Importance of finance_terminology

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Accounting Period

A term covered by a profit and loss account. A financial year is any 12-month accounting period that a

business chooses to adopt as opposed to the calendar year, which runs from January 1 to December 31

Accounts Payable (A/P)

Amounts owed by one organisation top another in respect of goods or services purchased. Accounts

Payable is classified as a Current Liability because the obligation is generally due within 12 months from

the initial transaction date

Accrual

Adjustment made at the end of an accounting period to recognise expenses that have been incurred

during the period but for which no invoice has yet been received

Aged Creditors Report

A list of all trade creditors at a specific date, analysed by length of time that they have been outstanding

Aged Debtors Report

A list of all trade debtors at a specific date, analysed by length of time that they have been due

Assets

Items owned by a business (e.g. property, stock, cash)

Audit

An examination of financial accounts and records in order to assure compliance with accounting rules and

regulations, prevent and detect fraudulent activity and to review efficiency of financial operations

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BACS

Bankers Automated Clearing Services

BACSTEL-IP

The upgraded BACSTEL service, for making BACS payments

Balance Sheet

Statement of a company’s assets and liabilities at a specific date

Base Rate

Annual interest rate on which lending charges are calculated by British banks

Benefits in Kind

Non-cash salary provided to employees; e.g. company car, health insurance

BIC (Bank Identifier Code)

This enables international money transfers and comprises the Bank Code, Country Code and Location

Code

BoE

Bank of England

Book Value

The value at which an asset is shown in the company’s books/balance sheet

Bought Ledger (B/L)

The section of the Nominal Ledger in which details of suppliers and amounts owed to them are held. Also

known as Purchase Ledger

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Capital Employed

Total long-term funds in the balance sheet (Net operating assets). Can be defined as Total assets less

current liabilities

Capital Expenditure (Capex)

Investment in fixed assets

CHAPS

Clearing House Automated Payments System. CHAPS is an electronic bank-to-bank same-say value

payment made within the UK in either sterling or euro.

Chart of Accounts (COA)

The account codes which give structure to the General Ledger. May include nominal codes, expense

codes, cost centre codes, project codes

Credit Note

Document showing details of a refund due to a customer. Must show the equivalent details of an invoice

Creditor

Someone to whom money is owed

Current Assets

Assets (stock, debtors) expected to be turned into cash within one year of the balance sheet date

Current Liabilities

Liabilities (trade creditors, accruals, overdrafts, short term loans) expected to be paid within one year of

the balance sheet date

Current Ratio

Current assets divided by current liabilities

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Accounting Period A term covered by a profit and loss account. A financial year is any 12-month accounting period that a business chooses to adopt as opposed to the calendar year, which runs from January 1 to December 31 Accounts Payable (A/P) Amounts owed by one organisation top another in respect of goods or services purchased. Accounts Payable is classified as a Current Liability because the obligation is generally due within 12 months from the initial transaction date Accrual Adjustment made at the end of an accounting period to recognise expenses that have been incurred during the period but for which no invoice has yet been received Aged Creditors Report A list of all trade creditors at a specific date, analysed by length of time that they have been outstanding Aged Debtors Report A list of all trade debtors at a specific date, analysed by length of time that they have been due Assets Items owned by a business (e.g. property, stock, cash) Audit An examination of financial accounts and records in order to assure compliance with accounting rules and regulations, prevent and detect fraudulent activity and to review efficiency of financial operations Back to Index BAC ...
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