1
Q
What is an invoice
A
A financial document sent from supplier to customer detailing goods purchased and what the customer owes the supplier
2
Q
What is a credit note
A
A financial document sent from supplier to customer reducing the amount the customer owes
3
Q
What is remittance advice
A
A financial document from the customer to supplier detailing what they are paying (which invoices etc.). Used to allocate payments and clear relevant transactions
4
Q
What is a statement of account
A
A financial document that details transactions on an account and what the customer owes the business/supplier
5
Q
What is a bank statement
A
A financial document issued by a bank to its customer. It details transactions on their account (payments in, payments out etc.)
6
Q
What is a petty cash voucher
A
A financial document created when someone in the business spends money from the petty cash tin e.g. buying stamps etc.
7
Q
Sales - costs =
A
Profit
8
Q
What is a Financial Transaction
A
An actual transaction that creates a document e.g. a sale
9
Q
What is a Financial Document
A
A document that is the result of a transaction e.g. a sale invoice
10
Q
List the books of prime entry
A
Sales Daybook
Purchase Daybook
Sales Returns Daybook
Purchase Returns Daybook
Discounts Allowed Daybook
Discounts Received Daybook
Petty Cash Daybook
Cash Book
11
Q
Where are financial documents first recorded
A
In the books of prime entry
12
Q
What is a statement of profit or loss
A
The sales and costs of a business for a period - shows resulting profit or loss
13
Q
What is a statement of financial position
A
Details the assets, liabilities and capital of a business as a given point in time
14
Q
What is a general ledger
A
Main ledger where all the transactions of a business are recorded
15
Q
What is a trial balance
A
Basic financial report that is a list of ledger balances
16
Q
Where is the trial balance extracted from
A
The general ledger
17
Q
What is recorded in the sales daybook
A
All sales invoices issued
18
Q
What is recorded in the sales returns daybook
A
All sales credit notes from customer returns
19
Q
What is recorded in the purchases daybook
A
All purchase invoices received
20
Q
What is recorded in the purchase returns daybook
A
All purchase credit notes from returns to suppliers
21
Q
What is recorded in the discounts allowed daybook
A
All credit notes issued to customers from prompt payment discounts
22
Q
What is recorded in the discounts received daybook
A
All credit notes received from suppliers for prompt payment discounts
23
Q
What is recorded in the petty cash daybook
A
Payments made out of petty cash
24
Q
What is recorded in the cash book
A
Payments and receipts in both the Bank Account and Cash Account
25
What books of prime entry are posted to the sales / receivables ledger
Sales Daybook
Sales Returns Daybook
Discounts Allowed Daybook
26
What books of prime entry are posted to the purchase / payables ledger
Purchase Daybook
Purchase Returns Daybook
Discounts Received Daybook
27
What does the sales / receivables ledger contain
Accounts of all credit customers - trade receivables / debtors
28
What does the purchase / payables ledger contain
Accounts of all suppliers whom the business receives credit from - trade payables / creditors
29
Accounting Equation
Assets – Liabilities = Capital
30
Alphabetical coding
A code made up from a combination of letters from the alphabet.
31
Alpha-numerical coding
A code made up from a combination of letters from the alphabet and numbers.
32
Asset
Items owned by the business that are used within the business
33
Bank Drafts
Non-cancellable cheque drawn on the bank rather than the customer’s account.
34
Capital
Owners’ funds invested in a business.
35
Bulk Discount
This discount is offered for large purchases.
36
Cash Book
Lists and can analyse all payments and receipts into and out of the Bank A/c and Cash A/c of the business.
37
Cash Transaction
A transaction where immediate payment is made — by cash, cheque or credit card.
38
Casting error
This is where an account balance in the ledger or one of the columns of the Trial Balance has been calculated incorrectly.
39
CHAPS
Clearing House Automated Payment System. An instruction by the business to the bank to make a large payment to a recipient so that the money is available on the same day.
40
Cheque
A written instruction telling the bank to pay an amount to a named person/business signed by the person paying.
