.1 million and fewer than 50 employees.
Sole Trader – A person operating a business alone.
Tangible Fixed Assets – An asset with a physical presence, such as a piece of equipment.
Trade Creditors – see creditors.
Trade Debtors – see debtors.
Trial Balance – A list of the balances on all the records used to compile the accounts.
Turnover – The sales and/or income of the business.
Work in Progress – The costs attributable to work, or goods, still not finished.
Year End – The end of the financial year for a business.