Accounting Terminology
Cash Flow – Cash flow Forecast – Cash flow statement is a record of expected income and expenditure for a given period received or paid. for further details please refer to Services Tab – Cash Flow
Budget – This is an operational tool that records information on income and expenditure that is expected going forward usually reported monthly on a 12 month or 3 years forecast. Further details are explained in the Services Tab – Budget
Turnover another word for – Revenue / Income / Sales
Creditors Another term used for Suppliers /Accounts Payable
Debtors Another term used for Customers /Accounts Receivable
Accruals & Prepayments would only be considered when using standard accounting
Accruals
This is a term used for reporting transactions for: –
Purchases / Expenses that you have received the goods, but you have to pay for or receive invoice from the supplier – transaction would debit expenses (P&L account) and credit to the accruals account (Balance Sheet)
Or income that you have not yet invoiced for or received payment for but relates to previous month or year. Accrued income transaction is Debit accrual account (Balance Sheet) and credit the Sales account (P&L account) The transactions would be reversed at the beginning of the next period.
Prepayments
Money paid out in advance for specific cost for example: –
Insurance paid for the year in advance.
The prepayment transaction is Debit the expenditure (P&L account) and credit the prepayment account (Balance Sheet) The transactions would be reversed at the beginning of the next period.
Trading Profit & Loss (P&L)
This is a statement / record of all income and expenditure – as follows: –
Turnover (Income, revenue, sales)
Cost of Sales (advertising, distribution, materials)
Gross Profit (Sales Less Cost of Sales )
Overheads (operating expenses – admin, electric, telephone, Insurance etc)
Net Profit (Gross Profit less Overheads)
Please refer to Services Tab – Management accounts for further details on the Trading Profit & Loss account
Balance Sheet
This is a statement / record of Assets & Liabilities
Fixed Assets
Current Assets
Current liabilities
Long Term Liabilities
For further detail please refer to Services Tab – Financial Accounts – Balance Sheet