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.

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