41
Acceptance
The unqualified and unconditional agreement to the terms of an offer. It must be communicated to the offeree by word or action.
42
Accounting Equation
Assets – Liabilities = Capital
43
Administrative Law
Concerns the working of government departments or public institutions and deals with disputes between members of the public and these institutions.
44
Adverse variance
Bad - actual costs are greater than expected or actual income is less than budgeted.
45
Advocacy
Where a finance professional promotes a position or opinion to the point that their objectivity may be compromised.
46
Agreement
The acceptance by one party of an offer made by another party.
47
Alphabetical coding
A code made up from a combination of letters from the alphabet.
48
Alpha-numerical coding
A code made up from a combination of letters from the alphabet and numbers.
49
Articles of Association
A set of written rules about how a company is to be run.
50
Asset
An item the business owns and are shown as debit entries in the ledgers
51
Assets
Items owned by the business that are used within the business
52
Attributes
A quality or characteristic that someone or something has, such as hardworking and adaptable.
53
AVCO
Average Cost - A method of inventory valuation whereby a new weighted average costs of goods is calculated each time a new purchase is made and using this valuation for subsequent issues and balances until further purchases are made.
54
Bank Account
A ledger account and a business account with a bank which only details transactions coming in/ out of the business bank account. It is important to note the opposite use of DR/ CR entries in both accounts Ledger bank account: Debit entry for receipts / Credit entry for payments Business bank account: Debit entry for payments/ Credit entry for receipts
55
Bank Drafts
Non-cancellable cheque drawn on the bank rather than the customer’s account.
56
Bank Reconciliation
The process of matching the balances in a business's cash book to the corresponding information on a bank statement. The goal of this process is to ascertain the differences between the two, and to record omissions in the accounting records as appropriate.
57
Basic pay
A time rate that is applied to the normal contracted work time and is usually an hourly rate.
58
Big Data
Extremely large amounts of data that can be analysed by computers at high speed to reveal patterns and trends, especially relating to human behaviour and interactions.
59
Blockchain
A form of distributed ledger technology (see below).
60
Bonus
An additional payment made to employees for efficient performance.
61
Breach of Contract
Failure to comply, either completely or satisfactorily, with contractual obligations.
62
Budgeting
A plan (or several) of how the business will perform over a period of time, it includes expected income, expected costs and expected profit.
63
Bulk Discount
This discount is offered for large purchases.
64
Business communication
The method of sharing information inside a company and how they present that information externally to other parties. The aim is to improve how employees and management interact to reduce errors, reach the goals of the business and ensure people are happy within their careers.
65
Bylaw
Laws made by local authorities which apply within a specific geographical area only. Created when there is no general legislation that deals with particular local concerns.
66
Capital
Owners’ funds invested in a business.
67
Capital / Equity
The amount invested by the owner / partner of the business. It includes any profit / loss generated by the business less any Drawings taken by the owner.
68
Capital Expenditure
Expenditure on capital items - non-current assets
69
Capital Income
One off income streams - e.g. bank loan, selling an asset
70
Case Law
A law made by a judge
71
Cash Account
Used by businesses who receive/ make cash payments and who usually have a till. Typically for transactions that are for large amounts of cash that would not normally be placed into the Petty Cash Book
72
Cash Book
Lists and can analyse all payments and receipts into and out of the Bank A/c and Cash A/c of the business.
73
Cash Transaction
A transaction where immediate payment is made — by cash, cheque or credit card.
74
Casting error
This is where an account balance in the ledger or one of the columns of the Trial Balance has been calculated incorrectly.
75
CHAPS
Clearing House Automated Payment System. An instruction by the business to the bank to make a large payment to a recipient so that the money is available on the same day.
76
Charity
An organisation set up to provide help and raise money for those in need rather than to make a profit.
77
Cheque
A written instruction telling the bank to pay an amount to a named person/business signed by the person paying.
78
Civil Law
Rules about how individuals interact with each other.
79
Cloud computing
It enables system information and software to be accessed by computers remotely through the internet by any compatible device.
