11th June 2019.
These are the most frequent jargon that we used to communicate in:
It is where the business receive the money after performing the sales or services but before minus any expenses where some of people will call it total sales amount.
On Bahasa, we call it "perbelanjaan" where the company is using the money to run the business and it can be categorized to 4 types: Fixed, Variable, Accrued & Operational.
3. Fixed Expenses
The expenses are consistent from day-to-day, month-to-month and year-to-year regardless your business is running good or not; for example wages and rental.
4. Variable Expenses
The expenses increase when your business's volume increase and decrease when the business is going down; for example OT hours and car maintenance bill.
5. Accrued Expenses
It is an accounting expenses that being recorded in journal but payment has not been made.
6. Operational Expenses
The expenses that is mandatory for the company in running the business; for example wages & utilities like TNB or LAP
7. General Ledger
This is where the record of the the transactions from incorporation date till the closing of company's business. As usual, you will hear debit bank credit supplier statement.
Some people call it accounts where all transactions will be recorded as it happens before moving into general ledger.
9. Profit & Loss Statement
We call it P&L where it is generated by the accountant where the P&L is showing total sales, expenses, profit or loss making for the financial year.
10. Financial Year
It is the year that the company uses for accounting purposes in preparing financial statements. The Financial Year is different from different company but majority will choose year end on Dec.
11. Trial Balance
It is exercise in finalizing figures before moving the generating of financial statements where the exercise needs to place debit and credit on a worksheet in ensuring the current balances are correct.
Forecasting will be applicable by companies in allocating budgets for incoming period of time like allocation for marketing, advertisements or increment.
It is debt that a company need to pay be it long or short term.
The amount on decrease of an item's value of the year of use and normally, it is important during tax computation as it can make effect on the company's effect to make money; for example a 20% depreciation value for production machine on every year.
15. Bad Debt Expenses
It is an entry towards towards the income statement that shows non-collectible accounts receivable during a specific period financial period.
The board of directors will decided on the company earnings after tax and distributed to the shareholders and normally, it can be in cash, shares and properties.
It is the amount being invested by the shareholders or owners into the company; if the company sole prop or enterprise then we will call the owners' equity and if the Sdn. Bhd. with various of shareholders, then the ownership collectively held by the shareholders.
Generally, we refer it as the total amount being invested into the company for running the business but not including assets or liabilities where some will refer it as the working capital.
19. Balance Sheet
In short, it is being address as BS where it is an summary of company's financial strength which is inclusive of assets, liabilities and equity; this is the banker's must view supporting docs in assessing the company's well being.
The company's ownership of an item and it is divided into tangible & non- tangible. For tangible like property, cars and machinery while non-tangible like copyrights, shares, TM and registered brand.
21. Accounts Receivable (AR)
It is an assets on the company's balance sheet as clients are committed to pay this debt. AR includes money owed by customers towards the company due for goods or services that had been performed.
The amount of expenses that had incurred but payment had not been done or sales had been performed but not at the invoice stage yet. In short, accruals are about to hit the record but have not yet.
23. Accrual Basis (AB) Accounting vs Cash Basis (CB) Accounting
AB recognize some flexibility when recognizing expenses and income where company states when income is earned and when expenses are incurred while CB is a straightforward for small or new business where income and expenditures are being recorded once payments are received and sent. CB is usually applicable to business that is not holding any inventories.
Happy reading and understanding your vocab.