All the money received from business activities during a given period minus costs
income
All the money that a business spends on goods or services during a given period
expenditure
A financial operating plan showing expected income and expenditure
budget
Anything owned by a business – cash, buildings, machines, equipment, etc.
asset
All the money that a company will have to pay to someone else in the future, including debts, taxes and interest payments
liabilities
An entry in an account, recording a payment made
debit
An entry in an account, recording a payment received
credit
A word describing a financial asset without a material existence, which cannot be
touched
intangible
A word meaning delayed or postponed until a later time
deferred (revenue)
You borrow money
debt
What owners invest
equity
A statement showing the value of a business’s assets, its liabilities, and its capital or
shareholders’ equity (money that belongs to the business’s owners)
balance sheet
A statement giving details of money coming into and leaving the business, divided into
day-to-day operations, investing and financing
cash flow statement
A statement showing the difference between the revenues and expenses of a period
Income statement
Preparing financial statements showing income and expenditure, assets and liabilities
accounting
A company’s owners are
shareholders
The amount of business done by a company over a year
turnover
The reduction in value of a Xxed asset during the years it is in use (charged against
proXts)
depreciation
Sums of money owed by customers for goods or services purchased on credit
accounts receivable
Sums of money owed to suppliers for purchases made on credit
accounts payable
The value of raw materials, work in progress and Xnished products stored ready for
sale
stock / inventory
The various expenses of operating a business that cannot be charged to any one
product, process or department
overheads/indirect costs
Transactions are entered as a credit in one account and as a debit in another.
Double-entry bookkeeping
do not vary with output (e.g. rent)
fixed costs
vary with output (e.g. raw materials)
variable costs
can be attributed to a certain product or activity
direct costs
contain fixed and variable
elements (e.g. heating).
semi-variable costs
not directly attributable to production/activity (e.g. administrative costs)
indirect costs/overheads
All the money belonging to the company’s owners
shareholders equity
Assets whose value can only be turned into cash with difficulty (e.g. reputation, patents, trademarks, etc.)
intangible assets
Capital that shareholders have contributed to the company above the nominal or par value of the stock
additional paid-in capital
Expenses such as wages, taxes and interest that have not yet been paid at the date of the balance sheet
accured expenses
Money owed by customers for goods or services purchased on credit
accounts receivable
Money owed to suppliers for purchases made on credit
accounts payable
Money paid in advance for goods and services
prepaid expenses
Profits that have not been distributed to shareholders
retained earnings
Tangible assets such as offices, machines, etc.
fixed assets
The difference between the purchase price of acquired companies and their net tangible assets
goodwill
The total amount of money owed that the company will have to pay out
total liabilities
All other costs that have been invoiced during the period. These will include e.g. rent, professional fees
expenses or overheads
First summary on the account (= income less cost of sales).
gross profit
A non-cash expense that reduces the value of an asset (as a result of wear and tear, age or obsolescence=Veralterung).
Depreciation
This is interest and bank charges paid by a business within the accounting period.
Interest
Additional costs associated with the sales made (other than wages and cost of goods sold).
other direct costs
All costs directly associated with sales. (These may include the cost of the product purchased and wages.)
cost of sales
A calculation of gross profit less other direct costs.
operating profit
Net result of all invoiced income, less all invoiced expenses and purchases, interest paid and tax to be paid.
Net profit/loss after tax
The estimated amount of corporation tax on the business.
tax
In general this calculation is made separately so that company results can be compared with each other.
Earnings before interest an tax (EBIT)
