GLOSSARY

Accountant

A person who is skilled at keeping business financial records. Usually, the name "accountant" refers to a highly trained professional rather than one who keeps books of account.

Account

A record of a business transaction. When you buy something on credit, the company you are dealing with sets up an "account". This means it sets up a record of what you buy and what you pay. You will do the same thing with any customers to whom you extend credit.

Accounts

'Accounts' is a generic term for the financial documents that companies in the UK are required to file each year. Most companies filings will include a Profit & Loss account, a Balance Sheet, a Director's Report and Auditor's Statement.

Limited companies have up to 10 months after the financial year end to file accounts for that year, so the first accounts for a new company are due 22 months after incorporation. PLCs must file within 7 months of year end.

95% of companies file their accounts on time.

Companies that do not file accounts on schedule incur fines from Companies House on a sliding schedule, and will eventually be dissolved if they do not comply.

Account payee only

Words often written on crossed cheques, which direct the bank to pay the cheque only to the bank account of the payee.

Accounting Reference Dates

Every company has an accounting reference date. You can change it using form 255. If a company has not chosen a date, it will default to the last day of the month in which the first anniversary of its incorporation occurs. e.g) incorporated on 14/6/99, accounting reference date = 30/6/00

You may shorten an accounting period as often as you like, but you may not extend an accounting period within five years of the end of a period you have extended previously, except in unusual circumstances (e.g the Secretary of State has directed this, or the company is subject to an administration order, or the company is aligning its accounting reference date with that of a subsidiary or parent undertaking established within the European Economic Area.)

Accounts payable

Is money you owe to suppliers and other business creditors as a result of purchases of stock and other expenses such as overheads and taxes.

Accounts receivable

A record of what is owed to you. All of the credit "accounts" - the record of what each customer owes you - taken together are your "accounts receivable".

Acquisitions

Acquisitions include the things you buy (goods, services and anything else) for your business. They also include many other transactions, such as obtaining advice or information, taking out a lease of business premises or hiring business equipment.

Actuary

A mathematician whose work is mainly concerned with insurance and finance.

Ad valorem

According to value. Applied to customs duty, it means a percentage charge on the value, rather than the weight or quantity of goods.

Affidavit

A declaration in writing on oath, made before a person legally qualified for the purpose.

Amortise

The gradual process of writing off the cost of an asset, or paying off a liability by means of a sinking fund, over a period of time.

Analysis

Breaking an idea or a problem down into its parts or a good examination of the parts of anything. In business you must "analyse", that is, make an "analysis" of, a problem before you can decide on the best solution.

Annual Return

Summarises current directorships and company/capital structure. Filed annually.

Annual Return Date

The Annual Return should be filed within 28 days of this date each year.

Articles of association

The basic document of a registered company defining its internal organisation. It is one of two fundamental documents on which the registration of a company is based.

Every company has a memorandum of association, which determines its name, where its registered office may be situated and what it may do (its objects).

The rules for the conduct of the company's internal affairs are contained in its articles of association. There is a standard form for the articles (in the case of a company limited by shares known as Table A), but this may be modified.

Asset

Anything of worth that is owned. The assets of a business are money in the bank, accounts receivable, securities held in the name of the business, property or buildings, equipment, fixtures, merchandise for sale or being made, supplies and all things of value that the business owns.

Authorised capital

The total amount of capital which a company, by its memorandum of association, is authorised to offer for subscription. See also, paid up capital.

Award

an agreement having the force of law, which sets out working conditions and wages for certain types of employment.

Audit

An audit is the official inspection of a company's accounts by a qualified accountant as required by Companies House each year to ensure that the company balance sheet reflects the true state of its affairs.

Authorised Capital

The total amount of share capital that a company is allowed to issue.

 

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