A

Accounts Payable: The money owed to suppliers. It’s a liability of the business and will record on the Balance Sheet.

Accounts Receivable: Payments that a company is owed, but has not yet received.

Accounting Period: The period when financial statements are prepared. Most accounting periods are calculated on a monthly, quarterly, or yearly basis.

Appreciation: Refers to an increase in the value of a company’s assets or an increase in the price of a product or service.

B

Balance Sheet: A snapshot of a business’s financial position on a particular date. It lists the assets, liabilities, and equity of the company.

Bad Debt: The money that is unlikely to be paid shortly or a business deems uncollectible.

Bookkeeper: the person who takes responsibility for recording the financial transactions, issuing invoices of a business.

Boot Strapping: A situation in which an entrepreneur funds its growth purely through personal finances, and earns from the business.

C

Credit: The column in a journal shows how much money the company received. It is recorded on the right side of the journal.

Capital: Cash and deposits, machines, and tangible assets such as computers, company vehicles that help the company make more profits belong to capital.

Cash Flow: Cash flow is the report that shows the movement of money in and out of the business over a particular period.

Creative Accounting: Explains how the company spends money but hides what happened. It’s a way considered legal but unethical.

D

Debit: A column in a journal shows spent by the company. It is recorded on the left side of the journal.

Double Entry: This is a bookkeeping system in which every transaction is recorded as debit and credit.

Depreciation: The price of the product or service provided by the company has fallen as time goes by. The amount or percentage it decreases by is called depreciation.

Dividend: A form of income that shareholders can get from the company base on each share of stock that they hold. It can be issued in two forms, cash payment or stocks.

E

Equity: It is the funding of the business which comes from shareholders. The equity of the balance sheet represents the stockholders’ investment and retained earnings or losses.

Expense: This is the running cost for a business to generate revenue, and can be classified into operating expenses and non-operating expenses.

EBIT: An abbreviation for Earnings Before Interest and Tax. It means the company profit before taxes have been deducted.

EPS: An abbreviation for Earning Per Share. Calculated by a company’s net profit for a certain financial period is divided by its shares outstanding.

F

Financial Statements: A report showing the company’s financial status including balance sheet, income statement, cash flow statement, and the statement of changes in shareholder equity.

Fixed Asset: Assets that are difficult to convert to cash such as long-term tangible property, land, buildings, plant, or equipment.

Future Value: The amount to which a present value will grow over time when placed in an account that pays compound interest.

G

Gross Profit: It’s calculated by subtracting product production costs and sales revenue from a company’s total sales revenue to get their remaining income.

Gross Margin: Also known as gross profit margin, or gross profit percentage. It’s the percentage of its revenue that exceeds its cost of goods sold.

GST: An abbreviation for Goods and Services Tax. The Australian GST standard rate is 10%, which is added to the price of any Australian goods and services.

H

Hurdle Rate: This is the minimum acceptable rate of return required that investors expect from the investment.

Historical Cost: The original purchase price of assets, stocks, inventory, or materials.

I

Inventory: A list of commodities that a company is holding for sale.

Invoice: A document to a customer that summarises the price of the goods or services provided by the supplier.

Income Statement: One of the financial statements that show earnings and expenses for a company.

J

Journal: A book or set of books used to record business transactions.

Joint Account: The bank account has two or more owners.

Joint Venture: A business arrangement whereby two or more companies pool their resources to complete a project or provide a service.

K

Known Liabilities: These are debts that a company knows are “certain” – eg accounts payable, sales tax payable and payroll liabilities.

L

Liabilities: The debts that are owed from a person or entity to another, such as money, loans, mortgages, goods, or services. Liabilities are recorded on the right side of the balance sheet.

Lease: Leases are contracts in which the property owner allows the user to pay for the right to use the asset.

M

Market Price: The current price at which a good or service can be purchased or sold. ·

Maturity Value: A financial obligation’s maturity value represents how much the holder is due and payable as of the maturity date of that obligation

N

Net Assets: The value of a company’s total assets minus its total liabilities

Net Loss: The value is when total expenses exceed the revenue for an entity over the reporting period.

O

Operating Activities: The daily activities of a company to bring its products and services to markets, such as administration, customer service, marketing, and sales.

Overhead: All expenses associated with operating that the company needs to pay, such as advertising fees, labor fees, bills, and taxes.

P

Profit: The money earned by the business after deducting all expenses.

Payroll: A list of all employees of the company and their salaries.

P.A.Y.G: Pay As You Go installments is the Australia-only income tax system. When a company pays its employees, the company withholds a certain amount of tax from their pay.

P/E Ratio: The measurement to evaluate how expensive a company’s shares are. The formula for the P/E Ratio is the price per share divided by earnings per share.

Q

Quick Ratio: Also known as the Acid-test ratio. It assesses a company’s capacity to meet short-term obligations by identifying assets that can be converted into cash quickly.

R

Revenue: The total amount of profit a company makes from the services or products it sells. Revenue is usually higher than profit because profit is after deducting all expenses and costs.

ROI: Return on Investment (ROI) is a profitability ratio. It’s calculated as investment income divided by investment cost.

S

Share: The units of equity ownership of the company. Shareholders who own shares have the right to receive dividends, but also have to share the risk of losing money.

Shareholder: Also known as Stockholder/s. An individual or organization that owns shares in a company. The shareholders are the owners of the company to some extent.

T

T Account: A particular method of visualizing individual accounts in the form of a “T” to keep debits and credits information separated.

Tax Period: The period prescribed by a governmental entity for which a tax is required to be paid and a tax return is required to be filed. The Australian income year for tax purposes is the 12-month period from 1 July to 30 June.

Tangible Assets: Physical assets such as buildings, plants and equipment.

U

Unrealised gain: The value increase of an investment before sale transaction has occurred. For instance a property purchased in 1988 for $600,000 may in 2020 have an unrealised gain of $600,000, but this was not known until it sold for $1.2m in 2021. Unrealised gains are not generally recorded until the gain has been formalised.

V

Variance: Actual results differ from those expected in the budget.

W

Wages: Payment from the employer to the payee for services rendered on behalf of the company. The Australian minimum wage is $19.84 per hour before tax.

Write-off: An accounting operation that diminishes the value of an asset while debiting a liabilities account at the same time.

WIP: An abbreviation of Work in Progress. It’s an accounting record way that partially finished goods or services will be recorded as an asset once completed.

X

Y

Yield to Maturity: If a bond is held until maturity, the yield to maturity (YTM) is the rate of return to investors.

Year-to-date: ​​It is a term used to refer to the period between the beginning of the year and the present. It can apply to calendar or financial years.

Z

Zero Based Budget: The allocation of various budgets must be re-arranged from “zero” according to task needs and financial resources. If the task is heavier, the funding will increase accordingly.