Glossary
Accounting:
A systematic way of recording and reporting financial transactions for a business
Accounting Period:
A set period of time used to record transactions so evaluation of business performance can be measured on a comparable basis
Financial Year (Aust)
Financial year means the period 01/07/XX to 30/06/XX
Fiscal Year
Calendar Year
Calendar year means the period 01/01/XX to 31/12/XX
Debit:
An accounting entry that may either increase assets or decrease liabilities & equity in the Balance Sheet. Conversely may either increase expenses or decrease revenue accounts in the Income Statement.
Credit:
An accounting entry that may either decrease assets or increase liabilities & equity in the Balance Sheet. Conversely may either decrease expenses or increase revenue accounts in the Income Statement.
Chart of Accounts
A listing of all the accounts in the general ledger of an entity
General Ledger Account
An account or record used to sort, store, summarise an entities transactions
General Ledger Control Account
A specific type of general ledger account used to summarise an entities transactions recorded via a subsidiary ledger
Accounts Receivable:
The amount of money owed by customers or clients to a business after goods/services have been delivered and/or used
Trade Debtors, Customers
Prepayments
Purchase of a good and/or service in advance of good/service being received to the business
Accounts Payable:
The amount of money owed by an entity to its creditors for the supply of goods and/or services
Trade Creditors, Suppliers
Goods Received Not Invoiced:
Is a subsidiary general ledger account used to track the amount an entity owes to its creditors for goods and/or services received but as yet uninvoiced
Balance Sheet Report
A financial report that summarizes the financial position of an entity at a point in time
Statement of Financial Position
Assets
Something of value to an entity, benefits from, or has use of, in generating income
Current Assets
Assets that will typically be 'converted' to cash within one year
Non Current Assets
Assets which which are 'consumed' or provide benefits to an entity over a period inexcess of one year
Fixed Assets
Assets specifically referring to capital purchases made by an entity in order to produce business income
Liabilities
A claim against the entity or legal obligation arising out of past or current transactions in order to produce business income
Current Liabilities
A claim against the business which will typically be 'remitted' within one year
Non Current Liabilities
A claim which will be 'paid' by an entity over a period inexcess of one year
Equity
Is the net worth of ownership in an entity. Usually expressed as Assets minus Liabilities = Equity
Owner's Equity
Profit & Loss Report
Income Statement
Revenue
The direct sales related to 'producing' and/or providing a service of a business
Income/Sales
Other Income
Income received by a business as a result of being in business but not related to income producing activities
Miscellaneous
Cost of Good Sold
The direct expenses related to 'producing' the goods sold by a manufacturing business
Cost of Sales
The direct expenses of selling stock/services by a non-manufacturing business
Gross Profit
Net income or loss to a business as a result of activities directly occurring as a result of producing/providing services
Gross Margin
Net Profit
Total earnings of a business after subtracting all expenses from revenue
Net Income
Depreciation
Method of expensing the purchase price of a tangible asset over its useful life
Amortisation
Method of expensing the cost of an intangible asset over its useful life
Trial Balance
A financial report that in which all the general ledger accounts, whether debits and credits, are compiled to ensure both sides of the ledger are correct (equal).
Cash Flow
The timing of revenue or expense expected to be generated by business activities over a projected period
