ACCA
Credit note
A document created by the supplier which shows that an amount which was previously owed is no longer owed by the customer
Account
Accounts receivablea location where all items relating to one particular group are recorded. For example cash items are recorded in the cash account.
Aged receivables
Analysis showing all the outstanding amounts of money owed to each supplier and how overdue it is
Accounting Equation
Assets = Liabilities + Equity
Balance
The difference between the incoming cash and outgoing cash
Accounts receivable
The total amount of money owed to a business.
Piecework
Work paid according to the number of units produced, not time
Paying-in book
a book for keeping a record of money deposited into an account
Insolvency
a business (or individual) does not have sufficient funds to repay its debts on time
Irrecoverable debt
a debt owing to the business which it considers will never be paid
Quotation
a document that shows how much an item or items will cost
Receipt(s)
a document to confirm the company has received money and given the customer the goods
Payables Control Account (Purchase Ledger Control Account)
a general ledger account that records the total entries made to the individual payables ledger
Payables ledger
a memorandum ledger in which individual payables' accounts are recorded
Asset
a resource controlled by a business as a result of something that happened in the past from which economic benefits (things which make the company better off financially) are expected to flow in the future
Float
a small amount of cash available to make payments
Petty cash voucher
a small form used to document payments from it
Account code
a unique group of numbers and/or letters that is used to identify an item and classify it into a particular group.
Cross cast
all the individual column totals are totalled and agreed to the total of all the rows
Expense(s)
amounts that a business incurs in order to run the business
Bonus
an additional amount paid to an employee above their standard rate of pay
direct debit
an electronic payment out of an account
Error of commission
an equal debit and credit is posted but one of the transactions has been posted to the wrong account of the same 'type'
Goods Received Note (GRN)
an internal document that the customer would complete as an extra check that everything has been received that was ordered
Analysed cash book
analyses the money coming in and money going out according to the type of transaction
Analysed column cash book
analyses the money coming in and money going out according to the type of transaction
Overheads
are costs which are not directly related to the product, but necessary for the business to function, such as rent and rates, heat and light
Period end routines
are procedures/checks that are carried out at the end of the month and at the end of the accounting year end
Ledger accounts
are where individual transactions are posted
Own (owned)
assets such as its inventory, the money it has in cash or in the bank
Dishonoured cheque
because of insufficient funds, the cheque is not signed correctly, or is drawn fraudulently. will return it to the recipients bank
Output tax
charged on the goods you sell
Batch posting
collecting transactions or tasks together to process in a group
General ledger
containing the asset, liability, capital, expense and income accounts of a business
Delivery note
document accompanies the goods that are delivered and is signed by the customer when delivered. It can also be used by the supplier to check that the correct goods are being sent
Memorandum account
does not form part of the double entry. An example would be the payables ledger
Error of principle
equal debit and credit is posted but the transaction has been posted to an account of a different 'type'
Net figure (pay)
exclusive of sale tax (other accruals)
Reconciling
explain the difference between the statement and the account
Absorption costing
focuses on the total cost of producing one unit of output, includes fixed production overheads in valuation cost of production
Credit (transaction)
goods are given to the customer in exchange for an invoice, and money is due within an agreed period of time
Outstanding lodgement
in the cash book has been listed as a receipt, but it has not yet been recorded in the bank account
Gross amount (pay)
inclusive of sales tax
Business
is a commercial enterprise (may be in the form of a sole trader, partnership or company)
Receivables Control Account (sales ledger control account)
is a general ledger account that records the total amount owed to the business by its credit customers
Control account
is a general ledger account that records the total entries made to the individual ledger, such as the payables ledger or the receivables ledger
Chart of Accounts
is a listing of the names of the accounts that a company has identified and made available for recording transactions in its general ledger
Receivables ledger
is a memorandum ledger in which individual receivables' accounts are recorded. The total of all individual balances in this ledger will equal the balance of the receivables ledger control account in the general ledger. Any differences will be investigated.