80
Code of conduct
An internal policy document produced by the directors of a business outlining what is expected of its employees whilst in the workplace. It states the rules that should be followed and the disciplinary procedure.
81
Coding
System of creating unique references for documents or accounts. Can be numeric, alpha, or alpha-numeric
82
Coding
System of creating unique references for documents or accounts. Can be numeric, alpha or alpha-numeric.
83
Coding system
Codes are used in a system of symbols designed to give each cost a classification, identity or reference.
84
Common Law
A set of customs and body of rules which have developed over time to become the law of the country.
85
Companies House
A government section within the Department for Business, Skills and Innovation. It deals with the regulation and incorporation of limited liability partnerships and limited companies in the UK.
86
Company Law
Laws applicable to companies (Ltds and PLCs).
87
Comparability
A characteristic of useful information. Information should be comparable to something else, for example another business or accounting period.
88
Compensating error
This is where the effect of two or more errors cancel each other out.
89
Confidentiality
Keeping personal and other sensitive information private.
90
Confidentiality/ Data protection
The data provided to internal or external stakeholders may contain sensitive or personal information. The appropriate format and method of communication should be used to maintain the security of the information being sent.
91
Confirmation Statement
A document that must be submitted annually to Companies House by LLPs and limited companies which gives a snapshot of general information about a company's directors, secretary (if one has been appointed), registered office address, shareholders, share capital and people with significant control.
92
Conflict of interest
Situation that occurs when an entity or individual becomes unreliable because of a clash between personal (or self-serving) interests and professional duties or responsibilities.
93
Consideration
A two-sided bargain where each side provides or promises to provide something in return for what the other is providing.
94
Consistency
A characteristic of useful information. Information should be prepared in a consistent manner using similar methods, policies, and method of presenting the information.
95
Constitutional Law
Concerns the workings of the British Constitution (for example determining the powers of government ministers and how laws are to be created).
96
Contract
A legally binding promise (written or oral) by one party to fulfil an obligation to another party in return for consideration.
97
Contract Law
The law pertaining to contracts.
98
Control Accounts
Act as an aid for management to ensure that information in the accounts is as accurate as possible.
99
Corporate Social Responsibility (CSR)
A concept where companies bring social and environmental concerns into their business operations and strive to ensure they help communities as much as they can in their interactions with stakeholders.
100
Corporation Tax
The tax that a limited company pays on its profits.
101
Cost behaviour
Costs change with an increase or decrease in activity or output.
102
Cost centre
· A section of an organisation that is responsible for costs only e.g. the hygiene department.
103
Cost classification
Where costs of the business are divided into logical groups.
104
Cost of sales
Total cost of producing output (bringing it into a saleable position).
105
Cost unit
A unit of product or service for which costs can be ascertained.
106
Counteroffer
An offer made in response to a previous offer.
107
Credit
A transaction entered on the righthand side of an Income, Capital or Liability T-Account which represents an increase in the balance. If a transaction is entered on the credit side of an Asset, Expense or Drawings account, it represents a decrease in that balance.
108
Credit Card
Person making payment received the credit – the person being paid receives the money on the same working day.
109
Credit Note
This document details the refund for the goods or services returned.
110
Credit Transaction
A transaction where a period of time is allowed before payment has to be made.
111
Criminal Law
Concerns offenses against the state.
112
Customer Order
Also known as Purchase Order — formal document ordering the goods or services.
113
Cyber risk
A term that covers a number of organisational risks which are possible consequences of a cyber-attack.
114
Cyber-attack
Deliberate attempts to damage an organisation using the internet to take advantage of poor security controls and system integrity.
115
Cybersecurity
The protection of computer systems from the risk of cyber-attack by using hardware and software security procedures and protocols.
116
Damages
Monetary compensation awarded by a court to an individual who has suffered the wrongful conduct of another party.
117
Data analytics
The science of analysing vast quantities of raw data (Big Data) and summarising it to make conclusions about that information.
