- Accountability responsibility - having to account or answer for actions / money spent
- Accounting - the logical recording of financial transactions, as well as the preparation, analysis, interpretation and communication of the financial statements
- Accounting cycle - the order in which the work is done from the initial documented transactions to the final report made to interested parties, e.g the owner, bank, SARS
- Accounting Equation - the analysis of transactions to show their effect on assets, liabilities and equity A = OE + L
- Accrued - means owing, outstanding, in arrear, unpaid
- Accumulated - the total of something e.g depreciation
- Acid-Test Ratio - a financial indicator which shows whether the business is liquid, i.e whether it will be able to meet its future commitment even if it cannot sell its stock
- Administration cost - the expense of running an office, e,g accountant's salary, rent of office space, etc.
- Appreciate - to increase in value
- Asset - something which one owns and can convert into cash or is cash already
- Audit - the reporting on the reliability and fair representation of the financial statements by qualified independent person who has checked the books
- Authorise - to allow
- Balance - difference between total of the debit side and the credit side of ledger account
- Balance Sheet - see Statement of Financial Position
- Bank Statement - a document received from the bank monthly showing the deposits, cheques and charges and dialy balance of the firm's account in their books
- Book Value - of an asset = cost - accumulated depreciation
- Bottom-Line - the net profit
- Break-Even Point - this refers to the minimum number of items which need to be manufactured by the factory so that it does not make a loss
- Bribe - payment used as incentive to 'encourage' someone to do something unfair for you'
- Budget - a plan of future receipts and payments of cash showing the surplus/shortfall of cash expected each month for the next period
- Business Rescure - a company, in financial trouble, but with a good chance of recovery, is placed under the supervision of a qualified business rescuer who will try to rehabilitated it
- Buy Back Of Shares - a company many buy back its shares to reduce the number in issue. This will improve the NAV and the EPS and the DPS
- Capitalise - this is what it is called when interest is added to the loan/fixed deposit and not paid/received in cash
- Carrying Value - the difference between the cost price and the accumulated depreciation of a tangible assets - also known as diminishing balance or book value
- Cast - to add; overcast = total too big and undercast = total too small
- Code of ethics - a document giving moral guidance to the staff as to how the business expects them to deal with others, i.e customers, fellow workers, etc
- Collusion - two or more people working together to steal, commit fraud, etc
- Commitee - a number of people elected by others to manage a certain task, e.g the audit commitee, the remuneration committee
- Company - a business registered in terms of the Companies Act of 2008 - it may be profit-making or non-profit making
- Consistency - to use the same method of doing something each time, e.g depreciation
- Consume - to use up
- Contribution - the difference between the selling price and the variable cost of a product in a factory
- (Employer's) Contribution - the amount an employer contributes (pays) to the pension fund, medical aid and unemployment insurance fund to provided the employees with more benefits
- Control Account - a ledger account which summmarises all the entries in a subsidiary ledger, i.e Debtors' Ledger or Creditor' Ledger
- Corporate Governance - the way in which senior managers run the business
- Corruption - crime committed by businesses
- Cost Accounts - accounts used by factories to summmarises their manufacturing expenses
- Credit - right hand side
- Credit Note - a document informing someone that their account has been credited in your books
- Creditor - a person or business to whom the firm owes money
- Creditors List - a list of all the balances in the Creditors' Ledger showing the amount owing by the business to each creditor. The total should equal the balance of the Creditors' control account in the General Ledger
- Creditors' Payments Schedule - shows the total owing to creditors and how many must be paid to them each month in terms of the credit agreements
- Chronological - in date order
- Current - will change soon, i.e. within the next 12 months
- Current Bank Account - the bank account into which all money received is deposited daily and out of which all cheques, EFT's debit orders are paid
- Current Accounting Practices - the way accounting is done at the present time as laid done by various acts of Parliament, GAAP and International Financail Reporting Standards (IFRS)
- Current Portion Of Loan - the amount that has to be repaid within the next tweleve months - it will be shown as a current liability in the Statement of Financail Position
- Current Ratio - a financial indicator used to determine liquidity by comparing current assets to current liabilities to see if the business has enough cash to meet its short term obligations
- Debit - left hand side
- Debit Note - a means of informing someone that their account has been debited in your books
- DEBT-EQUITY RATIO - a financial indicator showing the relationship between the money the business has borrowed and its own funds
- DEBTOR - a person who owes money to the firm
- DEBTORS' COLLECTION SCHEDULE - this shows the total owing by debtors and how much will be received each month if they keep to their credit terms
- DEBTORS' LIST - a list of balance taken from the Debtors' Ledger showing the amount each other debtor owes. This total must agree with balance on the Debtors' control account.
