Accountant - a person whose profession is inspecting and auditing personal or commercial accounts.
Accrual - liability for an expense for which no invoice has been received.
Asset - resources that are within a company can include property, machinery, cash and debtors.
Bad debt - is a debt that can no longer be collected and will subsequently be written off in the accounts.
Bookkeeper or accountants assistant - a person whose skill is keeping day-to-day account books or systematic records of financial transactions within a company or sole tradership and preparing these for the accountant.
Balance Sheet - is a snapshot of the business on a particular day and shows assets or liabilities within the business.
Capital - net worth of the company.
Cash Flow Forecast - is the prediction of the book balance at a given timeframe, using known expenses and income along with regular payments and receipts.
Cash Flow Statement - indicates how the business generated and disposed of cash and liquid funds over a given timeframe.
Credit - money paid out of an account/ledger, increases liabilities or decreases assets e.g. cash withdrawn from a bank account.
Creditor - a person or company that the company owes money to.
Debit - money paid into an account/ledger, increases assets or decreases liabilities. E.g. cash paid into a bank account.
Debtor - a person or company that owes money to a company. |
Depreciation - reduction in value of an asset over a period of time.
Direct Expenses - the cost of selling goods or services e.g. the purchase of raw materials or products to sell.
Liability - an obligation arising from a previous transaction, the payment of which may result in the transfer or use of assets provision of services or other yielding of economic benefits in the future.
Limited Company - a corporation registered in England and Wales, Scotland and Northern Ireland through Companies House and whose liability is limited by law.
Nominal Ledger - is the collection of accounts that record the second entry of bookkeeping and make up the financial statements. There is a different ledger for each expense or income e.g. sales ledger, purchases ledger, expense ledgers and asset ledgers, etc.
Overheads - are expenses of the business e.g. telephone, rent and rates but are not direct expenses.
Prepayment - an expense covering a long period of time paid for in advance e.g. quarterly rates of premises.
Profit and Loss Account - measures the performance of the business over a period of time and compares the income received against direct expenses and overheads to return a net profit or loss figure.
Sole Trader - is a type of business entity that legally has no separate existence from its owner, any liabilities for the business fall on the owner.
Trial Balance - summary of the ledgers either as a credit or debit, two columns must total the same amount for the accounts to balance.
VAT - valued added tax - consumption tax levied on goods and services deemed to give added value. Companies registered for VAT will have to add this tax to their sales but will also be able to reclaim it on purchases for which VAT has been added. |
