No jargon, no assumptions. Just explanations that actually make sense.
Matching your accounting records against actual bank transactions to confirm they agree. Usually done monthly.
Money your business owes to suppliers for goods or services already received. Not yet paid.
Money owed to your business by customers for goods or services already delivered. Not yet received.
Recording income or a cost in the period it happened, not when cash moves. Example: invoicing a customer on 30 June counts as June income, even if paid in July.
A financial statement showing what your business owns (assets), owes (liabilities), and is worth to shareholders (equity) on a specific date.
The structured list of categories your business uses to record income and expenses. Think of it as the skeleton your bookkeeping hangs on.
Spreading the cost of a fixed asset (like machinery or vehicles) over several years rather than claiming it all at once.
The standard method where every transaction is recorded twice — once as a debit and once as a credit. This keeps the books balanced.
Money your business spends to run operations. Rent, staff costs, supplies, marketing, etc.
Items your business owns that last more than a year. Equipment, vehicles, property, etc.
The master record of all your business transactions, organised by account. The source document your accountant uses for year-end accounts.
Revenue minus the direct cost of goods sold. Before operating expenses are deducted.
A bill you send to a customer after delivering goods or services. Says what they owe and when it's due.
A manual recording of a transaction in your accounts. Used for adjustments or complex transactions software can't handle automatically.
HMRC's requirement to keep digital records and file certain returns through compatible software, not manual forms.
Regular internal financial reports — usually monthly — used by management to track performance. Not filed anywhere, just for internal use.
The process of finalising a month's transactions and reconciliations before reporting. Ensures all activity is recorded and verified.
The bottom line. Revenue minus all expenses (including tax). What the business actually made.
An amount you owe but haven't paid yet. Opposite of receivable.
A financial statement showing income, costs and profit over a period (usually a month or year). Also called an income statement.
An amount owed to you but not yet received. Opposite of payable.
The process of checking that two sets of records match. Usually bank reconciliation (your records vs the bank statement).
The money your business brings in from sales or services, before any costs are deducted.
A list of all ledger balances used to check that total debits equal total credits. A sanity check that your books are in balance.
A tax on turnover collected at each stage of supply. UK standard rate is currently 20%. Businesses can reclaim VAT paid to suppliers.