IGCSE Accounting glossary

A record of all the changes affecting one item, such as cash or sales.

The sequence of steps from recording transactions to producing the financial statements.

The rule that everything a business owns was funded either by the owner or by others it owes.

The span of time a set of accounts relates to.

An expense that has been used but not yet paid for by the year end.

Income the business has earned but not yet received by the year end.

A club's version of capital, the members' collective stake.

The section that shows how a partnership's or company's profit is divided up.

Something the business owns or controls that has value and is expected to bring it future benefit.

Money received from a customer whose debt had already been written off as irrecoverable.

Working out the closing figure of a ledger account and carrying it forward.

Fees the bank takes from an account for its services.

A short-term facility that lets a business spend more than it has in its bank account.

Checking that the business's cash-book balance agrees with the bank statement, and explaining any difference.

The record the bank sends showing all the money that has gone in and out of an account.

The place a transaction is first recorded before it goes into the ledger.

The day-to-day recording of a business's financial transactions in the books of account.

The rule that the business's finances are kept separate from the owner's personal finances.

The money and resources the owner has put into the business, plus profits kept in it, less anything taken out.

In a partnership, the account showing each partner's fixed, long-term investment in the business.

The total long-term funding invested in the business.

Money spent on buying or improving non-current assets that will benefit the business for years.

New money or assets the owner puts into the business during the year.

A reserve that arises from capital events and cannot be paid out as an ordinary dividend.

The cost of having purchased goods delivered to the business.

The cost of delivering goods to customers.

What a non-current asset is worth in the accounts after depreciation is taken off its cost.

A book that records money received and paid through cash and the bank.

A reduction for paying an invoice promptly.

A sale where the customer pays straight away.

The value of unsold goods a business still holds at the end of a period.

Two separate errors that cancel each other out.

Once a business chooses an accounting method, it keeps using it so results can be compared.

A single transaction that affects both the cash and bank columns of the cash book.

A summary account that totals the individual customer or supplier accounts to check they are correct.

The cost to the business of the goods it actually sold during the period.

An entry on the right side of an account; it increases liabilities, capital and income and decreases assets and expenses.

A document that reduces the amount a customer owes, usually for returns or an overcharge.

Buying goods now and paying the supplier later.

A sale where the customer takes the goods now and pays later.

Money moved straight into a business's bank account by a customer or the bank.

An asset the business expects to use up or turn into cash within a year.

An amount the business must pay within a year.

A quick check of whether a business can pay its short-term debts, comparing current assets to current liabilities.

A long-term loan to a company that pays a fixed rate of interest.

An entry on the left side of an account; it increases assets and expenses and decreases liabilities, capital and income.

Whether an account has a net debit or net credit figure after balancing.

The way the cost of a non-current asset is spread over the years it is used, to reflect wear and ageing.

Costs that can be traced directly to making a product.

An arrangement letting a supplier collect varying amounts from an account with permission.

A reduction a business gives its credit customers for paying promptly.

A reduction a business gets from its suppliers for paying promptly.

A cheque the bank refuses to pay, usually because there are insufficient funds.

Selling or scrapping an asset and working out the profit or loss on it.

A share of a company's profit paid out to its shareholders.

The method of recording every transaction twice, once as a debit and once as a credit, so the books always balance.

Money or goods the owner takes out of the business for personal use.

Every transaction affects the accounts in two equal and opposite ways.

Posting the right amount to the wrong account of the same type.

A transaction left out of the books entirely.

Recording the wrong amount from the start, in both entries.

Posting to a completely wrong type of account, breaking an accounting rule.

A cost the business incurs in order to earn its revenue.

The 12-month period a business's accounts cover.

A reference code that links an entry to the page or account it came from or goes to.

Profit a company keeps back for no specific purpose, strengthening the business.

The assumption that a business will keep operating for the foreseeable future.

The extra value of a business above its net assets, from reputation, customers and location.

The profit a business makes from buying and selling, before other running costs.

The rule that assets are recorded at what they originally cost.

A way of running petty cash where the float is topped back up to a fixed amount each period.

Money received before the business has earned it, relating to a future period.

The financial statement that shows whether a business made a profit or a loss over a period.

Accounts kept without a full double-entry system, so figures must be worked out indirectly.

A valuable resource with no physical form, such as goodwill.

