A-Z of Accounting Terms UK

Accounting terms can feel like a secret code. We have broken down these terms into plain, everyday English. Here is a handy A-Z Accounting Terms UK guide to the most common financial words you need to know.

Essential A-Z Accounting Terms UK

Assets: The things your business owns that have value. Think of this like the cash in your wallet or the tools in your shed.

Balance Sheet: A financial picture that shows what your business owns and what it owes on one specific day.

Bookkeeping: The daily or weekly task of recording all the money that comes in and goes out of your business.

Capital: The money used to start or grow your business. Imagine it like the fuel you put in a car to make it run.

Corporation Tax: A fee that limited companies pay to the government based on their profits.

Depreciation: The drop in value of an item over time. Like a new phone, its value goes down the longer you use it.

Dividend: A cut of the company’s profit paid to its owners or shareholders.

Expenses: The costs you pay to run your business. Examples include rent, bills, and office supplies.

Gross Profit: The money made from selling a product before taking away your business expenses.

Income Statement: A report that shows all your money made (revenue) and money spent (expenses) over a period of time.

Liabilities: The debts your business owes to others. Think of this like a credit card bill you have to pay.

Net Income: The final profit left over after you pay all taxes and expenses. It is the real money you take home.

Payroll: The system used to pay your workers, figure out their taxes, and give them payslips.

Revenue: The total amount of money your business brings in before any expenses are paid.

Sole Trader: A business owned and run by one person. You are personally responsible for the business and its debts.

Turnover: The total amount of sales your business makes in a set period of time.

VAT (Value Added Tax): A tax added to the price of most goods and services in the UK. 

If you want to know more about how these terms apply to you, let us know by reaching out, we can guide you on the best steps to take for your accounting:

• Are you a sole trader or a limited company?

• What specific topic would you like to explore (e.g., taxes, bookkeeping)?

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