| Accounts Payable |
The bills for which payment is required by your business to suppliers. They are also sometimes referred to as creditors. |
| Accounts Receivable |
The amounts owed to you by your customers. They are also sometimes referred to as debtors.
|
| Accrual Accounting |
Income and expenditure is recorded when the transaction occurs not necessarily when the money is received or paid. |
| Assets |
Items held by the business that are of value. These can be cash at bank, tools, computers, motor vehicles, office furniture and software just to name a few. |
| Balance Sheet |
It is normally referred to as a snapshot of your current financial position at a given point in time. This is where your assets, liabilities and owners equity (capital) are shown. |
|
Cash Accounting
|
Income and expenditure is recorded when the money is received or paid instead of when the transaction occurs. |
| Chart of Accounts |
The list of accounts used to record a businesses transactions. |
| Creditor |
A business or individual whom you owe money to for services or goods you have purchased or received. |
| Current Assets |
These are assets that are easily convertible to cash. Some examples of these include cash at bank, accounts receivable and inventories. |
| Current Liabilities |
As a general rule these are liabilities that are payable within a one-year period. Some examples of these are accounts payable and tax payable. |
| Debtor |
A business or individual whom owes you money to for services your have performed or goods you have sold. |
| Depreciation |
An annual non-cash transaction that takes into account the wear and tear on assets. Depreciation is listed as an expense on the income statement. |
| Equity |
The net worth of the business. Can also be called owners equity or capital. Equity comes from the owners investment in the business plus or minus any profit or loss. |
| Loss |
When your expenses exceed your income. Generally this is not what a business is trying to achieve. |
| Non-Current Asset |
Assets that are generally not converted to cash within one year. Examples of these are motor vehicles, land and buildings. |
| Non-Current Liabilities |
Liabilities that a generally not payable within a year. Examples of these are mortgages, long-term business loans, and motor vehicle loans. |
| Income Accounts |
These are accounts used to record your income. |
| Income Statement |
Also referred to as the Profit & Loss Statement or “P&L”. It lists your income, expenses and net profit (or loss). The net profit (or loss) is calculated using the formula Income minus your Expenses. |
| Inventory |
Goods or products you hold for sale or resale. Can also be referred to as “stock”. An example of a businesses inventory is goods on shelves in a supermarket. |
| Liabilities |
What your business owes to creditors. These consist of current and non-current liabilities. Some examples are accounts payable, loans, income tax payable and GST payable. |
| Profit |
When your income is greater than your expenses. Generally this is the reason why a business does what it does and continues to do. |
| Retained Earnings |
Profits of the business that have not been paid out to the owners and instead are “retained”. |
