Bookkeeping

Reimburse

An individual who buys something for the business with personal funds can be reimbursed by the business i.e. paid back for that purchase.

purchase invoice

An invoice used as a source document for recording a purchase on account transaction. When a business buys the products or services it will receive a document.

sales invoice

An invoice used as a source document for recording a sale on account

sales invoice

An invoice used as a source document for recording a sale on account. A form provided to the customer when the business sells a products or services

Accounting Equation

Assets = Liabilities + Owner's Equity. The double entry method of bookkeeping is based on the accounting equation

Unpresented

Cheques that have not been deposited to the bank are said to be un-presented. This term is used most often on bank reconciliations to aid in the reconciling of the cash book with the bank account

Ledger

Each account on the chart of accounts has a ledger page. The ledger page lists all the entries made against the account either as a debit or a credit. The ledger page is totaled at the end of every month.

Contra

If a payment is made into a bookkeeping account, and then that same payment is paid out of the account for a reason, it is called a contra - the two figures contra each other out i.e. they cancel each other out of the account. Example: $200 was paid into the Sales account. The bookkeeper realised that he should have used a different account so he pays the $200 out of the Sales account. This is the contra.

Billing

Invoicing customers for goods or services they have purchased from the business.

Assets

Items of value owned by a business. Assets are found on the balance sheet and include cash in the bank accounts, cash in petty cash box, accounts receivable, equipment, land and buildings, vehicles.

Gross profit

Money left after the cost-of-goods expense is subtracted from total income. Net sales- cost of goods sales. This is calculated by taking the business income and deducting the cost of sales. If the cost of sales is more than the income a Gross Loss results.

Banking

Taking cash and cheques to the bank to deposit into the business bank account.

BOARD OF EQUALIZATION

The body of appeal if you think your property tax appraisal is too high.

Double-entry

The method of bookkeeping in which all financial transactions are entered twice - once as a debit and once as a credit. All the debits need to equal the same as the credits. If they don't it is called being out of balance and the error will need to be found.

Funds

The money or value of money involved in all business transactions within the business or at the bank.

Creditor

The person or business to whom our business owes money for purchases made.

Account

The place where financial entries of a similar nature are recorded, for example the 'Sales' account is where business income goes, the 'Stationery' account is where all pens, paper, staplers etc go. A list of account names is called the Chart of Accounts.

reconcile

The process of matching one set of figures or documents with another set of figures or documents. For example, matching the cash book with the bank account and investigating and fixing any differences; or checking that the business has received all the invoices listed on a supplier's statement and if any are missing phoning the supplier for them.

Equity

This is found on the balance sheet and it shows how much the business owner has contributed to the business from personal funds (capital) and how much he has withdrawn from the business for personal use (drawings). Another terms for this section is called the Current Account

Accounts receivable

Unpaid sales invoices (that is money owed to the business by customers) and are found on the balance sheet as an asset

Purchase

When a business buys goods or services

Withdrawal

When funds are taken out of a bank account they are 'withdrawn

Deposit

When money (cash or cheques) is paid into a bank account it is called a deposit.

vendor

a business from which merchandise is purchased or supplies or other assets are bought

refund

can be provided to or from another business if bills have been overpaid

Profit

difference between income earned and expenses paid. The greater the profit the better for business

Undeposited funds

n asset account in the bookkeeping system in which is entered money that has not yet been deposited to the bank

Bookkeeping

ping: The process of collating, recording and reporting on the financial transactions carried out by a business.

Deductible

purchase that can be claimed as a business expense is called a deductible expense because it has the effect of reducing the business profit, therefore reducing the amount of income tax owed to the government. A non deductible purchase is one that cannot be used to reduce the profit and tax such as when the owner uses business funds to buy something for personal use

Accounts Payable

the money a business owes to its creditors. Unpaid supplier invoices and bills (that is money owed by the business to other businesses) are found on the balance sheet as a liability.

Opening Balance

values found on the first day of the financial period. So for example, if your financial year starts on 1 January, the balances at the start of that day in the cash book or the ledgers are the opening balances. Opening balances are usually always exactly the same as the closing balances on the day before.

Balance sheets

A balance sheet report shows the business owners and managers how much equity is in the business, how many assets the business owns, and what the business owes in liabilities. The balance sheet falls in line with the accounting equation.

Payable

A bill that is due to be paid is called a payable and is included on the list of accounts payable

single entry

A bookkeeping system in which all financial transactions only have to be entered once. This is usually within a cash book system and does not utilize journals and ledgers for the process of balancing

petty cash

A business can keep cash in a safe place for the purpose of making small purchases like milk, stamps, pens etc. The petty cash is monitored carefully by the bookkeeper. All money paid out must be recorded in the petty cash book so that the expenses can be included in the accounts, and when the cash runs low it will be topped up with an injection of more cash.

receipt

A business form giving written acknowledgement for cash received. When payments are received from customers a receipt can be issued to them to confirm the details of the payment received, particularly useful for cash payments - the receipt provides proof of payment. Businesses should keep these receipts in a folder to match them up to the bank statement ensuring an accurate cash book.

Debtor

A customer that owes your business money.

Debit

A debit balance is found on the left hand side of double entry bookkeeping. A debit entry increases assets and expenses, and decreases income, liabilities and equity.

Liability

A debt. This is found on the balance sheet. Liabilities are made up of debts that the company owes to other businesses and includes accounts payable, loans and credit card balances

Expense

A decrease in owner's equity resulting from the operation of a business. Most purchases made by a business are called an expense. Expenses are found on the profit and loss report and can be used to reduce the amount of tax owed to the government

invoice

A document that details the sale or purchase of stock, parts or services. The invoice will show the main details such as date, invoice number, quantity, description, cost, total, payment terms. When a business buys the products or services it will receive a purchase invoice and when the business sells products or services it will provide a sales invoice to the customer.

Remittance

A document that is given to a supplier or received from a customer that lists what invoices are included in a payment made

purchase order

A form requesting that a vendor sell merchandise to a business, or a written offer to a supplier to buy specified items, or what the buyer orders

Chart of accounts

A list of all accounts used by a business. The main categories are: Assets, Liabilities, Equity, Income, Cost of Goods Sold and Expenses

Inventory

A list of items that a business buys and sells. These items are kept in a store room of some sorts and a strict record kept of the number of items on hand at any given time.

net loss

A loss occurs when the gross profit of a business is less than the expenses the business has to pay to keep the business running. This is usually called a Net Loss.

Reference

A number or combination of numbers or letters that are used to identify each transaction within the cash book following through to the journals and ledgers. Each financial transaction is allocated a unique reference that can be traced easily through the bookkeeping system

Bank statement

A report which the bank produces listing in date order all the money received and all the money paid out of the bank account, ending with the balance of cash in the account.

Coding

A term used to describe the allocation of a transaction amount to an account in the chart of accounts.

Recurring

A transaction that repeats regularly every week or month for the same amount to the same place is said to be a repeating or recurring transaction.

Transaction

A transfer of funds from one account to another

Receivable

Accounts that are due to be paid by the customers of a business are listed on the accounts receivable report. Anything that is receivable means that the business expects to receive money.

Entry/ entries

All financial transactions input to the bookkeeping system

Sales

All items or services sold to customers fall within the sales category

journal entry

An entry that is made into the accounts utilizing double entry bookkeeping to make an adjustment to the accounts such as if a correction has to be made. The journal describes which account is being debited and which account is being credited, the date, the reason for the journal and a reference.