Although every industry can feel as though it has its own secret language the accountancy dictionary is especially jam packed with jargon and specific terms and we fully appreciate that all of the terminology can leave your head in a spin! Although here at Bedford Accountants Ltd we pride ourselves on not using unnecessary jargon, we know that there are a few terms which people still find confusing so in this blog we will clarify the A-Z of the most common ones we get asked about.
Accounts Payable
Money owed to suppliers who have sent your business goods, or supplied it with services, who you haven’t yet paid. These can also be known as trade creditors.
Accounts Receivable
Money that your customers haven’t paid you for your goods or services. These can also be known as trade debtors.
Balance Sheet
A balance sheet is a report that shows how much a business owns, and owes, at a given point in time.
Cloud Accounting
The practice of using an accounting system which is accessed through the Internet.
KPI
KPI stands for Key Performance Indicator. A KPI is an identified value that you measure over time to help you determine how certain areas of your business are performing.
Memorandum of Association
A legal statement signed by shareholders or guarantors when they agree to form a limited company.
PAYE
PAYE is short for Pay As You Earn. It’s not a tax in its own right, it’s a system that HMRC use to collect income tax.
Sales Ledger
A list of all the sales invoices the business has ever issued and when they were paid.
Turnover
Accounting terminology for sales! Your business’s turnover is the sales it makes over a given period of time.
Year End
This is short for ‘accounting year end’ – the end of your business’s accounting year.
We hope that this has helped to demystify a little of the accountancy language – and as always, we are here to help with any other jargon you may need help with!