Bank reconciliation
is a statement that reconciles the bank account balance in the general ledger with the balance of cash held at the bank as shown on the bank statement
Cost unit
is a unit of a product or service to which costs can be related
automated bank transfer
is a way to transfer money directly from a bank account for one-off payments
Profit centre
is an activity or area of responsibility in an organisation to which costs and revenue can be attributed
Cost centre
is an activity or area of responsibility in an organisation which generates costs, but is not responsible for generating revenue or producing direct profit. In other words, it only adds costs
Commission
is an amount paid to a business for enabling a transaction to happen
Purchase order
is completed by the customer and sent to the supplier showing what they would like to order
Reconciliation
is done to explain the differences between the external statement and the position in the accounts of the business
Credit rating
is given to a customer, and determines how much credit the customer will be allowed.
Cash sale
is immediate cash payment to the seller for the goods
Input tax
is sales tax payable on a purchase of goods or services
Cash account
is the account in the general ledger where the cash transactions of the business are recorded. The information will be transferred from the cash book
Closing balance
is the amount in the account at the close of the time period - often a month
Balance brought down (b/d, brought forward, b/f)
is the balance on an account at the beginning of an accounting period. It equals the balance carried down from the end of the last accounting period.
Balance carried down (c/d, carried forward, c/f)
is the balance on an account at the end of an accounting period. It becomes the balance brought down at the start of the following accounting period.
Cash book
is the book of prime entry in which the bank transactions are recorded by the business. This may be divided into the cash payments book and the cash receipts book
Bankruptcy
is the legal status of a person or entity who cannot pay their debts. It is imposed by the court
Capital
is the owner's interest in the business. Cash or assets introduced to the business by the owner (capital introduced) + the profits generated by the business in previous years - any amounts that the owner has withdrawn from the business (drawings).
Capital expenditure
is the purchase of non-current assets
Cost behaviour
is the way that costs react as a result of changes in the level of activity
Journal
is used for recording unusual or non-regular transactions
Contra entry
is when you have a customer account in the sales ledger and the same customer is also a supplier with a supplier account in the purchase ledger
Owe (owed)
liabilities such as for purchases in credit
Back-up
maintaining a second copy of the records in case anything happens to the original set. In computerised accounting, this might be on hard drives kept off-site or in cloud storage
Errors of transposition
occur when you post a number with the figures the wrong way round. For example 965 is posted as 956
Compensating errors
occurs when there are two errors that cancel each other out
Cheque clearing system
operates country-wide where banks use a central agency to transfer the cheques that they have received between each other and transfer the money to pay the cheques raised
Purchase ledger
payables ledger
Imprest petty cash system
petty cash fund is a set amount of money, and is regularly replenished to the original value at the beginning of each week or month
Gains income
profit on sale of a non-current asset
Post(ed)
recorded, putting a record into the accounts
paying-in slip (part of a paying-in book)
small document recording money that you pay into a bank account
Error of omission
something is 'omitted' - left out or simply not posted to the accounts
BACS
stands for bankers automated clearing services in the UK. ... is a way to transfer money directly from a bank account for one-off payments.
Credit purchase
supplier provides goods to the business before they are paid for
Book value
the accounting value of an asset or liability that is shown in the business's accounting records
Bookkeeping
the act of recording financial transactions
Credit sale
the business provides a customer with goods before they are paid for
Cost per unit (CPU)
the cost of making a single unit of product
Payroll
the department or role responsible for paying the wages
Book of prime entry (day books / books of original entry)
the first place that original documents are recorded
Production Overhead Costs
the indirect costs incurred in the production process (including Indirect material, Indirect Labour and Indirect Expenses)
Cash purchase
the liability for the item purchased is discharged immediately
Payee
the specific person or company a cheque is made out to
Fixed overhead absorption rate
to calculate under/overabsorption of fixed overheads divide the budgeted fixed overheads
Prime cost
total sum of the direct costs
Credit check
trading with another business, will carry out checks on the creditworthiness of the business
Cheque requisition form
use it as authorisation to issue a cheque made payable
Marginal costing
variable costing
Discount received
we may be offered a discount by a supplier
Discount allowed
we may offer to a business
Balance off (Close off (the account))
work out the difference between money received and money paid out. The difference is then carried down to the next accounting period