118
Debentures
A loan, an agreement in writing between a borrower (a company) and a lender (a private individual) that is registered at Companies House. It allows the lender to be able to take control of the borrower’s assets if they fail to pay back the loan. It also gives the borrower a guaranteed rate of interest and a set repayment date.
119
Debit
A transaction entered on the lefthand side of an Asset, Expense or Drawings T-Account which represents an increase in the balance. If a transaction is entered on the debit side of an Income, Capital or Liability account, it represents a decrease in that balance.
120
Debit Card
A method of making an electronic payment directly from the bank account. The person being paid receives the money on the same working day.
121
Delivery Note
This document details the goods or services for being delivered.
122
Direct costs
Costs that are directly attributable to a unit of output.
123
Direct Credit (BACS)
Regular payment of a variable amount, set up by the person who is making the payment.
124
Direct Debit (BACS)
Regular payment of a variable amount, set up by the person who is being paid.
125
Director
An appointed individual who is responsible for the stewardship of a business.
126
Discount Allowed Day Book
Lists the credit notes raised to our Trade Receivables when they make a payment and take prompt payment discount.
127
Discount Received Day Book
Lists the credit notes issued to us from our Trade Payables after we have made a payment and taken prompt payment discount.
128
Distributed Ledger Technology (DLT)
Ledgers built as digital infrastructures that allow cryptocurrencies to be traded as the transactions are recorded and validated on the DLT (Blockchain). Anyone authorised can access the DLT/ Blockchain to view the transaction and it cannot be altered or amended by anyone. The data is also spread across multiple locations so it cannot be stolen or manipulated.
129
Dividend
A payment a company can make to its shareholders if it has made a profit.
130
Drawings
Cash or goods taken out of a business by the owner for personal use
131
Drawings
Money and/or goods taken from an unincorporated business by it owner(s).
132
Dual Effect
'For every DR there must be a CR'
133
Duties
A type of tax on certain goods that are collected by customs as government revenue.
134
Employee’s National Insurance
This is deducted and then paid over on your behalf to HMRC.
135
Employer’s National Insurance
This is an additional wage cost to the employer and is paid over to HMRC.
136
Entity Concept
The idea that a business is separate in the eyes of the law from its owners.
137
Equitable Remedy
A court-granted remedy that requires a party to act or refrain from performing a particular act in cases where legal remedies are not considered to provide sufficient restitution.
138
Equity
A branch of law that developed alongside common law and is concerned with fairness and justice.
139
Error of commission
This is where the entry has been made into correct type of account but not right named account.
140
Error of omission
This is where the whole transaction is omitted from the General Ledger.
141
Error of original entry
This is where the wrong figure was entered as both a DR and a CR. There is no difference in the Trial Balance, we have just entered the wrong amount.
142
Error of principle
This is where an entry has been made to the wrong type of account.
143
Error of reversal
This is where the entry has been made the wrong way around.
144
Ethical values
Assumptions and beliefs about what “right” and “wrong” behaviours are.
145
Ethics
Set of moral principles that guide behaviour.
146
Exclusion Clause
A clause inserted into a contract as a term to the contract with the aim of excluding or limiting the liability of one of the parties.
147
Expense
General costs incurred from running a business, such as utility bills, and are shown as debit entries in the ledgers
148
Expenses
The everyday costs of running the business – they are always Debits (DRs)
149
Express Terms
Terms specifically inserted into a contract by one or both of the parties. They must be clear for them to be enforceable.
150
Extraction error
This is where a balance extracted from the ledgers has been entered into the Trial Balance incorrectly.
151
Familiarity
Occurs when, due to a close or personal relationship, a finance professional become too sympathetic to the interests of others.
152
Faster Payment
Small and medium sized payments can be made online almost instantaneously.
153
Favourable variance
Good - actual costs are less than budgeted or actual income is greater than budgeted.
154
FIFO
First In First Out – A method of inventory valuation that assumes that goods will be issued in the order that they are acquired (for valuation purposes only). This means that the remaining balance will be valued based on the prices of more recent purchases.
