This is a glossary or dictionary of financial or accounting terms which are relevant and appropriate to small and medium enterprises [SME's]. If you have come across something not listed This e-mail address is being protected from spambots. You need JavaScript enabled to view it and I will add it. Also if I haven't explained something well enough This e-mail address is being protected from spambots. You need JavaScript enabled to view it so I can try to rectify my error.

AIFRS Australian equivalents of International Financial Reporting Standards
ASIC Australian Securities & Investments Commission
Asset Something that is owned or owed to a business. EG a car, bank account, debtor (unpaid sale). It may be tangible or intangible.
COGS Cost of Goods Sold. These are linked to and vary directly with the goods or services sold and are generally whole or constituent parts of that sale (eg direct costs for a pub are purchases of alcohol) [AKA Direct Costs or Cost of Sales]
Credit By convention this is the right side of a double entry transaction. Generally it represents income or a liability (although may be a negative adjustment to aa asset or expense account).
Creditor A person or business to whom money is owed (generally for goods or services purchased).
Current Asset An asset that is, or can be converted to, cash or to meet current liabilities within 12 months and is expected to be so used.
Current Liability A liability that is owed at the moment or expected to be settled within 12 months.
Debit By convention this is the left side of a double entry transaction. Generally it represents an asset or expense (although may be a negative adjustment to a liability or income account).
Debt Something, not necessarily money, which is owed to or by someone else.
Debtor A person or business from who money is due (generally for goods or services sold).
Direct costs These are costs which are linked to and vary directly with the goods or services sold and are generally whole or constituent parts of that sale (eg direct costs for a pub are purchases of alcohol) [AKA Cost of Sales or Cost of Goods Sold]
Double Entry Bookkeeping A universally accepted convention whereby all transactions involve two sides - a debit and a credit.
Financial Accounting Generally associated with compliance - such with legislation, debt covenants or stakeholder requirements.
Fixed Asset An asset which is not liquid or expected to be converted to cash within the next 12 months [AKA Non-Current or Long Term Asset].
GAAP Generally Agreed Accounting Principles
General Journal This is a 'bare bones' journal where both the debit and credit are separately coded - as opposed to a more specialised journal where one side has pre-determined coding (such as a bank transaction or sale or purchase).
General Ledger A record of all transactions of a business, divided into debits and credits and allocated to general ledger accounts (asset, liability, income or expense). Historically financial records were kept in a book or ledger, today this generally is computerised but the principal (and terminology) has not changed.
GST Goods and Services Tax. This is an indirect tax on consumption of most goods or services in Australia. Businesses act as tax collectors for the ATO by means of a regular Business Activity Statement [BAS].
IFRS International Financial Reporting Standards
Indirect Costs These are business overheads or the cost of doing business. They are not directly associated with goods or services being sold but are necessary to support the business of selling those items. They are often relatively invariable or fixed in nature (or related to the size of the business rather than than the volume or vlaue of sales) [AKA Overheads]
Intangible Asset An asset which does not exist physically but has vale and can be measured EG a brand, trademark or patent.
Internal Control Checks and balances within a system (eg total debits equals total credits in double entry bookkeeping).
Journal A transaction posted in the ledgers - the debit and credit total must equal each other although the journal may have many lines or codes. A transaction may be 'specialised', eg a bank payment or invoice...but this is still a journal.
KPI A Key Performance Indicator (KPI) can be defined as a measure that provides managers with the most important performance information to enable them or their stakeholders to understand the performance level of the organisation. KPI's should clearly link to the strategic objectives of the organisation and therefore help monitor the execution of the business strategy.
Management Accounting Accounting reports and information actively used by owners or managers to help operate and/or grow their business. This will usually involve analysis and commentary as well as the presentation of data.
Margin How much 'profit' there is on a sale - generally expressed as a percentage. EG Unit sold at $10 each - the purchase price was $8. The margin is 20% [10 - (10 x 20%) = 8]. The emphasis is on the selling price.
Mark-Up How much you charge on top of the purchase price - usually expressed as a percentage. EG Unit sold at $10 each - the purchase price was $8. This is a 25% markup [8 + (8 x 25%) = 10]. The emphasis is on the purchase price. Mark-up and Margin are just different ways of expressing the same thing.
Non-Current Asset An asset which is not liquid or expected to be converted to cash within the next 12 months [AKA Fixed or Long Term Asset].
Non-Current Liability A liability which is not due or expected to be settled in the next 12 months [AKA Long Term Liability].
Non-Operating Expense This is expenditure that is not related to the actual operations of the business but forms part of the costs of that business. Good eaxmples of this are depreciation, interest payable or tax - these are related to balance sheet assets or liabilities rather than to day-to-day business operations. Non-Operating Expenses are generally shown at the bottom of the Profit & Loss Statement.
Non-Operating Income This is income that is not related to the actual operations of the business but forms part of the income of that business. Good eaxmples are interest and dividends received - these are both returns on balance sheet assets rather day-to-day business operations. Non-Operating Income is generally shown at the bottom of the Profit & Loss Statement.
ROI Return on investment
Tangible Asset A physical asset which can be seen and measured EG a car, bank balance or debtor.
Tax Accounting Bookkeeping and accounting reports are primarily maintained in order to produce data and information for tax returns (whether income, company tax, GST or anything or form of taxation).
Trial Balance A list of balances from all accounts in the general ledger - the total debits must equal the total credits (or total of all balances must be zero if the credits are shown as negative numbers which is sometimes the case).