Accruals: Services or goods received but not (fully) paid for yet – for example accountancy fees or electricity bills. Accruals are treated as liabilities.
Balance Sheet: A statement of how much the business is worth and in what form. Includes the businesses assets and liabilities, for example business loans or equipment.
Capital Expenditure: Money spent to buy assets. For example, buying premises or equipment.
Cash In Hand: Cash money available in business through petty cash, float or in the bank – not to be confused with paying people outside of the payroll system.
Cost of Sales: The direct cost to the business of making a sales. Could include direct labor costs, subcontracting costs, material, marketing costs (if running a click-through campaign) etc.
Creditors: People or business your business owes money to
Current Assets: Assets that could easily be converted (sold) into cash
Current Liabilities : Money your business owes that you are due to pay soon.
Debtors: People or business that owe your business money
Depreciation: The nominal loss in value of machinery or equipment due to usage. Depreciation is a business cost.
Expenditure: All expenses of the business, adjusted for prepayments and accruals.
Factoring: An agreement normally between your business and third party to provide your business with cash while collecting money owed to you on your behalf. The third party chases your debts and charges commission in return.
Fixed Assets: Capital equipment or other physical resources likely to last more than one financial year.The value is reduced each year by the amount of depreciation.
Gross Profit: The surplus after direct costs have been deducted from sales. Often expresses as a percentage.
Income: A written record to the customer from the business when a service or product is sold but not paid for immediately.
Leasing: An agreement with third party to rent a piece of equipment. At teh end of the agreement, or if you stop paying, the equipment is returned to the owner. You/ your business is not the legal owner.
Liabilities: All debts and obligations of the business.
Liquidation: When a business has to sell its assets i order to pay its debts prior to the business ceasing to trade
Loans falling due: The cost of loan repayments you/your business will have to pay within the financial year, e.g. an overdraft facility. Loans falling due is treated as a current liability.
Margins/Profit margins: The difference between the value of sales and cost to attain the sale. Normally expressed as percentage.
Overdraft: Money you can draw out of your business account as you need it, usually up to an agreed amount of money.
Overheads: All business expenses other than cost of sales.
Prepayments: Items paid for in advance but received (in full) for example, vehicle or premises insurance, vehicle tax etc. Prepayments are treated as a current asset.
Profit: The amount of money left after taking expenditure from gross profit (sometimes called pre-tax or trading profit). After tax and extraordinary has been made, the net profit is what is left and what can be distributed among shareholders (dividends) or reinvested
Sales: In a profit and loss account, this is the value of sales made, regardless of when payment is received.
Stock: The value, usually at cost price, owned by the business and intended to make future sales.
Turnover: The total amount of money that has passed through your business over a set period of time
Variable Costs: Costs which can change if the volume of business increases or decreases, e.g. cleaning materials and products.