155
Financial accounting
Information containing accounting methods that detail the businesses financial position and performance. Useful for external users. Uses historical information.
156
Finished goods
Items that have been manufactured and are ready for sale.
157
Fintech
The collective name for the range of digital technologies used by the finance industry.
158
Fixed costs
Costs that do not change regardless of the level of activity or output.
159
Flexed budget
A budget that has been recalculated to reflect actual activity levels.
160
Frustrated Contract
Occurs where an unforeseen event makes performance of the contract impossible.
161
GDPR (General Data Protection Regulations)
Applied from May 2018, GDPR is designed to enforce specific requirements about the permissions required when collecting and using data.
162
General Ledger
The main ledger where all the transactions of a business are recorded and from which the Trial Balance is extracted.
163
Gross cost to employer
Gross Pay + Employer’s NI + any other employer contributions.
164
Gross Pay
The total amount of pay before any deductions are made.
165
Guaranteed minimum payment
The minimum payment an employee can receive in respect of a period of work.
166
Health and Safety Policy
Any employer who employs five or more staff is required by law, under the Health and Safety Act, to have a written statement outlining its policies on all aspects of health and safety and the procedures required to minimise or eliminate risks as much as possible.
167
Idle time
The unproductive time of employees for which they are still paid
168
Implied Terms
Terms not expressly included in the contract but are nevertheless part of the contract. They may be implied by statute or by the courts.
169
Imprest Amount
The imprest amount is the amount of money required in the petty cash account at any one time, the limit. If you are asked what amount of money is required to restore the imprest amount, this is replenishing what has been spent and restoring the balance of petty cash back to its required limit.
170
Income
The everyday income of the business – normally sales – they are always Credits (CRs)
171
Income
Usually, revenue received from sales but can include any form of additional income the business receives, such as rent, and is shown as credit entries in the ledgers
172
Income Tax
A tax paid by the owners of unincorporated businesses on their share of the business profits (amongst other things).
173
Incorporated Business
A business whose owners have limited liability for company debts.
174
Indirect costs
Costs that cannot be directly attributed to a unit of output, otherwise known as overheads.
175
Injunction
A court order requiring a party to do or cease to do a specific action.
176
Integrity
Being straightforward and honest in all professional and business relationships.
177
Intelligent systems
Collective name for artificial intelligence and automation. Technology that uses the computer’s ability to learn, make decisions and perform actions based on those decisions.
178
Interpersonal skills
The social skills required to interact with people effectively to establish and maintain relationships. Being able to manage your relationships at work, so that they have the effect you want, is the key to optimum teamwork and performance.
179
Intimidation
Where a finance professional may not act objectively because of threats whether this is an actual threat or it is perceived, when it feels like a threat.
180
Inventory
Goods held for sale in the warehouse, storeroom or stores of a business. Can include raw materials, work-in-progress and finished goods. Otherwise known as stock.
181
Investment centres
A section of an organisation that is responsible not only for profits, but also for the return on funds invested e.g. aa individual shop within a chain of shops.
182
Invitation to Treat
An invitation made by one party to another party to make an offer.
183
Invoice
This document details the sale of the goods or services sold.
184
Irrecoverable Debt
A debt which the business considers is unlikely to be paid.
185
Journal
A written instruction to the bookkeeper to make specified entries into the general ledger accounts
186
Law
A system of rules that a government develops in order to deal with crime, business agreements, and social relationships.
187
Law of Tort
Law concerned with a civil wrong.
188
Legal Capacity
Being legally competent to enter into a contract. In other words, aware of the implications. Being under the age of 18, of unsound mind or under the influence of alcohol or drugs means legal capacity is not present.
189
Legal Intent
The contracting parties must have had the intention to form a legally binding contract.
190
Legislation
Law made by Parliament; the highest (supreme) form of law passed within England.
191
Levies
An amount of money charged as taxation on particular assets, goods or actions.
