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