Accounting & Bookkeeping Abbreviations, Acronyms and Definitions

The following list provides the meaning to common words and terms used within the accountancy / bookkeeping industry to engage understanding.

Accountant - Qualified Accountant, or Professional Accountant is a certified accountancy and financial expert in the jurisdiction of many countries.
Accounts Payable - Is a "creditor" to the business (you owe them money).
Accounts Receivable - Is a "debtor" to the business (they owe you money).
Australian Taxation Office (ATO) - The principal revenue collection agency for the Australian Government.
Balance Sheet - A balance sheet is a statement of the book value of all assets and liabilities (including equity) of a business or other organization or person at a particular date, such as the end of a financial year. It is known as a balance sheet because it reflects an accounting identity: the components of the balance sheet must (by definition) be equal, or in balance; in the most basic formulation, assets must equal liabilities and net worth, or equivalently, net worth must equal assets minus liabilities.
Business Activity Statement (BAS) - A form submitted to the Australian Taxation Office by all businesses to report their taxation obligations which include Pay as you Go Withholding (PAYGW), Pay as you Go Instalments (PAYGI), Fringe Benefits Tax (FBT), Wine Equalisation Tax (WET), Deferred Company Instalments (DCI) and Luxury Car Tax (LCT). PAYGW is sometimes known as "Income Tax Withholding (ITW)," PAYGI is sometimes known as "Income Tax Instalments (ITI)".
Bookkeeping - The recording of all financial transactions undertaken by an individual or organization. Bookkeeping is "keeping records of what is bought, sold, owed, and owned; what money comes in, what goes out, and what is left."
Credit - The deduction of a payment made by a debtor from an amount due.
Creditor - A party (e.g. person, organization, company, or government) that has a claim to the services of a second party. The first party, in general, has provided some property or service to the second party under the assumption (usually enforced by contract) that the second party will return an equivalent property or service. The second party is frequently called a debtor or borrower.
Debt - That which is owed; usually referencing assets owed, but the term can cover other obligations.
Debtor - Respectively, a person who owes a debt and a person to whom the debt is owed; however, one of the account balances in financial statements. Usually it is presented as one of current assets.
Financial Transaction - Any event that involves money.
Fringe Benefits - Benefits in kind (also called fringe benefits, perquisites, or perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries. Where an employee exchanges (cash) wages for some other form of benefit, this is generally referred to as a 'salary sacrifice' arrangement.
Goods and Services Tax (GST) - A value added tax of 10% on most goods and services sold in Australia.
Income - Generally defined, is the money that is received as a result of the normal business activities of an individual or a business.
Invoice - A commercial document issued by a seller to a buyer, indicating the products, quantities and agreed prices for products or services with which the seller has already provided the buyer. An invoice indicates that payment is due from the buyer to the seller, according to the payment terms.
MYOB - Entry level accounting software through to multi user enterprise software.
Owners Equity - Is the difference after subtracting all liabilities from assets; is the owners investment in the business; is the amount owed by the business to the owner.
Payroll - The sum of all financial records of salaries, wages, bonuses, and deductions.
Profit - The making of gain in business activity after all operating expenses have been met.
Quicken - A provider of financial and business management software.
Reconciliation - The act of checking a financial account for accuracy.
Salary - Fixed compensation for services, paid to a person on a regular basis.
Tax Return - A document giving the tax collector information about the taxpayer's tax liability.
Trial Balance - A worksheet wherein all the balances of each ledger are entered in two columns, namely debit and credit. Trial balance is prepared in each financial period as a summary of the closing of the previous ledger. The total of the debit side should always be equal to the total of the credit side, which proves the arithmetic accuracy of the ledger entry.
Wage - A compensation which workers receive in exchange for their labor.