192
Liabilities
Items owed by the business
193
Liability
An item the business owes as a debt and are shown as credit entries in the ledgers
194
LIFO
Last In First Out – A method of inventory valuation that assumes that the most recently acquired inventory will be used fist, leaving the earlier acquisitions to make up the value of the remaining balance. This does not have to correspond with the actual order of usage.
195
Limited Company
An incorporated business owned by shareholders and run by directors. The shareholders have limited liability for the debts of the business.
196
Limited Liability Partnership
A partnership whose partners have limited liability for the debts of the business.
197
Line function
A business function that is directly involved in the revenue generating activities of the business.
198
Ltd
The abbreviation for a private limited company, a company in which shares may only be purchased by invitation not on the stock market.
199
Management accounting
Internal information containing costing methods that assist managers in planning, control and decision making.
200
Manufacturing account
A cost statement produced at the end of a period to summarise costs under various categories,
201
Memo
Internal written document.
202
Memorandum of Association
A legal statement signed by the initial shareholders of a company confirming their intention to form a company.
203
Net Pay
The amount left after all the deductions have been taken. The amount actually received by the employees
204
NIC
National Insurance Contributions, a type of tax levied on earned income, paid by both employees and employers.
205
Non-production costs
Costs that are not related to production, otherwise known as overheads.
206
Numerical coding
A code made up from a combination of numbers.
207
Objectivity
Not allowing personal thoughts, feelings and beliefs to impact judgement.
208
Off the shelf company
A pre-registered limited company that has never traded.
209
Offer
A definite and unequivocal statement of willingness to be bound on specified terms without further negotiations.
210
Order in Council
Laws made by the King acting on the advice of the Privy Council and are approved in person by the monarch. Some, like those that transfer functions between Ministers of the Crown, are made using powers conferred by an Act of Parliament. Others, like those which make appointments to the civil service, are made by virtue of the royal prerogative. Although Orders in Council must be formally approved in person by the monarch, they are drafted and their substance is controlled by the government.
211
Organisational policies and procedures
Varying types of guidelines on matters such as how to conduct business, complete tasks, behave, make strategic decisions, operate equipment, who to communicate with and how financial transactions should be recorded. This provides structure within the business and provides guidance to all staff members.
212
Outsourcing
When a business pays an outside supplier to provide goods and services, rather than doing the work in-house.
213
Overhead absorption rate (OAR)
The rate used to absorb overheads into products or services.
214
Overheads
Expenses of a business that cannot be attributed to production of goods/provision of services. Otherwise known as indirect cots or non-production costs.
215
Overtime premium
The additional amount, over and above the hourly or standard rate, paid to employees in respect of the overtime hours worked.
216
Partnership
Two or more persons engaged in business activities with the view to making a profit.
217
Payables Ledger Control Account (PLCA)
This account is in the General Ledger and contains the summary information of the Payables Ledger.
218
PAYE
Pay As You Earn, a tax paid by employees on their wages. It is deducted by the employer from their wages and paid to HMRC on behalf of the employee.
219
PAYE/Income Tax
Pay As You Earn - Income Tax charged on employed earnings. This is deducted by the employer and then paid over on your behalf to HMRC.
220
Period cost
A cost that is not related or tied with the production process of the company.
221
Petty Cash Account
Holds transactions of small amounts, usually used for sundry day to day office expenses
222
Petty Cash Book
Lists and analyses all payments and receipts into and out of the Petty Cash A/c.
223
Piece rate
An amount paid to an employee is respect of each single task performed or unit produced.
224
PLC
The abbreviation for Public Limited Company which is a company whose shares are publicly listed on the financial markets and may be purchased by anyone.
225
Precedent
A court decision that is considered as authority for deciding subsequent cases involving identical or similar facts, or similar legal issues.
226
Pre-incorporation contract
A contract entered into before a company has been formed.
227
Primary sources
Primary sources are original materials that provide direct evidence or a first-hand account of an event. Examples include:
• Eyewitness accounts.
• Interviews, autobiographies, drawings, statistical data, and journals articles reporting original research.
