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The Accountancy Jargon Dictionary

Updated: Nov 17, 2021

Scratching your head after talking to your accountant? Wondering what all those business words mean? Check this cheat sheet to get a rundown of all the common terms used by accountants.

Hint! Press CTRL+F (Windows) Or Cmd+F (Mac) and enter a specific term to find your definition quicker!


CT600 - Corporation Tax Computation. Also known as a Company Tax Return. This is the filing required to pay tax on your earnings. From Small businesses all the way to large corporate firms this tax payment is required and is called corporation tax.


SA302 - This is a statement provided by HMRC that gives proof of your earnings. HMRC produces this after you have submitted your self-assessment tax return. The form shows the amount of tax owed to HMRC and any refunds that are due.


FRS105 - The Financial Reporting Standard applicable to the Micro-entities Regime. Is a very corporate sounding title for a single accounting standard for use by entities that are eligible and choose to use the Micro-entities Regime. (HMRC defines a business as 'Micro' if it has a turnover under £630,000, a balance sheet total under £316,000 and no more than 10 employees).


FRS102 - For all companies who do not fall under the criteria of the FRS105. FRS102 is the accounting standard that needs to be applied when preparing financial statements.


SA100 - The main tax return to notify HMRC of your income as an individual.


P11D - A P11D is a form used to detail any expenses and benefits that you are tax liable for. Mostly relevant to employers, who have to submit P11d forms every tax year to inform HMRC of any expenses payments, benefits and facilities given to each employee or director.


Prepayment - The opposite of Acrurals. Prepayments are expenses that are included in your profit and loss account but some of the costs may relate to the next financial year. For example, if you pay for a service every 12 months, your year-end splits that in half. A prepayment entry will be made to reflect this.


Profit & Loss Statement - A statement, usually on a spreadsheet that details all income and expenditure for a company's financial year.


Stock Turnover - The time it takes to sell your goods.


Break-Even Point - The sales number you need to cover your expenses and turn a profit.


Overheads - Monthly costs that you have to cover each month. For example telephone, business rates, broadband etc.


Advisory - A service providing information and advice to a business owner to plan the future from an accountant.


EBITDA - Earnings before interest, tax, depreciation and amortization. This is Profit earned from trading activities.


Depreciation - Whenever a company purchases a fixed asset, its lifetime value is estimated and devalued over the duration of ownership.


PAYE - Pay As You Earn. Employed people who have their taxes and national insurance deducted from payroll.


Dividends - A dividend is a method of payment for shareholders of a company. Dividends can be taken out of the net profit after corporation tax has been accounted for.


Directors Loan account - Whenever a director takes money out of the business it is accounted to the Directors Loan Account. This may be to cover business expenses paid personally. The annual total is tallied and declared the year-end accounts.


Accruals - The opposite of prepayments. A cost that you are aware of, but do not yet have evidence for. For example, a bill of materials, that you have not received until the month after the delivery of the goods.


Cash Flow - The rate of cash that flows in and out of your accounts. Encompassing incoming, and outgoing money. Cash flow is king.


Net Profit - The money left over after all overheads have been deducted from the Gross Profit.


Gross Profit - The money left after all direct costs have been deducted from sales.


Cash Burn Rate - This is the rate you are getting through your money, calculated using current trends till you hit 0.


Balance Sheet - Balance sheets are prepared at the end of the trading year. It is a quick glance at a companies assets and liabilities.


Retained Earnings - Retained earnings refer to the profit left in the bank after all directors have taken a dividend. They are added to a pot for future drawings.


Debtor Days - How long your invoices take to be paid.


Abridged Accounts - Simplified version of Statutory Accounts that are filed to Companies House. Containing company information and that year's balance sheet.


Statutory Accounts - These are the fully detailed end of year accounts showing Profit & Loss, Balance Sheet and Detailed profit and loss reports.


Capital Allowances - This is an expenditure a business can claim against its taxable profit. Capital allowances can be claimed on most normal asset purchases made for business use by a business.


Trial Balance - A statement of all credits and debits for the business at that time. Showing costs & income.


Fixed Asset - Any purchase over £100 that brings benefit to a company and lasts over a year. E.g Laptop, company car.

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