- DEDUCTIONS - amount taken off an employee's salary/wage to be paid to UlF, PAYE, Pension, etc.
- DEPRECIATION - the amount by which an asset decreases in value as it ages
- DIMINISHING BALANCE - a method of depreciation which never writes off the full cost
- DIRECT COSTS - the essential costs of making a product, i.e. labour and materials
- DIRECTOR - a person appointed by the shareholders to manage the company
- DISHONOUR - used for cheques which the bank refuses to honour (pay) because there is no money in the account, the cheque is stale or post-dated, etc. - also called unpaid or R/D DISPOSALto sell, donate or throw away
- DISTRIBUTE - to appropriate/give a share of the profits to the owner/shareholders
- DIVIDEND - equal share of a company's after tax profit which may be distributed to shareholders
- DRAWINGS - the cost of all items taken by the owners for personal use, e.g. trading stock, cash, stationery, etc. to comply with the GAAP principle of 'separate entity'
- ENTITY - something which has real existence
- EQUITY - the value/worth of a business made up of capital plus any profits not distributed
- ETHICS - moral principles, rules of conduct, human duty
- EXEMPT - the law/rule does not apply in this case
- EXTERNAL AUDIT - an annual investigation ofthe accounting records to determine that the financial statements give a reliable and fair representation ofthe results by an independent chartered accountant who is member of SAICA
- FINAL ACCOUNTS - the Trading account and the Profit and loss account are the last accounts done in the ledger to finalise the activities for the year. All incomes and expenses are closed to these two accounts to calculate the gross and net profits. They are for internal use.
- FINANCIAL ACCOUNTING - the recording, analysing and reporting on financial activities which happened in a previous time period
- FINANCIAL ASSETS - money invested in fixed deposits etc. which will earn income for the business
- FINANCIAL INDICATORS - the ratios and percentages calculated from the financial statements which will show whether the business was efficiently managed in the last financial period
- FINANCING ACTIVITIES - the actions which raise money from owners and banks to fund the business
- FINANCIAT PERIOD - the time period used (usually a year) decided on for recording transactions and determining the profit
- FINANCIAT STATEMENTS - the Statement of Comprehensive Income (lncome Statement) and the Statement of Financial Position (Balance Sheet) with Notes, are prepared at the end of the year to show the prof;tability, solvency and liquidity of the business. They are for external use, i.e. presented to the shareholders, potential investors, bank manager, and SARS.