In business, they provide information about what a company or industry says about itself, such as annual reports, financial statements, press releases, blogs, or tweets.
228
Prime cost
Total of all direct costs for a unit of output.
229
Private Law
Law affecting relationships between individuals, businesses, and small groups.
230
Product cost
The costs incurred to create a product.
231
Production cycle
A process comprised of all activities related to the conversion of raw materials into finished goods.
232
Professional behaviour
Behaving in a way that does not harm the profession by bringing it into disrepute.
233
Professional competence and due care
Exercising care when undertaking any tasks and not completing any tasks which you do not have enough knowledge, skill or experience.
234
Profit
Sales less costs. The revenue earned from the sale of a unit over and above the cost of the cost of producing the unit.
235
Profit centre
A section of an organisation that is responsible for both revenue and costs, which result in profits (or losses) e.g. the production department.
236
Prompt Payment Discount (PPD)
This discount is offered for payment within a specified time period.
237
Public Law
Law affecting relationships between individuals and the state.
238
Purchase Day Book
Lists and analyses the credit purchase invoices from suppliers of the business.
239
Purchase Ledger / Payables Ledger
The subsidiary ledger that contains all the individual Trade Payable/Supplier accounts.
240
Purchase Returns Day Book
Lists and analyses the credit notes issued to us from our suppliers of the business.
241
Quote
An estimate of a proposed purchase of goods or services.
242
Rapport
A close and harmonious relationship where people or groups understand each other's feelings and ideas and communicate effectively (Pronounced: ra-paw).
243
Raw materials
He materials brought by manufacturing organisations and used to manufacture finished products.
244
Receivables Ledger Control Account (RLCA)/SLCA
This account is in the General Ledger and contains the summary information of the Receivables Ledger.
245
Regulations
Rules made by a government or other authority in order to control the way something is done.
246
Relevance
A characteristic of useful information. Information should relate to the purpose it is intended for; it must be relevant.
247
Reliability
A characteristic of useful information. The information should come from a reliable source and the user needs to have confidence that it is complete and accurate.
248
Remittance Advice
This document details the documents that are being included in the payment being made.
249
Report
Formal format to communicate financial data and information with a written analysis and conclusion.
250
Revenue
Income of the business, primarily from sales.
251
Revenue center
A section of an organisation that is responsible for generating revenue e.g. the sales department.
252
Revenue Expenditure
Everyday expenses of the business
253
Revenue Income
Everyday income of the business
254
Revocation of Offer
Withdrawal of an offer before it has been accepted. Must be communicated to the offeree.
255
Safeguard
Actions or other measures that may eliminate threats or reduce them to an acceptable level.
256
Sage
A popular accounting software package used by many in finance roles.
257
Sales Day Book
Lists and analyses the credit sales invoices raised to our Trade Receivables.
258
Sales Ledger / Receivables Ledger
The subsidiary ledger that contains all the individual Trade Receivable/Customer accounts.
259
Sales Returns Day Book
Lists and analyses the credit notes raised to our Trade Receivables.
260
Same sided entry error
This is where both side of a transaction have been mase as a debit/credit.
261
Secondary sources
Secondary sources describe, summarise, review, interpret, and analyse primary sources.
Examples include books, newspapers, magazines, trade publications and journal articles that evaluate original research done by other people. In business, secondary sources provide opinions about a company or industry so company, industry or market reports and trade publications would also be included.
262
Self-interest
Where financial or other interests will inappropriately influence a person’s judgement or behaviour.
263
Self-review
Where work or a previous judgement is reviewed/ re-evaluated by the same person as performed/ made it in the first place.
264
Semi-variable costs
Costs that have a fixed element and a variable element.
265
Shareholder
A party that legally owns shares of a company's stock. A legal owner of an incorporated business.
266
Shares
Units of ownership in a limited company.
267
Sickness and Leave policy
Rules for reporting absences due to sickness, long term illnesses and such matters as maternity, paternity, adoption, bereavement, and jury duty.
268
Significant variance
A variance that is brought to the attention of managers for further investigation due to either its high monetary value or the high percentage of the variance form the budget data.
