Key accountancy terminology: A bitesize glossary

This bitesize glossary gives a summary of words that you may encounter when maintaining the accounts of sole traders and partnerships, using an accounting system that has been created by software. 

It is not definitive and has a few useful extras, as its purpose is to acknowledge the range of terminology you are likely to come across and equipped you with the knowledge and skills to recognise groups of terms and to use them interchangeably.

Key term Also known asReferred to in
accounting software as
General
ledger
Main or nominal
ledger
Chart of accounts /
Nominal
Income Revenue
Revenue
from
sales
revenue
Turnover or sales
Expenses
Overhead, direct cost/ cost of sales or cost of goods sold
Depreciation
charge(s)
Depreciation
Diminishing
balance
depreciation
Reducing balance
depreciation

Carrying
amount
Net book value
Current
assets


Inventories Stock
Cash and
cash
equivalents
Cash at bank and in hand
Current
liabilities


VAT
Sales tax
Non-current
assets
Fixed assets
Non-current
liabilities
Long-term liabilities
Equity Capital
Retained
earnings
Profit
Profit from
operations
Operating profit
Profit/loss for
the year/
period
Net profit/loss
Drawings

Sales ledger Receivables
ledger
Customers
Sales ledger
control accou-nt (SLCA)
Trade receivables
account / Account
receivable /
Trade debtors

Other
receivables
Prepayments
Purchases
ledger
Payables ledger Suppliers
Purchases
ledger
control
account
(PLCA)
Trade payables
account /
Accounts payable
Trade creditors
 Vendors
Other
payables
Accruals
Subsidiary
accounts
Memorandum
accounts

Sales invoice Invoice
Purchase
invoice
Invoice Bill
Financial
statements
Financial
accounts

Statement
of profit or
loss
(SoPL)
Income statement
Statement of
financial
position

Balance sheet

Furher reading:

Gill Myers is a self-employed accounts consultant. She has taught AAT qualifications since 2005 and written numerous articles and e-learning resources.

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