- FINISHED GOODS - the articles actually completed by a factory in a certain period of time
- FIXED ASSET REGISTER - a book which records full details ofthe purchase, depreciation and eventual sale of each tangible/fixed asset
- FIXED - will not change in the next twelve months FIXED DEPOSITamount of money invested in a banl. lor J (ertain period of time to earn interest
- FRAUD - the illegal action ot stealing dn asspl and rovering it up by altering the records
- GAAP - Generally Accepted Accounting Prar tir e which has been developed by accounlanls as a guide as to how to account for certain transactions - now being replaced by IFRS
- GEARING - a term indicating the ratio of capital loans in the financing of a business
- GENERAL TEDGER - the most important book containing all the assets, liability, expense and gain accounts, except the personal accounts of debtors and creditors
- GROSS PROFIT - the difference between the selling price and the rost price of goods sold
- GROSS SALARY/WAGE - the total amount earned by the employee, i.e. normal + overtime (gross = big)
- IFRS - International Financial Reporting Standard. whit h are now used by many counfries as guidelines on the presentation of financial statements
- INCOME STATEMENT - see Statement of Comprehensive lncome
- INCOME TAX - the amount of money paid to SARS bascd on thc income earned
- INDIRECT COSTS - expenses not directly involved in manufacturing an article, e.g. overheads
- INDIRECT MATERIALS - materials used in the lactory. but nol lo mdke lhe arlicles, e.g. cleaning materials
- INTERNAL AUDIT - a regular check of the accounting records to ensure they are correct by someone (not necessarily a chartered accountant) employed by the business
- INTERNAL CONTROL - procedures set up by the firm to ensure safety ofthe assets and to maximise profits
- INVENTORY - the value ofthe merchandise/stock/goods on the shelves as it has been counted
- INVESTING ACTIVITIES - the actions of acquiring tangible and financial assets and using them to make a profit
- INVOICE - the document which is used as cvidHn( e of a sale of merchandise/stock/goods
- KING CODE - a code of good busine:s prat tir e flovplsped in South Afrita by d commitlee headed by .Judge Mervyn King - now in its third version LIQUID/LIQUIDITYa business is liquid when lhp r unpnl assets exceed the current liabilltres, i.e. it has sufficient cash available to meet its immediate commitments
- LIQUIDATE - to convert assets into cash
- MANAGERIAL ACCOUNTING - the planning for the future by preparing budgets and costing properly
- MANANUFACTURER - making a product from raw materials and selling it to wholesalers and retailers
- MARK-UP - the smount (usually quoted as a percentage) added on to the cost proce to get the selling price - must be enough to cover all selling and administrative costs
- MATCHING - one thing corresponds exactly to another, e.g same time period [GAAP]
- MATERIAL - serious or important - the GAAP practice used when categorising a transaction
- MATURE - When a fixed deposit reaches its expiry date, i.e matures, the cash invested is paid back to the investor
- MEMORANDUM OF INCORPORATION - the document which outlines exactly what a company, its directors and its sharesholders, can and cannot do - it must comply with Companies Acts of 2008
- MORTGAGE LOAN - money borrowed from a bank using land and building (property) as security
- NET PROFIT - the amount by which all incomes exceed all expenses = the 'bottom line'
- NET SALARY/WAGE - the 'take home' pay of employes after PAYE, pension, medical aid, UIF etc. have been deducted from the gross amount
- NON-CURRENT - will NOT change in the next 12 months
- NORMAL TIME - the usual number of hours an empoyee is expected to work
- ON-LINE BANKING - all bank transactions are made by accessing the internet
- OPERATING ACTIVITIES - the generation of cash by carrying on business as usual
- PRUDENT - wise, discreet, cautious, conservative
- RAW MATERIAL - this is converted into the finished product during the manufacturig process
- RECEIPT - a document which serves as evidence of moeny received for anything at all
- RECONCILE - to work out the differences between two things which do not agree to determine why they do not agree
- REIMBURSE - give back the moeny spent
- RETAILER - a business which buys goods and sells them to the public to make a profit
- RETAINED INCOME - the portion of a company's after tax earnings which it does not distribute as dividends, but leaves in the business to increase the funds availables and equity
- RETURN - money earned by rendering a service
- RISK - the chance that a business takes that it will not make a profit
- SALARIES - the remuneration of an employee who is paid monthly
- SELLING AND DISTRIBUTION COST - the expenses incurred by a factory to sell the finished products and deliver them to the buyers
- SOLE PROPRIETOR - a business in which only one person invests captial, takes all the profits/losses and is responsible for all the debts
- SOLVENT - current + non-current assets are greater than current and non-current liabilities
- STALE CHEQUE - this cheque was dated for more than 6 months ago and is no longer valid - it must be cancelled
- STATEMENT OF CASH - FLOWS used to be called a cash flow statement, this shows the actual money generated during.the year and how it was used