269
Single entry error
This is where only one aide of a transaction has been posted to the ledgers.
270
Sole Trader
A person who owns and runs their own unincorporated business.
271
Solvency
The long-term financial stability of a business and its ability to cover its long-term liabilities and their ability to pay short and long-term debts as they become due.
272
Specific Performance
An order by the court to compel a party to perform its contractual obligations.
273
Staff function
A business function that provides support to the line functions (see above) of a business.
274
Stakeholder
An individual or group that has an interest in any decision or activity of an organisation.
275
Standing Order
Regular payment of set amount, set up by person paying the bill.
276
Statement
This document details the transactions on the customer account and shows what is currently outstanding.
277
Statement of Financial Position
Shows the assets and liabilities of the business at a given point in time
278
Statement of Profit or Loss
Shows the revenue income of the business less the revenue expenses resulting in a profit / loss
279
Statutory books
A number of key registers to be maintained and updated as required by company law
280
Statutory Instrument
Laws made by government ministers who have been given powers in a parent act to do so.
281
Stepped costs
Fixed costs that rise in incremental stages, after a certain period, level of costs or level of activity.
282
Stewardship
The responsibility of directors to manage a business to the benefit of its stakeholders.
283
Subsidiary Ledgers
These are the Payables Ledger and Receivables Ledger that ‘sit’ outside of the General Ledger.
284
Suspense Account
An account created to temporarily balance the Trial Balance.
285
Sustainability
Actions that meet the needs of the present without compromising the ability of future generations to meet their own needs.
286
Sustainability policy
Rules designed to assist the business to reduce their impact on the environment such as recycling, turning lights off, and switching to electric cars.
287
T-Account
The name and shape of all accounts used within the double entry system. The lefthand side of the ‘T’ represents debit entries and the righthand side of the ‘T’ represents credit entries.
288
Teamwork
A team is a group of people working together to achieve defined objectives in an effective way. A team will usually be the department within which you work and working together will help achieve the departmental goals and meet deadlines more efficiently.
289
Time related pay
The method of remuneration when payment is made on the basis of time spent at work.
290
Timeliness
A characteristic of useful information. Information should be available in enough time for it to be used for its intended purpose.
291
Trade Discount
This discount is offered to regular customers.
292
Trade Payables
Suppliers that we have bought goods or services from on credit – otherwise known as Creditors.
293
Trade Receivables
Customers that owe the business money – otherwise known as Debtors.
294
Transposition error
This is where a figure in the books and ledgers had been transposed (entered in the incorrect order), for example £87 being entered as £78.
295
Triple Bottom Line (TBL) reporting
An alternative to the traditional approach to organisational reporting where social and environmental impacts are reported on as well as financial results.
296
Trust
A legal arrangement for managing assets.
297
Understandability
A characteristic of useful information. The intended user of the information needs to be able to understand it.
298
Unincorporated business
A business whose owners have unlimited liability for company debts.
299
Valid Contract
A contract that meets all legal requirements and is legally binding.
300
Variable costs
Costs that change if output or activity increases
301
Variance
The difference between budgeted amounts and actual amounts.
302
VAT
Value Added Tax — currently at 20%.
303
VAT
Value Added Tax, a tax on certain goods and service, payable by the consumer.
304
VAT Control Account
This account contains the summary information and should reconcile with the VAT return.
305
VAT Exclusive
The net amount of the transaction before VAT is added.
306
VAT Inclusive
The gross amount of the transaction after VAT has been added.
307
Void Contract
A contract that cannot be enforced by law.
308
Voidable Contract
A contract that is valid but can be made legally null and void by one of the parties.
309
Warranty
An assurance or promise in a contract, the breach of which may give rise to a claim for damages.
310
Work-in-progress (WIP)
The name given to partly completed items in a manufacturing organisation.
311
Xero (Pronounced ‘Zero’)
A popular accounting software package used by many in finance roles.
AAT Level 2 (All)
flashcards
Decks in class (3)
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