A reward partners give themselves for the capital they have invested, before splitting profit.

A charge partners make on money taken out during the year, discouraging early withdrawals.

The goods a business holds to sell, or the materials it will turn into goods to sell.

A document a seller sends a credit customer showing what was sold and how much is owed.

Money owed by a customer that the business has decided it will not be able to collect.

A book used to record transactions that don't fit the other day books, with a note of why.

The set of accounts where all the business's transactions are gathered together.

An amount the business owes to someone else and will have to settle in future.

A business that is a separate legal entity from its owners (shareholders).

Money borrowed that is repaid over more than a year.

A statement that gathers the costs of making goods to find the total cost of production for the period.

Profit expressed as a percentage of the selling price of goods.

Profit expressed as a percentage of the cost price of goods.

The rule that income and the costs of earning it should be recorded in the same period.

Only items large enough to affect decisions need their own careful accounting treatment.

The rule that accounts only record things that can be measured in money.

The short note under a journal entry explaining why it was made.

What a business owns less what it owes, its value to the owners.

The result when a business's total expenses exceed its total income for the period.

Purchases after taking off goods returned to suppliers and adding delivery costs in.

The estimated selling price of inventory less the costs of getting it sold.

The main ledger holding the impersonal accounts such as sales, purchases and expenses.

An asset the business keeps and uses for more than a year to help it operate.

An amount a business owes that is not due for repayment within a year.

A club or society that exists to serve members, not to make a profit.

The value of unsold goods a business holds at the start of a period.

Units of ownership in a limited company that carry voting rights and a variable dividend.

Indirect costs of running the factory or business that cannot be traced to one product.

In a partnership, the account that collects a partner's profit shares, salary and drawings.

A business owned by two or more people who share profits.

An agreed amount credited to a partner who does more work, before the rest of the profit is split.

A record of small everyday cash payments.

A small slip that records and authorises a minor cash payment.

An expense paid in advance for a benefit the business has not yet received.

The direct costs of making a product: direct materials plus direct labour.

What is left after every expense has been taken away from all the income for the year.

The agreed proportions in which partners divide the remaining profit or loss.

The running total of all the depreciation charged on an asset so far.

An estimate of receivables that may not be paid, set aside without writing off a specific customer.

The rule that you should not overstate profits or assets, and should recognise likely losses.

Goods bought by a business specifically to sell on to customers.

A list of all the invoices a business receives for goods bought on credit.

The ledger with one account for each supplier the business buys from on credit.

Profit is recorded when goods or services are delivered, not when cash is received.

A way of charging depreciation as a fixed percentage of the asset's remaining value each year.

The amount an asset is expected to be worth at the end of its useful life.

The profit a company has kept over the years instead of paying it all out as dividends.

Goods that customers send back to the business.

Goods the business sends back to its suppliers.

The income a business earns from its main activities, mainly from selling goods or services.

Day-to-day running costs that are used up within the period.

Profit a company keeps that could still be paid out as a dividend later.

The value of goods a business has sold to its customers in a period.

A list of all the invoices a business sends out for goods sold on credit.

The ledger holding a separate account for every customer who buys on credit.

The extra a company charges for shares above their nominal value.

A business owned and run by one person.

The original paperwork that proves a transaction happened.

An instruction to the bank to pay a fixed amount to someone at regular intervals.

A summary a supplier sends a customer showing invoices, credit notes, payments and the balance owing.

A rough statement of assets and liabilities, used to estimate capital when proper records are missing.

A snapshot of what the business owns and owes at a single date.

A way of charging the same amount of depreciation every year of an asset's life.

The fees members pay to belong to a club or society.

A temporary account that holds the difference when a trial balance does not agree, until errors are found.

An asset with a physical form that you can touch, such as machinery or a building.

A reduction off the list price given to certain customers, deducted before the invoice total.

Money the business owes to suppliers for goods or services bought on credit.

Money owed to the business by customers who bought on credit.

A list of all the ledger balances, with debits in one column and credits in another, used to check they are equal.

The total value of sales a business makes in a period.

Money paid into the bank and recorded by the business but not yet shown on the bank statement.

A cheque the business has written and recorded but that has not yet been paid by the bank.

Partly-finished goods not yet ready for sale.

The money a business has available for its day-to-day running.