Money owed by a company to its creditors for goods and services purchased on credit.

Money owed to a company by its customers for goods and services delivered on credit.

Expenses and revenues that are recorded when they are incurred, not when cash is exchanged.

The process of gradually writing off the initial cost of an intangible asset over its useful life.

A financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing assets, liabilities, and equity.

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

The movement of cash into and out of a business, crucial for assessing liquidity.

The primary legislation governing company law in the UK, including accounting and reporting requirements.

Legislation governing the taxation of corporate profits in the UK.

The direct costs attributable to the production of the goods sold by a company.

The systematic allocation of the cost of a tangible asset over its useful life.

An accounting system where every transaction affects at least two accounts, with debits equaling credits.

The value of the owner’s interest in the company, calculated as assets minus liabilities.

The body responsible for setting and maintaining UK accounting standards.

A set of guidelines and rules used to prepare and present financial statements.

• FRS 100: Sets out the application of financial reporting requirements.
• FRS 101: Provides a reduced disclosure framework for individual financial statements of subsidiaries and ultimate parents.
• FRS 102: The main standard for entities not applying IFRS, FRS 101, or FRS 105.
• FRS 103: Consolidates financial reporting requirements for insurance contracts.
• FRS 104: Used for interim financial reporting.
• FRS 105: Applies to micro-entities.

A complete record of all financial transactions over the life of a company.

The body of accounting standards published by the FRC, governing how company accounts are prepared in the UK.

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business’s reputation, customer base, and other non-physical assets.

Revenue minus the cost of goods sold, representing the core profitability of a company’s operations.

A permanent reduction in the value of an asset below its carrying amount on the balance sheet.

Legislation governing the taxation of income in the UK.

Adopted by some UK companies, these are global standards for financial reporting.

The goods and materials a business holds for the purpose of resale.

Obligations that the company needs to settle in the future, such as loans, accounts payable, and mortgages.

The total profit of a company after all expenses and taxes have been deducted from total revenue.

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, usually a fiscal quarter or year.

A measure used to evaluate the efficiency or profitability of an investment.

The accounting principle that dictates how and when revenue is recognized in the financial statements.

Issued by the FRC to assist stakeholders by highlighting certain requirements of FRS 102 and other standards.

Sector-specific guidelines developed by SORP-making bodies to provide additional guidance on financial reporting.

A report that lists the balances of all general ledger accounts of a company at a particular point in time, used to verify that debits equal credits.

A type of consumption tax that is placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

The difference between a company’s current assets and current liabilities, indicating the liquidity available to run day-to-day operations.